Note that public employees in Alabama have insurance heavily subsidized by the state. This has been a long-standing arrangement, usually explained as a way to attract qualified employees without having to pay competitive salaries.
However, when the Great Recession took a bite out of tax revenue, budget-cutting politicians reduced the subsidy the state usually paid. Add to that the cost of implementing the Affordable Care Act, along with the growing number of retirees and fewer new hires paying into the system (another consequence of budget-cutting), and you have a pile of expenses and less money to pay them.
The program’s board is going to ask the state Legislature for more money to help make up the deficit, but given the attitude of the politicians who run things in Montgomery (and in an election year no less), that is a weak reed on which to lean.
The board is also planning to drop participating pharmacies from the program if they do not lower costs. With nearly 300,000 active and retired public employees in the system, the board has a lot of clout, and it should use it.
At the same time, the board needs to take a hard look at what public employees are paying for their insurance.
It is appropriate for the state to subsidize this insurance, but you can imagine the public reaction when learning that active educators pay only $15 a month for individual coverage and $162 for family coverage. Requiring these employees to pay more is not unreasonable.
The board recently took action to replace the two-option plan — single or family coverage — with a four-option plan: individual, individual with children, individual with spouse and individual with spouse and children. How much this will contribute to closing the gap is uncertain, but it is a step in the right direction.
However, the Legislature should not stand by, content to let the public employees solve a problem the Legislature helped create.
Now is the time for the board and key legislators to sit down and plan for a future that will soon be the present.