Audit: Nebraska Employee Insurance Costs High

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The state auditor says the employee insurance plan is way too expensive, with millions of dollars at stake.

Auditor Mike Foley released the findings of an in-depth look into the state's employee health insurance costs.

He says Nebraska is spending too much.

It's one of the most expensive plans in the country.

He cites reasons like inefficient plan design, high administrative costs and poor program monitoring.

Foley says around 200 people currently being covered aren't eligible.

He cited one woman who stopped worked for the state 17 years ago, saying "She hasn't worked a day in 17 years. Her doctor has cleared her to work, with certain restrictions. She could come back to work. She has not, yet she still carries her blue cross card. She's still having all her medical bills paid."

Carlos Castillo, the Director of Administrative Services who oversees the program, says there's a reason.

Castillo says, "She was injured on the job, she happens to be blind as a result of her injuries. We believe changing a legal agreement that happened 17 years ago at this point could open up the state to potential legal liability and so we just have a disagreement."

That's not the only disagreement.

The state has a fund to pay claims, but Foley says at $64 million, it's too high.

Foley says, "It's better to have too much in your fund than too little, but too much in your fund also costs you money because what that means is you're setting your premiums too high, you're over-collecting from the employees."

But Castillo says for a $160 million program, the fund is reasonable, saying "We think it's been very appropriate to have that kind of balance and we adjust it year to year as things change and we continue to monitor it on a year to year basis to make sure that our balance is appropriate for our fund size."

Foley says the plan is inefficient and administrative costs are too high, but Castillo says they're moving in the right direction and have made a number of positive changes not reflected in the audit.

The state health insurance program covers 29,000 state employees and dependents. The state pays 79 percent of the premium costs, while employees cover 21 percent.