Thursday, February 19, 2009

Update on PEBP: NFA testimony to joint subcommittee

Yesterday morning (Wed February 18th), the Joint Subcommittee on General Government held its pre-budget hearing on the PEBP program, to discuss the Governor's proposed budget for the health insurance program that covers most public service workers in the state and many retirees from state and local government employers.

The Governor's Executive Budget proposes significant increases in out of pocket costs to active workers and the near elimination of health insurance benefits for retired workers. In short it represents a plan that would radically alter, and could fundamentally cripple, the state's health insurace program.

At the hearing, a significant contingent of active and retired public service workers, attended and spoke, and the faculty was well represented. Jim Richardson made a lengthy presentation on behalf of the NFA.

Among the most significant points, he emphasized that the PEBP plan is adequate but by no means excessively generous in comparison with other health plans in terms of either coverage or cost to the state.

He emphasized that the Governor's proposals would greatly diminish the competitive position of the PEBP plan relative to other public service benefits plans and to plans that prospective faculty members might find from other potential employers. He emphasized the importance of a competitive health plan for the state to be able to recruit and retain top faculty, including the importance of retirement benefits for mid-career faculty who might be recruited from other states. This point was reinforced by a letter sent to the committee, and released to the public, by UNLV President David Ashley. Also submitted in support of this point (in subsequent testimony) was the UNLV Faculty Senate's resolution on health care benefits of last December.

Richardson also emphasized that the PEBP program does not represent, as its critics maintain, a significant long-term liability for the state. He presented a chart showing that the estimated liability of $3.6b over 30 years represents less than 1% of the long-term liability for the state in other areas, such as human services, K-12 and higher ed, and prisons. (Combined, those agencies, represent a long-term liablity of over $250b for the state over 30 years.)

Following Richardson's testimony, additional testimony was given via teleconference by NFA state president Alok Pandey, CSN-NFA President Shari Lyman (whose critique of the Governor's "regressive targeted tax increase" on public service workers drew a rousing cheer from the crowd in both sites), NFA past president Candace Kant, and a presentation by UNLV Faculty Senate chair Nasser Daneshvary and myself (Greg Brown), as UNLV-NFA president.

Daneshvary presented his own research findings on the economic importance to workers of health care benefits (Economic Inquiry 45:4 (October 2007) pp 800 - 816) to argue that cutting costs in health care benefits will not save the state money, because if it intends to attract and retain the same high quality of faculty, it will need to increase salaries ( by 16.5% for married men and by 20% in salary for maried women. More specifically, an employer offering a plan with higher out of pocket premiums (as the Governor proposes), will have to compensate a prospective employee with at least 2% in higher salary per dollar lost out of pocket for premiums.

When we consider that the Governor's plan represents not only an out of pocket premium increase of at least $125 per month (for individuals) and $166 (for insured families), and an estimated $2000 total out of pocket costs per year for an individual and over $3000 in out of pocket costs per year (for an insured family) we see that the state will not realize significant savings by cutting PEBP as drastically as the Governor proposes to do.

For those concerned with preserving our health insurance as an affordable, competitive plan -- especially for those in retirement -- please contact the key members of the state legislature and please forward this message to others.

Invite them to get involved, by educating themselves, by contacting their representatives, and by joining the NFA.

In solidarity,
Greg Brown
Interim President, UNLV-NFA

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