The heads of the boards overseeing Alabama’s two health insurance plans for public employees said Monday they were looking at potential losses and the possible need to use reserves in the coming future, which could lead to increased costs.
Representatives of the of the State Employees Insurance Board (SEIB), which oversees the state employees’ health insurance plan, told lawmakers at the first meeting of the State Employee & Education Health Insurance Joint Interim Study Commission that they have a projected loss of around $20 million for Fiscal Year 2025, due in part to the number of retirees growing as the state workforce shrinks.
William Ashmore, the chief executive officer of SEIB, and Sally Corley, the chief operating officer, said they had reserves to cover that loss. But in fiscal year 2026, he said, the loss will be around $37 or $38 million and the reserves will be depleted.
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“We are at a point where you have to start addressing ‘Are we going to do any changes on the funding side of it?’ Or are we looking at having to make some big changes on the expense side?” Ashmore said.
Dave Wales, director of the Public Education Employees Health Insurance Plan (PEEHIP), which oversees the health insurance plan for education employees, gave a similar presentation, where he said fiscal year 2025 will be the first year PEEHIP is projected to go into reserves.
“We are beginning more difficult financial challenges in the future,” he said. “But I don’t think that calls for panic at this point.”
The State Employee & Education Health Insurance Joint Interim Study Commission will explore the the two systems of insurance – which cover state employees and education employees, respectively – and look at the possibilities of combining the two.
“We’re not here to force unification,” said Albritton. “This is not a shotgun wedding. This is a matter of where we’re trying to reach a means together. You guys are professionals. We, many of us here, are part time legislators that have to make decisions based on facts that we have. Most often we are surrounded and swamped by many ideas brought forward in legislation that may not be completely thought out or understood not just by us, the perpetrators, but by others until we get completed.”
PEEHIP is funded through the Education Trust Fund, the state’s education budget. SEIB is funded by the General Fund, the budget for non-education expenses.
SEIB officials expressed concerns about a shortfall last year and raised the prices of some services, including hospital deductibles.
Members heard presentations from representatives from the two systems and asked questions about the future and differences between the program.
Corley showed lawmakers a chart that depicted the reserves – or “carry forward” funds – of the program depleting after the pandemic. The reserves were made up of federal funds.
“If we did not have those dollars in 2023, our carry forward balance would have been extremely low,” she said.
Albritton suggested meeting the week of September 9. He said the goal was to work on a timeline to be done by next February.
“I’d like to have this done before we started dropping bills in February, at least,” he said.
