The House all but unanimously voted to raid the Savings Reserve Account (rainy day fund) to cover $100 million of the the now $250 million deficit in the State Health Plan. The Senate wants to raise co-pays and deductibles to fill the gap.
There are at least three important issues in this debacle:
- Transparency and Oversight – Nobody still knows how or when the expected $50 million surplus turned into a $65 million deficit, then a $250 million deficit. The State Health Plan’s financing is a black box that has had little oversight from the legislature or the governor.
- Fiscal Responsibility – The final budget put no new money into the rainy day fund and a $100 million withdrawal will leave it at about three percent of General Fund spending – far too little to get through an economic slowdown and the accompanying fall in tax collections.
- Plan Design – The state already has a $24 billion unfunded liability to provide health benefits to current and future retirees. This shortfall illustrates the problem of relying on one’s employer and the state to provide for one’s health. State employees and teachers are at an advantage in that they are a relatively small portion of the working population, so legislators can use the rest of the state to offset the shortfall in paying for their care, but Massachusetts’ has a similar problem subsidizing insurance under its universal coverage plan. Too many individuals have had too little incentive (through high taxes and excessive regulation) and too much scaremongering from the Left to consider purchasing insurance on their own.
Daren has also brought up the separation of powers question in the legislature’s firing of George Stokes. This again raises the question of what Gov. Mike Easley does when not on state aircraft or trips to Europe.
