Cuts Coming to State Employee Health Plans?

NASHVILLE – Gov. Phil Bredesen said Wednesday Tennessee government-worker medical coverage won’t be spared the budget scalpel, and that benefit-reductions and co-pay increases are cost-savings measures under review in the current fiscal climate.

The $820 million the state spends for employee health care is “a huge piece of the equation” and “a big pot of money…that’s growing rapidly,” Bredesen said during a hearing with Department of Finance and Administration officials. Controlling those costs is “something we need to look at,” he said.

The budget allotment for employee medical benefits “is bigger than our Corrections Department, for example,” said Bredesen, who earlier this week heard prison officials suggest they’ll have to release roughly 3,300 inmates to meet the kinds of reductions in their FY2011 spending plans the governor wants them to prepare for.

“Everywhere else I’m telling people they’ve got to give up six and nine percent, and (the state employee health-benefits package) is coming in at what it is, plus another $65 million,” Bredesen told reporters after the hearing. “I want to provide good health insurance and health care to people, but in this environment…you can’t just let that happen without pulling it apart a little bit and seeing if there are ways you can make it work better.”

Bredesen also said he’s skeptical that substantial short-term budget savings can be realized through creating more employee-incentives for “healthy behaviors,” as one state official suggested might be possible.

“All of this stuff about health behavior is very politically correct,” said Bredesen. It’s nevertheless “very difficult to show it has any effect on health care costs,” he added.

Said Bredesen later: “We’ve talked a lot about preventative care, and there are a lot of things I’m in favor of with all this kind of stuff, (but) it’s not going to change the cost next year. It just isn’t going to do that. I need to change the cost next year.”

Bredesen described “the big-ticket items” in the state budget as TennCare, higher education, K-12, public safety and government health benefits. There’s no balancing the budget “without tackling those in some fashion,” he said.

“I’m just saying, nothing’s off the table,” Bredesen said.