Rising health care and pharmacy costs mean current and retired state employees will face health insurance rate hikes ranging from 8 percent to 25 percent beginning July 1, leading to monthly premium increases of $8 to $53 depending on the number of dependents and the plan type.
The Public Employees’ Benefits Program (PEBP) Board approved the increases at its meeting last Thursday. Though the board, which oversees a group health and life insurance program for about 70,000 people, initially considered raising monthly premiums between 15 percent and more than 50 percent, board members voted to dip into the agency’s catastrophic reserve fund and subsidize the amount employees and retirees were paying.
“Regardless of what you do, you’re looking at an increase in premiums to the members,” PEBP Executive Officer Celestena Glover told board members during Thursday’s meeting. “But this ideally helps soften that blow.”
Though Gov. Joe Lombardo signed a state worker pay bill providing the largest raises for state employees in decades, board members raised fears that increased insurance costs could effectively nullify those raises, which were in part designed to adjust for cost-of-living increases.
“We fought both sides, everybody, to get state workers more money,” board Chair Jack Robb, who also leads the Department of Administration, said about the original proposal to raise premiums. “But on our lower salaried people, pretty much 100 percent of their pay raise that we have afforded them is eaten up by these increases.”
The board voted to use approximately $7.3 million to subsidize the monthly premium increases and plans to request the Legislature reimburse that money during the 2025 legislative session — though lawmakers have wide flexibility in considering budget requests.
However, there are still concerns that the rate hikes could exacerbate the state worker shortage. As of August, the state vacancy rate across all executive branch agencies is 25 percent.
During public comment at Thursday’s meeting, Doug Unger, president of the UNLV chapter of the Nevada Faculty Alliance, said that it’s challenging to retain and hire quality employees across all state agencies, and high premiums could worsen understaffing and worker shortages. The alliance emphasized that it supported PEBP’s decision to use its reserve funds to increase subsidies.
In a statement to The Nevada Independent, Michael Ahlmeyer, a member of the American Federation of State, County and Municipal Employees Local 4041 and maintenance worker at Truckee Meadows Community College, urged PEBP to reject the premium increases.
“State agencies continue to face extreme understaffing and cannot stay competitive if services continue to be cut and health insurance costs continue to increase year after year,” Ahlmeyer said. “As a dual organ transplant recipient, quality health insurance is extremely important to me because staying healthy allows me to serve our community.”
Below is more information about the rate hikes and what drawing from the reserve funds mean:
What is PEBP?
PEBP specializes in health care benefits for state employees and retirees. The agency also offers life insurance options. It covers 43,000 primary participants and 27,000 covered dependents.
PEBP submits its funding requests through the Legislature as part of its biennial budget. Upon approval, each state agency pays a certain amount to contribute to health plans, with the rest covered by participant contributions.
Why are the rates increasing?
A PEBP meeting report indicates that state subsidies for health insurance are projected to be less than lawmakers budgeted because of lower enrollment, higher usage of medical benefits than during the pandemic when many people paused dental and provider visits, provider shortages and because PEBP was allocated less money than it requested from the Legislature.
PEBP officials also cited high-dollar claims costs that the program is still repaying as another driver of the increasing premiums.
Every year, financial analysts predict medical inflation trends for PEBP, and the organization submits a budget request to state leaders to meet those trends. During the 2023 legislative session, the benefits program requested increases of 5 percent for medical, 8 percent for pharmacy and 2 percent for dental. However, the governor’s recommended budget, which the Legislature approved, only allocated a 3.91 percent increase for medical, a 3.67 percent increase for pharmacy and a 2 percent increase for dental.
Employees and retirees on the state insurance plan must bear any costs not covered in the final state budget.
Could PEBP mitigate the rate increases?
PEBP did mitigate the increases by dipping into reserves. A December…
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