December 7, 2023

Keeping Media and Government Accountable.

Gov. Kelly misleads on employee insurance premiums, media play along

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The Topeka Capital-Journal ran a news story about Gov. Laura Kelly’s claim that state employees’ had been ‘bearing the brunt’ of rising health insurance premiums due to ‘mismanagement’ by the Brownback administration, but a little digging would have shown a rational basis for the premium changes.

The story begins, “Gov. Laura Kelly supports moderation — perhaps a reduction — of state employee health insurance premiums following years of massive rate hikes that covered diversion of millions of dollars in state payments from the health insurance fund to shore up a budget ravaged by declining tax revenues.”  (That editorial-like comment – “ravaged by declining tax revenues” – doesn’t belong in a news article and it’s also misleading. There was a single year that tax revenue declined (2014) and the budget problems after that resulted from not adjusting spending to match revenue and further spending increases.)

The state did shift more of the burden onto employees beginning in 2016, but it was prompted by two practical policy reasons dealing with taxpayer fairness and having appropriate reserves.

The state’s share of premiums was much higher than the national average as calculated by the Kaiser Family Foundation, a non-profit organization focusing on national health issues that counts former governor Kathleen Sebelius among its board members.

In 2010, the state paid 94 percent of the cost for single coverage and employees paid 6 percent, while the national average was 81 percent for the employer and 19 percent for the employee.  The national average for the employer share of family coverage was 70 percent, but the state of Kansas paid 77 percent of the cost.  Those disparities meant the state, and ultimately, taxpayers were spending $29.8 million more annually than if employees were contributing at the national average.

According to Dave Trabert, president of Kansas Policy Institute (which owns The Sentinel), conversations about the disparity between the national average and what the state contributed to employee insurance premiums began years before the Brownback tax cuts.

“KPI first collected the data in an Open Records request in 2010, and we started the conversation with (former) State Budget Director Steve Anderson shortly after he took office, about two years before the tax plan went into effect,” Trabert said.

By 2015, taxpayers were spending $40.5 million extra because of the disparities. The state was paying 97 percent for single coverage and 83 percent for family, while the national averages were 83 percent and 72 percent, respectively.  In 2016, the state held its premium contribution flat and began increasing employee contributions. The state has since increased its annual contribution, but employee premiums increased more, and now the state is ‘only’ paying $7.7 million more than if employees were contributing at the national average.

Today, the employer/taxpayer share more closely mirrors the national average. For a single employee, the state pays 89.5 percent of health insurance premiums compared to the 82.9 percent national average. For family coverage, the state pays slightly less than the national average, 71.2 percent compared to 71.7 percent.

J. Scott Day, a member of the Kansas State Employees Health Care Commission appointed by Governor Brownback, tells The Sentinel he didn’t want to be interviewed for the Cap-Journal article, saying he recognized he was being asked to play a part in a hit piece. But he did tell them, and they reported, there was “nothing nefarious” about the commission’s previous decisions and there was a “very good reason” for past directives to that fund.

Day may have been referring to the fact that the reserve fund balance of $194.7 million in 2014 was six times greater than needed to meet the actuarial target of $31.6 million for unpaid claims.  The actuaries also recommended having $23.2 million set aside in case there was an unexpectedly large increase in future claims. The reserve currently totals $49 million, almost exactly what the actuaries recommend for meeting unpaid claims ($29 million) and a hedge against unexpected claims ($21.3 million).

Anderson says the state was overpaying based, in part, on actuarial charts that weren’t a good fit for the demographics of the state workforce.

“Most of the state workforce doesn’t do jobs that will result in injury,” Anderson said.

Former Kansas Insurance Commissioner Ken Selzer sat on the Kansas State Employees Health Care Commission throughout his term in office, 2014-2018.   He rejects the notion that the commission’s actions were driven by disdain for employees or the tax plan.

“What was done and what was put into place before I entered office was an effort to better manage the fund and the premiums so they would be more actuarily sound,” Selzer said.

The Topeka Capital-Journal’s hostility toward former Governor Brownback and efforts to reduce the tax burden on citizens is front and center. “But the arrangement placed on state workers added burden for consequences of tax cuts championed by Brownback that nearly crippled state government,” they wrote without attribution.  The facts show the commission worked to balance fairness between employees and taxpayers, and also reduced unnecessarily high reserves.

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