Raising rates the same as raising taxes

By Craig FordBy Craig Ford

Mismanagement.

That is the only word to describe the state’s decision this week to raise insurance premiums on state employees instead of choosing to tap into the board’s reserves for next year.

It would be one thing if this were a small increase or if there were no other options. But this is not a small increase we are talking about. This decision will raise premiums for state employees, and increase co-pays by 43 percent!

Additionally, this decision added new charges, such as a new monthly spousal surcharge of $50, and increased the co-pay for vital health services like outpatient surgery and emergency room services.

By raising these costs, the Republicans are, in effect, raising taxes on law enforcement officers, firefighters, the people who run our courts and government agencies like Medicaid, and other public servants. This has happened because of rising health care costs and disastrous mismanagement of our state government by the Republican Supermajority in Montgomery.

The real shame is that most of this could have been avoided.

It is no secret that the Republican Supermajority in Montgomery has targeted state employees over the past three years. Since taking over the legislature, Republicans have cut pay for public employees by 2.5 percent on top of being passed over for a cost-of-living pay increase (which is another 7.5 percent pay cut) and eliminated the DROP program that kept experienced administrators and public servants in office.

Two years ago, the Republicans in Montgomery tried to remove public employees representation from the board that oversees their retirement funds. Fortunately, that effort failed.

Over the past three years, Republicans have eliminated 3,000 state employees jobs and left our government in such disarray that even Judge Roy Moore, by no means a liberal man, has publicly said that without more funding, our judicial system could loose 300 more employees and endanger our courts’ ability to continue operating.

Republican leaders bragged about these lost jobs and called it “rightsizing” state government. But the truth is that the loss of these jobs is part of the reason our insurance costs have gone up.

For more than 20 years, I have made my living in the insurance business. And the way insurance works is that costs go down when more people participate, and they go up when fewer people participate in the system.

There are two reasons why this happens.

First, the more people you have participating in a system, the more the risks are spread out. Spreading out the risks lowers the expense to insurers and therefore lowers the costs to the consumer.

Secondly, more people participating in the system means more money being paid to the insurer, which lowers the expense to the insurer and, again, lowers the costs to the consumer.

But because Republican leaders have eliminated 3,000 jobs over the past three years, there are now 3,000 fewer people participating in the system. That means less money coming in and more risks being assumed by the insurer, and that equals higher costs.

So not only has the loss of these jobs hurt our economy (these 3,000 people cannot buy things from local businesses or invest their money if they don’t have a job), but now it is also impacting the costs of health insurance for the state and public employees.

But here’s another way of looking at this situation: raising health care premiums and co-pays for state employees and adding new fees and charges is the equivalent of a tax increase. And it comes after state employees have been passed over for a cost-of-living pay increase and even had their pay cut by 2.5 percent.

This could have been avoided. If state leaders had not eliminated these 3,000 jobs and the insurance board had chosen to tap into their reserves instead of raising rates, then we could have kept the costs down and spared these public servants from, in effect, a massive tax increase.

Once again, Republican leaders in Montgomery have chosen to target working families and public servants instead of doing what’s right. It is time for state leaders to take responsibility for their decisions and poor leadership.

 
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