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Changes to SD benefits puts more cost on state workers, requires some travel for lowest rates

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PIERRE, South Dakota — State employees in South Dakota, many of whom are based Pierre, will have to travel more than three hours to Sioux Falls and other cities to the east for the most affordable specialty health care as changes to the state benefits plan took effect this week.

The changes classify certain categories of health care as "Tier 1" with limited options for the most affordable treatment. People with gastroenterology needs, including hernia repair, have only one option at that level— the Sioux Falls Specialty Hospital. For other providers, people will be charged up to an additional $2,075.

Deductibles have also increased by $250 in two of the state's three insurance plans. Out-of-pocket payments increased for all plans.

The state spends about $110 million on state employee benefits a year. Gov. Dennis Daugaard's administration, which has promoted fiscally conservative polices, has recently become more involved with changes to the state benefits plan after a few years of cost overruns.

"We want to make sure we get it right," said Dusty Johnson, the governor's chief of staff. So his office worked more closely with the Bureau of Human Resources.

To mitigate costs, state officials requested bids for certain health care services, which make up Tier 1. Cardiac services like pacemakers and bypass surgery, as well as total knee and hip replacements are referred to Aberdeen, Sioux Falls, Vermillion and sites in North Dakota.

Employees can pay more to see providers in other locations. Of the state's nearly 13,000 employees, 21 percent are concentrated in Pierre and 16 percent are in the Black Hills. The majority are located along the Interstate 29 corridor.

Johnson said officials have been aware of geographic access throughout the process and are still trying to expand contracts to Rapid City to better serve employees west of the Missouri River.

Eric Ollila, executive director of the South Dakota Employees Organization, which lobbies for state workers, said employees should have been consulted in the decision-making process.

"A lot of these changes come into place, because health care is expensive," Ollila said. "We appreciate that it's a balancing act."

His group has been around for more than four decades, but hasn't been consulted on benefits. He said there should be a board that includes stakeholders to make these decisions, as there is for the retirement system.

He said South Dakota taxpayers don't want to pay for lavish benefits for civil servants and some legislators don't think employees have enough of a stake in the matter.

"That is a perception that is out there and inaccurate. And it's something we fight against every day," he said.

Johnson, a state worker himself, said employees still have choices and the majority of the cost is still born by the state.

"The state employee is not being gouged," he said.

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