SEHIP executives predict financial turmoil for 2013 fiscal year
The Alabama State Employee’s Health Insurance Plan (SEHIP) may be heading for economic turmoil. SEHIP executives announced this week that they expect the insurance program to spend more money than it collects in the 2013 fiscal year. The plan currently covers 51,000 active and retired public workers, giving them access to affordable health insurance coverage. If the plan faces economic troubles in the future, the cost of the coverage it provides to these consumers may become more expensive, if it is not cut entirely.
Expenses to exceed profit by $48 million
According to SEHIP executives, the insurance program will spend approximately $48 million more than it collects through premiums in the fiscal year of 2013. Expenses are expected to total $424.3 million in this time, while revenues will only reach $375 million, compounded by some $298 million from other state agencies. Executives suggest that SEHIP will survive the 2013 fiscal year by borrowing money from state agencies and digging into its financial reserves, but it may be more difficult for the program to remain sustainable in 2014.
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Attempts to mitigate financial losses could come in the form of reduced benefits and higher premiums
Executives are formulating plans to mitigate the financial strain on SEHIP. Some of these plans focus on increasing insurance premiums, while others aim to cut the benefits provided through the program, while still others are based on a combination of the two. Executives believe it is likely that numerous plans that make drastic changes to SEHIP and the health insurance coverage provided to public workers and retirees will be instituted to ensure the longevity of the insurance program.
SEHIP falls in line with other economically troubled state and federal insurance programs
SEHIP is another in a long line of state-run insurance programs that are facing financial trouble. Florida’s Citizens Insurance group is not stranger to economic stress as it has long spent more than it has collected. This is the case in Louisiana as well. On the federal level, the National Flood Insurance Program has been plagued with financial disaster for several years. While SEHIP is a health insurance program, it is facing the same problems that other state-run program are in that it cannot find adequate balance between providing affordable coverage and turning a profit.