Amid projections that the state’s medical insurance plan will cost an additional $73 million next fiscal year, some lawmakers want to add new groups to the rolls – not all of whom are public employees.
Three Senate bills introduced recently would extend the state’s health and dental plan to the staff of the South Carolina Athletic Coaches Association; employees, dependents and retirees of joint municipal power agencies; and employees, dependents, and retirees of special-purpose sanitation districts.
The coaches’ association, which has three full-time staffers and typically employs two other workers in the summers, is a nonprofit organization. The other two groups, which are larger, are considered public bodies under state law.
A Senate Finance subcommittee chaired by Sen. Billy O’Dell, R-Abbeville, who is the main sponsor of the coaches’ association bill (S. 524), voted Tuesday to put that measure on hold after the director of the state Employee Insurance Program informed the panel that including a private organization in the state health plan could result in expensive federal regulations.
Stephen Van Camp, the EIP director, said during the hearing that he wasn’t aware of any private groups covered now under the state health plan. But The Nerve later found that under state law, at least five nonprofit organizations are eligible for coverage under the plan.
Sen. Glenn Reese, D-Spartanburg, said during the hearing that the coaches’ association should be made a government agency.
“I agree, but I don’t know how you would do that,” O’Dell replied laughingly.
Asked afterward about Reese’s proposal O’Dell told The Nerve: “That’s just talk. We’re going to look at any way to help the folks, but right now I’ve got to do more research.”
Reese, a former public school teacher, also said during the hearing he believes that the state health plan should cover local school boards.
The subcommittee in separate voice votes approved including joint municipal power agencies and special-purpose sanitation districts in the state health plan. Those bills will be referred to the full Senate Finance Committee.
The state health plan, administered by BlueCross BlueShield of South Carolina, insures more than 400,000 individuals, more than half of whom are employees or retirees; the remainder are spouses or children, according to information from the S.C. Budget and Control Board, which oversees the EIP.
The plan last fiscal year cost more than $1.3 billion in employer and employee premiums –a $105 million, or 8.5 percent, hike over the previous fiscal year, figures show. When other state insurance products, such as dental and vision coverage, are included, the total premium cost last fiscal year was about $1.7 billion, an increase of about $74 million, or 4.6 percent, over the 2009 fiscal year.
The state health plan is projected to cost about $73.1 million more for next fiscal year, which starts July 1, according to EIP figures. That includes nearly $30 million in increases for the last half of this year, about $23 million in projected employer premium increases for the first half of 2012, and more than $20 million for new retirees with state-funded benefits.
Nonprofits Covered Under Plan
Besides county, municipal and school district employees and retirees, the state health plan by law offers coverage to more than two dozen other groups.
The Nerve’s review found that at least five of those groups designated in federal tax filings as nonprofit organizations are eligible under state law for state health benefits, including the:
- S.C. Association of School Administrators;
- S.C. School Boards Association;
- Palmetto State Teachers Association;
- S.C. Student Loan Corp.; and
- PalmettoPride
When O’Dell asked Van Camp during Tuesday’s hearing whether any private groups were covered under the plan, Van Camp responded, “Not as far as we know, and certainly that’s something that we, as part of the vetting process, make sure that an entity is government-owned.”
The Nerve after the meeting attempted to get clarification from Van Camp, a Budget and Control Board employee, about his statements. BCB spokeswoman Lindsey Kremlick in a written response said the state health plan is “obligated” to cover groups listed under state law “regardless of whether the (federal) exemption might be affected.”
Kremlick also said that Van Camp “does not recall testifying that there were no private entities in the plan,” though The Nerve audiotaped the hearing.
At the S.C. Schools Board Association, its 35 full-time employees are “eligible to participate in the state health plan, but not all elect to do so,” association spokeswoman Debbie Elmore said in a written response to The Nerve. No premiums are paid by the state, she said.
Molly Spearman, executive director of the S.C. Association of School Administrators, told The Nerve in a written response that it was her “understanding that the association was one of several that joined the plan years ago at a time when the state needed participants.” She said her nonprofit organization has six employees.
The S.C. Athletic Coaches Association, which rents an office in a Greenwood public school, is a private, nonprofit organization, federal tax filings show. Executive Director Shell Dula, a former longtime football coach, told The Nerve before Tuesday’s hearing that having state health coverage could help attract a future director and other future staff who might not be already on the plan.
“We’re trying to look long term, and right now, our hands are tied,” said Dula, 63.
Dula said there would be no initial cost to the state health plan if his staff were covered, noting that he, two other full-time staffers including his wife and two summer workers already are on the plan, either as retired or current school district employees, or spouses covered under the plan.
Dula said the bill, filed Feb. 9 and co-sponsored by Sen. Floyd Nicholson, D-Greenwood, would cover only his staff, not the approximate 5,300 coaches statewide who are association members. Most of the member coaches already are covered by the state health plan because they are public employees, he said.
During Tuesday’s Senate Finance subcommittee hearing, Van Camp said South Carolina is exempt from federal regulations governing private health insurance plans. But he warned lawmakers that adding the coaches’ association to the state health plan could result in a loss of the exemption.
“It’s a very expensive, very cumbersome bunch of regulations we would become subject to at that point,” Van Camp said.
Contacted last week by The Nerve, Sen. Wes Hayes, R-York and a member of Finance Committee who is not on O’Dell’s subcommittee, said he has concerns about the bill.
“If you could do it for this, it could open the door for other (private) groups,” Hayes said. “I think it’s going to be tough to expand it even if you have a legitimate group.”
Other Groups Seeking Coverage
Hayes is the sponsor of another bill (S. 586), which is co-sponsored by O’Dell, that would extend state health benefits to joint municipal power agencies. The only such organization in the state is the Piedmont Municipal Power Agency, which provides electrical service to 10 member municipal utilities in the Upstate.
“They are different from the coaches’ association,” Hayes said, noting the municipal group is a public agency.
Coleman Smoak, Piedmont’s general manager for the past four years, told The Nerve that his agency is seeking a new insurance carrier because the South Carolina Local Government Assurance Group, a self-insured program administered by the Municipal Association of South Carolina, is “going out of business” as of June 30.
The total insurance premium costs last year for the agency’s 12 employees, including Smoak, were $86,782, Smoak said.
Piedmont, which incorporated in 1979, initially was eligible to participate in the state’s retirement system, though it chose not to, Smoak said. Had it done so, he explained, it automatically would have been eligible to participate in the state health plan as well, but legislation is now needed to accomplish that.
Smoak said if Piedmont becomes part of the state health plan, the agency, not the state, would be responsible for paying any premiums. Currently, employers contribute about 72 percent of the state health plan’s total premium costs; and of those contributions, about 54 percent are state funded, according to Budget and Control Board figures. Employees contribute about 28 percent of the plan’s total costs.
Smoak said his organization approached Hayes about drafting the bill, which was introduced on Feb. 17. Hayes said it won’t be easy to pass the bill in a year when lawmakers are struggling to fill an unprecedented budget hole for next fiscal year that is projected to be about $700 million.
“This will get close scrutiny,” Hayes said.
The third bill (S. 560), filed on Feb. 15, would extend the state health plan to special purpose sanitation districts. Sen. Mike Fair, R-Greenville, told The Nerve last week he introduced the bill on behalf of the Greater Greenville Sanitation Commission, a special-purpose district that provides garbage and recycling service to unincorporated areas in Greenville County.
Fair, a Senate Finance subcommittee member, said he was informed that the Greenville sanitation district, which he noted is self-insured, would save money by switching to the state health plan, and that the state would not be responsible for any of the premiums.
“This is a win-win proposition,” he said. “I’m glad to help them to save money.”
Fair didn’t know specifics of the potential cost savings, referring those questions to Edwin Marr, the commission’s executive director.
“I won’t vote for my own bill if it costs anything,” Fair said. “We just can’t add anything new, no matter how much it sparkles.”
Contacted this week by The Nerve, Marr said switching his 140 employees to the state health plan would be a “major cost savings to us,” estimating the annual savings would be about $660,000.
Marr said his agency is the only special-purpose sanitation district in the state, and that other types of special-purpose districts already are covered under the state health plan.
“I think simply it was an oversight to not list us,” he said.
Reach Brundrett at (803) 254-4411 or rick@thenerve.org