N.B. spends millions to pay benefit plan deficits: Auditor general

The annual report from New Brunswick’s auditor general has found there is poor government oversight of the health and dental benefit plan for 30,000 provincial employees and their families.

The health component plan has been in a deficit position since 2016, with a cumulative deficit total of $6.9 million recorded in June 2021.

That is despite a lump sum payment of $8.8 million to finance the deficit in June 2016.

“The concern with outstanding deficits is that there is accumulated interest that increases fees on the debt, without a strategy to cover costs within the plan itself,” said Auditor General Paul Martin in a news release.

“The interest then becomes additional cost that could have been avoided by settling the deficit in full, or by developing an effective strategy to stabilize costs.”

Martin says the audit uncovered a complex operating structure combined with poor documentation of roles and responsibilities.

“There is cause for concern in terms of accountability as, over time, the structure has become more complex with multiple parties involved in the management and administration of the plan, but these changes have not been properly documented. It becomes challenging to know who is accountable for what within the structure,” said Martin.

The plan spent $752 million on claims related to health and dental treatments between July 2011 and June 2021.

The report also notes that the same claims administrator — Vestcor — has been awarded the contract since the 1960s.

In addition, it says the contract has been awarded without a tendering process, and the Finance and Treasury Board (FTB) has not evaluated the structure of the provider arrangement in over 30 years.

It also says the FTB has not evaluated the plan administration costs paid to Vestcor to ensure these costs are in line with industry standards and provide best value for money to the plan.

Noted in the report is that the FTB has also not has not developed a process to manage risks, and highlighted the issue of weak contract management, and that third-party performance is seldom evaluated against targets.

Martin makes 14 recommendations to address issues related to managing costs and risks of both plan members and taxpayers.

His full report is available online.


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