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Committee debates health insurance base for FY2026 amid reserve, risk concerns; no action taken
Summary
Lawmakers debated whether to adopt the governor's $14,300 per-FTE health insurance base or the CEC committee's $13,960 figure for FY2026; neither motion secured both-house majorities and no change was adopted. Staff and actuary testimony highlighted reserve balances and possible risk charges if contingency falls below contract minimums.
Members of the Joint Finance-Appropriations Committee debated two competing proposals to set the health insurance base for eligible full‑time positions for fiscal year 2026. The staff presented two options: a CEC recommendation to set the base at $13,960 per eligible FTE and the governor's recommendation of $14,300 per eligible FTE.
Keith Bybee, the Division Manager in the Budget and Policy Analysis Division, walked members through the cost and the linkage to the actuarial projections: the CEC figure would increase general fund costs by about $29.996 million (total $40.2612 million across funds), while the governor's $14,300 figure would increase general fund costs by about $42.0766 million (total $56.3152 million across funds).
Committee members pressed staff on reserve balances and downside risk. Bybee and DFM Administrator Laurie Wolf explained the Milliman actuarial projection that the CEC recommendation would reduce the contingency reserve to approximately the contractual minimum of 10% of plan costs (projected reserve $51.6 million on a total plan cost projection of about $482 million). Bybee said the governor's recommendation would leave about $10 million more in cushion. Wolf and Faith Knowlton (Office of Group Insurance) told the committee that falling below the contingency minimum could trigger a risk charge by the insurer, and that the 10% minimum represents a threshold the carrier treats as the contractual floor.
Representative Miller moved the governor's $14,300 recommendation; Representative Furness later moved the CEC $13,960 substitute. The substitute motion received 9 yeas and 11 nays overall and therefore failed to obtain the necessary majority from both chambers. The original motion likewise failed to secure a Senate majority; the clerk announced the governor's motion also failed. No change to the health insurance base was adopted during the session.
Committee discussion also noted that choosing the lower premium increase this year could mean having to adopt a larger increase in a future fiscal year if claims rise; conversely, keeping a higher base now preserves reserves but increases near-term cost to agencies and schools.
Ending — Staff said Milliman projections and contract language will guide the next steps. Because neither motion passed, the committee left the health insurance base unresolved for later action or integration with other budget decisions.
