Anniston senator seeks merger of state health insurance boards
by Tim Lockette
tlockette@annistonstar.com
Apr 17, 2013 | 4612 views |  0 comments | 11 11 recommendations | email to a friend | print
MONTGOMERY — State Sen. Del Marsh, R-Anniston, wants to merge the state boards overseeing two state health insurance plans — one that covers teachers and one that covers other state employees.

"It doesn't make any sense to have two boards for state employees," Marsh said.

The Senate Finance and Taxation Education Committee voted Wednesday to approve a bill by Marsh that would abolish the State Employees Insurance Board, which oversees the health insurance plan for state employees in most agencies, and the Public Education Employees Health Insurance Board, which oversees the health plan for teachers and other education workers.

In its place, the bill would establish a Public Employee Health Insurance Board, which would oversee both health plans. The new board would consist of appointed officers such as the state finance director, appointees chosen by the governor and other elected officials, and one active employee and one retired employee covered by each of the two insurance systems.

The board would have the power to merge the two insurance programs into one. Marsh said he wouldn't mind if the board exercised that option.

"Yes, I would like to see them merge," Marsh told The Star.

Marsh has long been an advocate of merging state agencies. Earlier this year, he pushed a bill through the Legislature that combined the state's law enforcement functions under one cabinet position.

He said the insurance board merger worked on a similar principle. The board merger wouldn't cost anyone a job, he said, though staff could be trimmed down over time through attrition, as employees retire.

Susan Kennedy, manager of funding and revenue for the Alabama Education Association, said there was nothing to be gained by placing the teachers' health insurance system, also known as PEEHIP, under the same governance as the state employee system.

"We have a whole lot of problems, but PEEHIP is not one of them," Kennedy said. Both Kennedy and Marsh said PEEHIP costs the state about $700 per person covered per year, compared to more than $900 per person per year for the state employee board. Marsh cited the cost differential as a reason why a merger might bring costs down.

There were no statements from representatives of the State Employees Insurance Board at the meeting. The Star's attempts to contact representatives of the board, beginning Monday, were not successful.

Committee member Sen. Rodger Smitherman, D-Birmingham, said the two boards shouldn't be merged because they had competing interests. Marsh said they don’t.

"The interest is the same. The interest is good health care at an affordable cost," he said.

Kennedy said the potential merger posed a women's health issue. She said 85 percent of AEA's members are female, and PEEHIP's client base is also disproportionately female. A separate board allows PEEHIP to consider the needs of a mostly-female client base, she said.

"Their needs are vastly different than the needs in a more diverse group," she said.

The committee passed the bill in a vote that appeared to fall along party lines, with Republicans voting yes and Smitherman and other Democrats voting no. The bill moves on to the full Senate for a vote.

The committee also considered a handful of amendments to offer tax breaks for economic development purposes — tax breaks that would trim the revenues of the Education Trust Fund, which pays for public schools. Kennedy claimed that the various bills, if all were passed, would draw $42 million away from the $5.74 billion ETF budget. Some of those bills, such as a tax break for people who buy cars powered by natural gas, were "carried over," or put on hold until the next committee meeting.

Grocery tax bill advances

The committee did approve a bill by Sen. Gerald Dial, R-Lineville, that would eliminate the state sales tax on food. Dial's bill would lower the four-cent state sales tax from food purchases by one cent per year. It would replace the lost revenue, more or less, with quarter-cent increase, yearly for the next four years, on sale tax on all other items. City and county taxes on groceries would remain in place.

"Only us and Mississippi tax food," he said. "That's not acceptable."

Some other states do impose sales tax on food, but the two Deep South states are the only ones to tax food at the full rate. Critics of that custom say it imposes an undue burden on people in poverty, who spend a higher percentage of their income on food.

Still, advocates for the poor have been skeptical of Dial's plan, largely because it increases sales taxes on other items. Kimble Forrister of Alabama Arise said the group was "concerned about replacing one regressive tax with another regressive tax."

Committee members expressed concern about the effect that the general sales tax increase would have on non-grocery stores.

Some committee members said cities and counties would simply make up the difference by passing their own taxes on food, bringing the cumulative grocery tax back up to its current level. Committee members asked Dial to add a provision that would place a cap on local sales taxes on food.

Dial said he couldn’t support that idea. He said it would keep some small towns from raising revenue when needed.

"The biggest producer of sales tax in Lineville is Piggly Wiggly," he noted.

Dial has sought the elimination of the sales tax on groceries many times before. The effort has often foundered on concern for the education budget, which is funded by sales and income tax. Dial's one-cent increase on general sales tax was designed to offset that loss. He said the revenue swap might not come out to an exact dollar-for-dollar exchange, but was designed to be very nearly so. He said the poor would come out ahead in the exchange.

He drove the point home by holding up a pair of socks and a loaf of bread, telling committee members he'd paid the same tax on both.

"How many loaves of bread do you have to buy," he asked. "And how many pairs of socks do you have to buy?"

Dial's bill moves on to the full Senate for a vote.

Capitol and statewide reporter Tim Lockette: 256-294-4193. On Twitter: @TLockette_Star.
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