(The Center Square) – Trouble could be looming for Florida’s state employee health insurance trust fund despite a positive cash balance.
The State Employees’ Health Insurance Trust Fund had a balance of $652.7 million for fiscal 2024-25, but the report from the nonprofit group Florida Taxwatch found that the program could face a $1.5 billion deficit by fiscal 2028-29 if lawmakers don’t do anything, such as increasing premiums.
The report predicts an ending cash balance for the trust fund in fiscal 2025-26 to be a deficit of $421.9 million.
Like the state’s retirement system, the fund is a defined benefit system where the employee pays a premium and taxpayers pick up the rest of the tab.
The report says the reason is the cost of health insurance provided by the program has doubled while premiums paid by the employee for both single and family coverage haven’t increased, leaving taxpayers to pick up the rest of the cost.
According to the report, the taxpayers’ share of the total cost has increased from 87.4% to 94.4% for single coverage and from 79.9% to 91.1% for family coverage. Of the 171,009 state employees enrolled, 48.9% (83,623) were in single coverage while 51.1% (87,386) were in family coverage.
“It will become increasingly more difficult to maintain the solvency of the Florida State Employees’ Group Health Self-Insurance Trust Fund through a supplemental appropriation by the Legislature, as is current practice,” Florida TaxWatch President and CEO Dominic Calabro said in a release. “Florida TaxWatch urges the Legislature not to wait until the deficits projected for fiscal year 2026-27 and beyond occur to begin paring down the state budget.”
With lawmakers spending more each budget cycle, deficits will require constitutionally-mandated spending cuts and make those supplemental appropriations harder to source. In fiscal 2026-27, that deficit is projected to be $2.8 billion, with $901.6 million needed to shore up the trust fund’s finances.
In fiscal 2027-28, the state’s budget deficit is predicted to be $6.9 billion.
In its recommendations, the group said the state should follow guidance from the Government Efficiency Task Force’s June 2016 final report. For the trust fund, the 2016 report recommends establishing a set state contribution amount or percent for health insurance that would be more consistent with plans offered by other large public and private employers.
The report says this would shift more of the burden of premium cost to the employees and result in significant savings for the state.
