Gov. Nikki Haley overruled the state legislature Wednesday, raising state health insurance premiums in an unprecedented move that stunned state workers and left lawmakers seething.
The state Budget and Control Board -- at Haley’s request -- voted 3-2 on Wednesday to raise employee health insurance premiums by 4.6 percent. The increase will cost the average state employee an extra $7.24 per month. The increase is for all 234,363 subscribers to the state health insurance plan -- which includes retirees. Including dependents, the plan covers 415,362 people -- 9 percent of the state’s population.
State workers, who are vigilant protectors of their benefits, did not show up to Wednesday’s meeting because it was supposed to be a rubber-stamp vote authorizing what lawmakers had overwhelmingly approved last month: $20.6 million in public money to pay for all of that health insurance increase -- a move lawmakers did specifically so state employees would not have to pay more.
But Haley -- saying “it is unfair for us to ask taxpayers to go and pay for the increase in benefits when we can share it” -- convinced a majority of the Budget and Control Board to overrule the legislature and require state workers to share the increase evenly with state employers.
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“That simply just baffles me. Once the legislators had made their decision, I thought that was the end of it.,” said Ginny Robinson, who retired in June after a 40-year career in state government. “I’m just stunned, to tell you the truth, that the governor would take that position.”
Joining Haley were state Treasurer Curtis Loftis and state Comptroller General Richard Eckstrom. State Sen. Hugh Leatherman, chairman of the Senate Finance Committee, and state Rep. Brian White, chairman of the House Ways and Means Committee, voted against it.
“It is not to us to look behind the action of the General Assembly and decide whether we want to do it or not do it,” Leatherman said. “I’ll never vote to undo what the General Assembly did. I don’t think we or anyone else has the authority to go behind the General Assembly.”
Haley said the Budget and Control Board has the authority to raise the rates because they were acting on behalf of the newly created Public Employee Benefits Authority -- which does have the power to raise rates but cannot meet yet because lawmakers have not yet appointed all of its 11 members. Until that happens, the Budget and Control Board can act in the authority’s place, including raising health insurance rates, according to Paul Koch, general counsel for the State Budget and Control Board.
Hours after the vote, at least two state workers contacted Columbia attorney Dick Harpootlian -- who has filed and won lawsuits for state workers in the past -- wanting to sue the Budget and Control Board.
“We’re going to evaluate whether or not there is legal recourse for these folks who basically have just gotten a pay cut,” said Harpootlian, who is also chairman of the South Carolina Democratic Party. “The Budget and Control Board is a Frankenstein-like creation. I don’t quite understand its legal authority. Hopefully a court will have a chance to rule on that.”
Haley was focused not on how much more state employees would have to pay, but on how much state employers would save. The decision means state employers, instead of paying an extra $20.6 million in taxpayer money for employee health insurance, will instead spend an extra $14.8 million -- a savings of $5.8 million. State employees and retirees will make up the difference starting Jan. 1.
Haley has gone out of her way to support her fellow Republican governors’ crusades against public-sector unions, even flying to Wisconsin to campaign for Gov. Scott Walker’s recall election (which Walker won.) South Carolina does not have public-sector unions, yet many viewed Haley’s action Wednesday as using state employees as a proxy in the national fight against unions.
“It appears the governor continues to have a contempt for public employees,” state Sen. Joel Lourie, D-Richland, said.
But Haley said she was simply “making a statement for the taxpayers.”
“We want state employees to get their benefits. We are going to fight for them to have it,” she said. “But they have to have some skin in the game. They can’t expect somebody else to pick up the tab for them.”
State employees pay 27.5 percent of their health insurance costs, while state employers pay for the other 72.5 percent. That’s slightly higher than the national average for private sector employees who, according to the 2011 Medical Expenditure Panel Survey, pay an average of:
• 20.9 percent for single coverage
• 26.5 percent for employee-plus-one coverage
• 26.4 percent for family coverage
The state’s $6.9 billion general fund budget includes $91.8 million in raises for state workers, including a 3 percent raise for state employees, a 2 percent raise for public school teachers and a 5 percent raise for class I law enforcement officers with annual salaries of $50,000 or less. It is the first raise for state workers since 2007.
But those raises were effectively lowered by a 1.5 percent increase in state workers retirement contributions. And now they will be lowered even more by increased health insurance premiums.
“That’s right,” Haley said. “But ask anybody in the private sector if they got a raise, because most didn’t. Ask anybody in the private sector if they get the benefits that state employees get, because they don’t. And ask anyone in the private sector if they have the extra money to pay for state employees to have benefits -- they don’t.”