06:57 PM EDT on Saturday, October 9, 2004

By JOE BIESK
Associated Press

FRANKFORT, Ky. — House and Senate lawmakers, pondering two possibilities for improving state health insurance benefits, are hoping to announce legislation by early next week, Speaker Jody Richards said Friday.

One option was to extend current benefits for teachers and state workers for another year, Richards said. That would require voiding existing contracts for next year, a move that could prove costly to the state, said Richards, a Democrat from Bowling Green.

Lawmakers could also decide on amending the 2005 benefit plan being offered by the Fletcher administration to include some current benefits, he said.

"I think everyone wants to go with continuation," Richards told reporters after a private meeting of House Democrats. "It's just whether we can financially do that or not."

Gov. Ernie Fletcher last month announced substantial changes to the state's health insurance plan, which covers 229,000 retired and active public school and state employees. Participants have argued the governor caught them by surprise with expensive changes.

For example, an employee who makes the state average $36,000 per year and is covered by one of the state's least expensive family plans this year would pay about $430 per month. Next year, a comparable plan — the state's benchmark "Commonwealth Preferred" plan — would cost about $490 a month.

Current benefits also call for set copays. But under the new plan, participants would have to pay a percentage of their doctor visits and medications.

Teachers have threatened to strike on Oct. 27 — less than a week before the November elections — if the current benefits aren't restored. Calling the situation a "crisis," Fletcher called the General Assembly into a special session, which began Tuesday.

Lawmakers have said their options were limited because the administration had already signed contracts with four insurance carriers for next year — CHA Health, Anthem Blue Cross, Bluegrass Family Health and United Healthcare.

Richards said he spoke with the attorney general's office and was told the state could void those contracts for various reasons, including that the benefits were not as high as required by state law.

The attorney general's office had been asked to give an opinion on the contracts, but had not yet made a decision, Vicki Glass, a spokeswoman for Attorney General Greg Stumbo, said in a statement.

Senate President David Williams, R-Burkesville, said he did not have a preconceived preference for either option. But there were "all sorts of issues" to consider if the state decided to void the contracts and extend current benefits, Williams said.

"As far as getting out of the contracts, getting out of the contracts is a relative term," Williams said. "You know, you can get out of them voluntarily or you can get out of them and be sued. I don't know."

Afternoon meetings between House and Senate leaders did not produce an agreement, and they were planning to meet again Monday, Williams said. However, their goal was still to be finished by next Friday, he said.

Williams said he authorized the Legislative Research Commission to hire an actuarial firm to help.

Rep. Harry Moberly, chairman of the House appropriations committee, said the attorney general's decision would factor into the what the state ends up doing. Still, the state would not have "legal certainty" about the ramifications of voiding the contracts, Moberly said.

The Lexington Herald-Leader reported that Moberly said House leaders met Friday with representatives of Humana Inc. That company insures workers now but didn't get a contract for next year.

Humana officials said in the meeting that it was too costly to cover state employees and teachers last year, the newspaper reported Saturday. They said they would manage coverage for their old customers if the state would pay their claims, a common practice known as "self-insurance" and included in Fletcher's 2005 plan for part of the state.

If lawmakers opt to pursue extending current benefits with existing carriers, they still have to determine whether those carriers would continue offering coverage, he said. And lawmakers don't know exactly what extending the contracts would cost, Moberly said.

Fletcher said he would hold judgment on the ideas until he saw the final details. However, he hoped that the health insurance situation had a "sobering effect" on state lawmakers.

"I think they're beginning to realize, as they came in and looked at the numbers, at the magnitude of this problem," Fletcher said.