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Originally published April 14, 2012 at 8:01 PM | Page modified April 15, 2012 at 10:49 AM

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Truth Needle: McKenna plan misstates rise in health-care costs

Truth Needle: Gubernatorial candidate Rob McKenna said state spending on health care for employees rose 10.5 percent in the most recent year. That's not true.

Seattle Times staff reporter

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The claim: Republican gubernatorial candidate Rob McKenna recently released a six-point plan to reduce state spending. In a section about health costs, he singles out benefits for state employees, noting that "in the most recent year, state spending on health care for employees rose 10.5 percent."

What we found: False.

Costs of the program that includes health coverage for current and retired state employees and their beneficiaries rose 1.2 percent in fiscal year 2011, not 10.5 percent. This year, they're expected to increase by less than 1 percent.

Given the dollars spent on employee/retiree health-care benefits — a projected $1.7 billion for this year alone — even a 1 percent increase can translate into millions of dollars.

So how did McKenna, the state attorney general, miss the mark by so wide a margin?

A footnote in the report shows he took the number from a December 2009 article on the website Washington State Wire that reported an estimate for state health-care benefit costs that year. At the time, the state was preparing to shift a larger share of health-care costs to employees through higher deductibles and co-pays, in an effort to save money.

To avoid paying those higher costs the coming year, employees went to the doctor and got procedures they might otherwise have put off.

So instead of the 7.5 percent cost increase the government was predicting for 2009, costs actually rose 10.7 percent as people covered by the plan got all those procedures and tests early, according to Annette Meyer, deputy chief financial officer for the Health Care Authority, the state's umbrella agency for government-run health-care plans in Washington.

The state provides benefits for about 176,675 active and retired state employees, and nearly 160,038 of their dependents. It also covers legislators and their dependents, and some school-district employees who buy their health care through the state. In addition to health insurance, the dollar figure for benefits includes long-term disability coverage, and dental and life insurance.

The authority's figures show employee benefit costs have settled down since the double digits of 2009. Employee health costs increased 4.5 percent in 2010, and about 1.2 percent in 2011. This year, they're expected to increase by 0.7 percent.

The reasons: There are 5,000 fewer employees on the plan, due to budget cuts. The cost-shifting has taken effect. And a new third-party administrator hired by the state last year has negotiated better rates with providers and adopted so-called "managed care" tools, such as pre-approvals, to control costs.

Still, Meyer said, "We do see spikes from year to year. You do have to look at these things over a longer period of time."

McKenna spokesman Charles McCray III acknowledged the statement was in error, and said McKenna's website would be changed to reflect the correct information.

McCray said McKenna intended to focus on curbing "state health-care spending in its entirety," not just for state employees.

"Rob does acknowledge in speeches on the subject that the governor has made strides in moving state Medicaid patients to managed care, which results in the type of cost-curve bending reforms that will accelerate under a McKenna administration," McCray wrote in an email.

Still, McKenna's plan misstated the facts about recent health-care spending when it used a 3-year-old estimate from an article about increased costs stemming from the type of cost-shifting McKenna himself is advocating. We find the claim to be "false."

Susan Kelleher: 206-464-2508 or skelleher@seattletimes.com. On Twitter @susankelleher.

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