Otter's insurance plan draws fire

Gov. Butch Otter's plan to make part-time state employees pay more is causing pain among public workers who face hundreds of dollars in premium increases starting Nov. 1.

Otter's plan is common among states and the private sector. Nonetheless, state Sen. John Andreason, R-Boise, chairman of the Senate Commerce and Human Resources Committee, calls the move the worst mistake involving state employees that he can remember in his 42 years in government.

And even those who understand the reasoning for the change fault the process followed to make it, saying many employees were caught by surprise.

Despite the critics, Mike Gwartney, the Department of Administration director who made the decision last month in concert with Otter, says the state's move is right for several reasons:

® It helps achieve part of Otter's goal of reducing benefits while increasing state employees' salaries, which he says Otter intends to fight for.

® It brings the state benefits package more in line with the private sector, where the state competes for employees.

® It helps contain costs and will save the state about $10 million annually.

"We are trying to do what's right," Gwartney said.

But doing what's right could cost state employee Zack Gonzales his health insurance.

Gonzales works 20 hours to 40 hours a week at the Idaho State Emergency Medical Service Communications Center in Meridian.

He pays about $30 a month for health insurance. That's what all qualifying state workers insuring only themselves - not family members - now contribute for the health-plan option Gonzales has, whether they're full-time or part-time. But beginning this fall, his share of the premium will rise to $302.50, a 900 percent increase, or most of one of the two paychecks he gets from the state every month.

Gonzales and his companion rely on Gonzales' check for the mortgage on their home. So Gonzales, 23, will choose the mortgage over health insurance. That means medicine he pays only a few dollars for now will cost him $200 a month.

"Come Nov. 1, I'm joining the ranks of the uninsured," Gonzales said. "It's a slap in the face."

Gonzales isn't alone. The change in benefit costs for part-timers could hit about 1,000 employees in state government and at several state universities and colleges. The University of Idaho is not part of the state's health insurance system, but it already requires part-timers to pay a greater share of their premiums, just as the state plans to do.

FEW BUSINESSES COVER PART-TIMERS

Idaho isn't a good state to work in if you're a part-timer looking for medical insurance. Only one in 11 businesses make health insurance available to part-time workers, according to a 2007 survey of fringe benefits by the Idaho Department of Labor.

The survey said employers who do cover part-timers pay an average of 70 percent of the insurance cost for part-timers, compared with 84 percent for full-time employees.

In the Treasure Valley, St. Luke's Health System and Saint Alphonsus Regional Medical Center require part-time employees to pay more for health insurance than full-time employees do. Idaho Power and Boise Cascade do not.

Idaho Power tries to benchmark its benefits to those of other utilities, said Scott Carrell, benefits manager.

The company has 2,050 employees. Fewer than 20 are part time, and most of them take the company's health insurance, a spokeswoman said.

At Boise Cascade LLC, where Gwartney retired as vice president of human resources, salaried employees must work 30 hours a week to qualify for health benefits. Employees who work 30 to 40 hours pay the same amount in health premiums, said John Sahlberg, vice president of human resources and communications.

Gwartney considered using the Boise Cascade approach for state employees. But that would have eliminated benefits for hundreds of employees who work less than 30 hours a week, Gwartney said.

Instead, the state is moving to a bracketed plan, where employees working 28 to 35.9 hours a week pay 20 percent of the cost of their premiums, and employees working 20 to 27.9 hours pay 40 percent of the premium.

STATES SWITCHING, TOO

A number of states also differentiate between full- and part-time employees when it comes to paying for health insurance.

"It is a fairly widespread practice in the private sector, and I believe a number of public sectors have formulas that scale back," said Richard Cauchi, program director for health programs at the National Conference of State Legislatures.

A budget crunch in Texas in 2003 led that state to increase health insurance premium contributions for state employees who work less than 40 hours. They now pay half the cost, said Mary Jane Warlow, spokeswoman for Texas' Employee Retirement System.

In Florida, part-time employees pay a larger share based in part on the number of hours they work. Florida officials say part-timers get the same health benefits as full-timers, even though they work less. "They are asked to make up some of the difference," said Leticia Nazario-Braddock, with the Florida Division of State Group Insurance.

'VERY DISAPPOINTED'

Gwartney's decision to increase part-timers' health insurance costs led state Sen. Kate Kelly, D-Boise, to seek an attorney general's opinion earlier this month on whether the state could make such a move without legislative approval.

Lawmakers didn't need to approve the change, the attorney general said.

"I'm very, very disappointed," Andreason said. Many of the employees affected by this decision aren't part-time because they choose to be, he said. "These are people who are working these hours because these are the hours we want them to work," Andreason said. "This is for the state's convenience."

Sen. Charles Coiner, R-Twin Falls and vice chairman of Andreason's committee, disagrees. The state has been working to get a handle on its benefits, he said. "I think it is really pretty generous," he said.

But some state workers say they didn't know the change was coming. Gwartney convened a task force that met seven times in 10 months. Once he reached a decision, he said, he briefed legislative leaders in the closing days of the session. He sent out a memo to department heads in mid-May.

The timing of the memo coincided with the open enrollment period for state employees to sign up for benefits, Department of Administration officials said.

But Zack Gonzales learned of the change only through another employee a few weeks ago. "Nobody knew anything about that," he said.

Gwartney said that even with the increased costs, people are still getting a lot of health coverage for the money.

"In the final analysis, we are still paying 60 percent of the cost of the lower bracket," Gwartney said. "If you went out on the street and bought our coverage, it's a heck of a deal still."

Bill Roberts: 377-6408