Legislative mismanagement of the state worker benefit fund has put it close to insolvency. It’s so bad – a $197 million projected deficit – that the Insurance Commissioner’s office said that it if it were a private company it could be put into receivership.

The issue is also entangled in as yet unresolved state budget and tax politics that will be the focus of next week’s special session of the Legislature. And the Legislature’s proposed boosts in the state’s share of employee health-care benefit costs may violate state laws governing negotiating public-sector union contracts.

Washington state provides generous medical and other benefits to 336,000 state employees, retirees and dependents through the Health Care Authority.  63 percent of them are self-insured by the state, meaning that the state acts as their insurance carrier. The balance of them are covered by HMOs and Preferred Provider plans such as Group Health and Kaiser Permanente.

Overseeing the HCA is the Public Employees Benefits Board, a nine-member board appointed by the governor. PEBB sets benefit eligibility requirements, approves premium contributions for eligible employees and approves health-insurance plan benefits.

The state spends $1.7 billion per fiscal year on benefits. PEBB is tasked by the Legislature to take the funding given it and craft benefit plans accordingly. The difficulty is that the Legislature doesn’t always play fair leaving PEBB holding a now empty bag.