State to cut some off public employee health benefits

The state of Minnesota is terminating health insurance coverage for about 3,100 family members of state employees.

The action comes after the state conducted an audit to determine whether anyone was improperly receiving benefits. Supporters of the audit say it is proof the program is working, and that it could save the state millions of dollars.

When state lawmakers and Gov. Mark Dayton finally reached a budget deal to end last year's government shutdown, it included a requirement for an audit of 34,000 Minnesota employees to determine that their children, spouses and other dependents were actually entitled to state health insurance.

The state contracted with an outside consulting firm to conduct the audit. State employees were required to submit tax returns, birth certificates and marriage licenses to prove that their family members deserved to be covered. The audit found that 3,100 people, roughly 4 percent of the 75,000 state employee dependents, are actually not eligible for the health insurance they're been receiving.

"Anytime you scrub a large program, you're going to find some mistakes. You're going to find some things that you wouldn't have necessarily expected," said Management and Budget Commissioner Jim Schowalter. "And that's what we found."

Schowalter said the findings are consistent with what the consulting firm predicted it would find. He cautioned against suggesting any state employees were engaged in intentional wrongdoing.

"It's not fraud. What we do know is that some people may have grown old enough that they're no longer dependents. They may have chosen to not continue coverage because they have coverage from other sources," Schowalter said. "There are a whole lot of reasons why people may have intentionally or unintentionally responded to the audit."

For example, Showalter said children of state employees may have passed the age of 26 and are no longer eligible for state funded health insurance. He said grandparents may have mistakenly assumed some grandchildren were eligible. Schowalter also said 770 state workers didn't respond to the audit, resulting in 1,600 dependents losing their coverage. He said he expected the total change would result in a savings of about $10 million.

"We're looking at a situation where we spent $400,000 and saved up to nearly $10 million. I think anybody would say that's a fantastic return and worth doing," said Sen. Dave Thompson, R-Lakeville, pleased by the amount saved by the audit.

Thompson was the chief backer of the amendment. He said the program vindicates his belief that people were getting state benefits when they shouldn't have been.

"In these times of pressure on the state budget and the like — we have to do the things that we can to save money where money should properly be saved," Thompson said. "I think everybody would agree that if we're paying out nearly $10 million to provide health insurance to people who are ineligible, that would not be a good thing."

Thompson would not say whether he believed anyone was engaging in fraud. Jim Monroe, who directs the Minnesota Association of Professional Employees, downplayed any suggestion that state workers were knowingly enrolling ineligible family members in the benefits program.

"We won't accept fraud. I don't believe that anybody intentionally defrauded. I think as the dust settles on this, we're probably going to find misunderstandings. Children aged out and weren't aware. Divorces," Monroe said.

Management and Budget officials with are still compiling the data and say a full report on the audit will be released in the next month.

Eliot Seide, who directs the state employee union AFSCME Council 5, said he thinks many employees got in their applications late and their dependents unfairly lost their benefits.

"We had people try to track down birth certificates and marriage certificates. We think there needs to be more discussion. We think the list can be smaller," Seide said. "We know that people got the material in, but it just missed the deadline."

Officials with Management and Budget say people who were disqualified for state employee health insurance coverage will be eligible to continue health insurance at the employee's expense. They say anyone who can justify that their dependents were wrongly disqualified can reapply for health insurance during open enrollment in the fall.