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Since 1972, advocating for the rights and value of South Dakota state employees.

First week of 2014 session: a state health plan that hardest hits those who can least afford it

Monday, January 20, 2014
The first week of the 2014 South Dakota Legislative Session, the 89th session in South Dakota history, started with the South Dakota Joint Committee on Appropriations taking state government employee proposals. The committee heard from the Bureau of Finance and Management's commissioner Jason Dilges and Bureau of Human Resources commissioner Laurie Gill. The Thursday BFM testimony was pretty much laid out in Gov. Daugaard's state budget address, and showed raises in compensation. The slides used are here. Compensation is on page 11. Below is a chart based on info from page 11:

Recommended Increases
                           General Federal      Federal           Other
3% Across the Board and
Market Increases                                          $9,772,471         $5,442,344   $11,678,982
3% Adjustment Toward Job Worth (PACE)      $2,797,040         $1,346,040    $1,828,3780
4.5% Pay for Performance (Career Bands)       $585,673              $544,366    $1,587,957
Targeted Compensation Adjustments               $454,727             $224,340      $304,730
Employee Health Insurance Increase              $6,756,462          $3,902,062    $7,286,652
Total Cost of Recommendation                      $20,366,373        $11,459,152   $22,686,699
Remaining FY2014 Compensation Pool           $(32,711)             $(190,766)     $(464,725)
Total Increase for Compensation Plan             $20,333,662        $11,268,386   $22,221,974

So we see that the proposed salary policy leads to a raise in compensation across the spectrum. But the Friday BHR-centered hearing showed that raises in compensation may have been proposed, but so have increases in deductible and out-of-pocket costs for the employee and dependents. That proposal would see families paying prohibitively more for health care. The slides used are here.

Under the BHR proposal, deductibles would rise from a low of $500 to $750, and from $1,000 to $1,250 (no change on $1,800 HSA). And out-of-pocket costs would rise from $2,500 to $3,250, from $3,500 to $4,250, and from $3,600 to $4,350. In addition, higher prescription drug costs, the halving of the retirement subsidy, and the elimination of the COBRA subsidy were offered. Altogether, it totals $5.8 million, and that's all born by the employees, straight out of their pockets. That's a problem.

The worst of it is, though, that these costs would disproportionately affect the lowest paid workers. I think of the families that really comprise the backbone of South Dakota, those helmed by heads of household earning less than $40,000 per year. I'd say most of those families have children, and you know how it is to be a parent: children regularly go to the doctor. Then I imagine having to pay an extra $250 per person for the deductible (so, at least an extra $750 to $1,000 per family), and $750 per person for the out-of-pocket (about $2,250 to $3,000 per family). That all adds up to an extra $3,000 to $4,000 per family per year. As far as family finances are concerned, that's a catastrophic health plan. And for families in the $20,000 to $60,000 range, it's just catastrophic.

The SDSEO will be working hard to see that legislative amendments or other remedies are made. We need your help. One thing you can do is join the SDSEO, as we need your voice with us in the Capitol. Another thing you can do is talk about the SDSEO, and how we're working for you: spread the word about the SDSEO. Yet another thing you can do is talk to your district legislators; you can find them here. An email, phone call, visit, or letter about your concerns goes for more than a session's worth of lobbying by the SDSEO.

Categories: Appropriations Committee, Bureau of Finance and Management, Bureau of Human Resources, Legislative, Movement to Job Worth, Retirees
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