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Obamacare to Boost Costs for State Insurance Plan

January 15, 2013 - 6:00pm

The federal Affordable Care Act is expected to add tens of millions of dollars in costs to Florida's state-employee health insurance program, leading some lawmakers to float the possibility of shifting more expenses to workers or tinkering with benefits.

"We certainly still have budget problems in the state of Florida,'' Rep. John Wood, R-Winter Haven, said Wednesday as a House select committee heard a presentation about the issue. "We have a lot of competition for our revenue."

A major part of the increase stems from an Affordable Care Act requirement that the state offer insurance coverage to people who are considered temporary employees but work more than 30 hours a week. Under current state law, those people -- known in Tallahassee-speak as "other personal services,'' or OPS, employees -- are not eligible for coverage.

Estimates indicate that adding coverage for the OPS employees and carrying out other parts of the federal health overhaul would cost the state-employee insurance program about $72.8 million during the upcoming 2013-14 fiscal year. That number would grow to $137 million in 2014-15, the first full fiscal year in which most of the Affordable Care Act would be in effect.

If Florida does not offer coverage to OPS employees, it could get hit with an estimated annual penalty of $318 million under the federal law. That is because of a requirement that large employers offer coverage to employees who log 30 or more hours a week.

The addition of OPS employees is one of several factors expected to increase costs for the insurance program. Another example centers on state employees who are already eligible for coverage but do not sign up. With the federal law requiring most Americans to have coverage starting in 2014, at least some of those employees likely will join the state insurance plan.

The House select committee, which began studying the Affordable Care Act this week, heard three hours of testimony Wednesday that focused on how the law will affect the state insurance program and businesses. Lawmakers this spring are expected to consider proposals about carrying out the law, which Republican leaders largely refused to address for more than two years after President Obama and congressional Democrats approved it.

The state-employee health insurance program is a closely watched issue in Tallahassee, as it provides coverage for about 300,000 workers, their family members and retirees. During the current fiscal year, the program is expected to cost a total of $1.9 billion, with the state paying about $1.4 billion and enrollees picking up the rest of the tab.

Members of the select committee did not offer proposals for dealing with the extra costs stemming from the Affordable Care Act.

But ideas mentioned included requiring employees to pick up more costs through such things as increased premiums, co-payments or deductibles. Another suggestion was to make changes in what was repeatedly referred to as the state's "rich" benefits package. For instance, that could involve offering a scaled-down plan for OPS workers who would enter the program.

Rep. Travis Cummings, R-Orange Park, said he continues to "wrestle with" the affordability of the overall changes in the federal law.

"One of the myths is the word, 'affordable,''' Cummings said.

Stuart Rachlin, a consulting actuary with the firm Milliman Inc., told the committee that numerous questions remain about how the law will affect employers. Those questions also differ for large employers, such as the state, and small businesses.

"There's so many moving pieces,'' Rachlin said. "It's a very fluid environment."

Two small-business owners, who help provide coverage for their employees, told the committee about grappling with the law.

David Hurley, president of Landmark Engineering & Surveying Corp., in Tampa, said he is trying to figure out how to expand his business without topping 50 employees. That is because businesses over that threshold are considered large employers and face additional requirements under the Affordable Care Act.

"The idea of going over 49 just scares me to death,'' Hurley said.

But Karen Woodall, executive director of the Florida Center for Fiscal and Economic Policy, told the committee that expanding eligibility for the state's Medicaid program could help low-income workers and benefit many small businesses. The Affordable Care Act calls for raising income-eligibility levels in the Medicaid program, though it is unclear whether Florida lawmakers and Gov. Rick Scott will carry out such an expansion.

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