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South Carolina Professor Files Suit Over Health Insurance Hikes for Public Workers

Source: CBC Money Watch

Posted on 15 Aug 2012 by Neilson

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Public Workers Health InsuranceUniversity of South Carolina professor has filed a class-action lawsuit against a state panel for raising public workers' health insurance premiums in spite of lawmakers' agreement to foot the bill in the state budget.

The lawsuit by Thomas Bryson, a USC chemistry professor and graduate studies director, alleges the Budget and Control Board lacked the authority to raise employees' premiums. Legislators agreed in the state budget to provide money for agencies, school districts and public colleges to fully cover the premium hikes.

But Gov. Nikki Haley, chairwoman of the board, convinced a majority last week to disregard the budget and split the cost of the hikes between employers and workers. The board voted 3-2 to raise rates on both by 4.6 percent starting Jan. 1.

On average, agencies will pay an extra $19 monthly, while employees and retirees will pay $7 more. Specific amounts by plan are not yet determined.

"It's not about the money," Bryson's attorney, Michael Medlock of Edgefield, said Tuesday. "It's about the principle of law and following the rule of law. The issue is government taking the proper steps and doing things right."

The lawsuit filed Monday in Richland County court seeks to represent the more than 234,000 public workers and retirees who have health insurance through the state health plan. A total of 415,310 residents are covered through the plan, when including spouses and children.

The lawsuit asks the court to block the hikes from taking effect. It argues that the board could not legally make changes to employees' insurance program — since a law signed in June gave that authority to a new agency — and even if it did, the board couldn't ignore the budget and raise rates.

Lawmakers agreed to fully cover the premium hikes as part of a larger compromise on worker pay.

After four years with no raise, legislators wanted to provide workers a noticeable increase in their paychecks. The final budget increased most state workers' salaries by 3 percent, but also required them to contribute more toward their retirement. It also distributed the necessary $20.6 million to agencies and schools to fully cover premium hikes.

"What we have is another state agency saying we're going to ignore that," Medlock said.

In her executive budget proposal, Haley provided no raises for public workers. However, her line-item vetoes of legislators' budget didn't touch the raises or insurance coverage.

"We will always work to take care of state employees — which is why we signed off on their raises this year — but we also believe everyone should have skin in the game. The taxpayers of this state should not have to pick up the tab for 100 percent of the increase," Haley said Tuesday. "Last week, we required employees to share 50/50 in their health insurance increase, and while our action has caused an uproar, this is just common sense and not too much to ask."

The vote to split the increase means there's a $5.8 million surplus in the budget. There's no mechanism for it to directly benefit taxpayers. It would mark the second consecutive year that premium hikes were split between agencies and workers.

The law reforming public pensions gave oversight of employee retirement and insurance programs to the new Public Employee Benefit Authority, separating those duties from the budget oversight board. Haley and her attorneys have said the board was legally acting on behalf of that agency's board, since its members are not yet in place.

By law, health premium rates must be approved by Aug. 15, to prepare for open enrollment in October.

The vote has been considered procedural.

The budget board's various tasks include preventing a shortfall by making across-the-board cuts to agencies if revenues dip below projections. But its decision to ignore the budget when the money is there is believed to be unprecedented.

Last Thursday, House Speaker Bobby Harrell predicted that a class-action lawsuit would be filed. He also predicted a costly loss for the state.