Expert: Insurance tweaks save

$88 million if school staffs go on Medicaid, legislators told

Sen. Jim Hendren, R-Sulphur Springs and task force chairman, said he likely will request that Gov. Mike Beebe call a special session of the Legislature to address the issue if the task force recommends eliminating coverage for employees who work fewer than 30 hours a week.  Sen. Jim Hendren is shown along with Rep. Bob Ballinger (left), R-Hindsville in this file photo.

Sen. Jim Hendren, R-Sulphur Springs and task force chairman, said he likely will request that Gov. Mike Beebe call a special session of the Legislature to address the issue if the task force recommends eliminating coverage for employees who work fewer than 30 hours a week. Sen. Jim Hendren is shown along with Rep. Bob Ballinger (left), R-Hindsville in this file photo.

Thursday, April 17, 2014

Arkansas could save about $88 million in state tax dollars next year by adopting insurance-plan options that would encourage more low wage public school employees to enroll in the state’s expanded Medicaid program, a consultant told state lawmakers on Wednesday.

Eric Helman, president of Atlanta-based Continuous Health LLC, said the state also could save about $36 million by limiting eligibility for coverage to employees who work at least 30 hours per week.

Most of the 4,700 part time employees who would be affected by the proposals likely would qualify for Medicaid or other subsidized coverage under the federal health-care overhaul law, he said.

“You would not only save money to the plan, but you would create a positive outcome for those individuals,” Helman said.

Helman’s firm was hired along with Memphis-based Collier Insurance to help the State and Public School Life and Health Insurance Program Legislative Task Force develop recommendations for improving the finances of the public school employees plan, which faces a $34 million funding shortfall for next year.

The plans cover about 86,000 people, including 47,000 teachers, administrators and other public school employees and their relatives as well as about 12,000 retirees and their relatives.

The task force is to discuss the options further on April 30 and make its recommendations in May.

The State and Public School Life and Health Insurance Board is expected to finalize details of the insurance plans and set rates for 2015 by July 1.

Eliminating coverage for employees who work fewer than 30 hours a week would require changing a state law that makes employees eligible if they work at least 900 hours during a year.

Sen. Jim Hendren, R-Sulphur Springs and task force chairman, said he likely will request that Gov. Mike Beebe call a special session of the Legislature to address the issue if the task force recommends that option.

“While a special session has some costs, it doesn’t cost $36 million,” Hendren said.

Although he opposed the expansion of the state’s Medicaid program, which requires annual reauthorization by the Legislature, Hendren said he was open to making it part of the state’s strategy for reducing costs in the teacher plan.

“I certainly will play by the rules as they are,” Hendren said. “If the rules change, we’ll have to adjust.”

Eliminating coverage for employees who work under 30 hours a week and increasing the cost of the low-premium bronze plan would allow the state to save money as employees move into coverage options that became available under the federal health-care overhaul law on Jan. 1, Helman said.

For instance, the federal government is paying the full cost of covering newly eligible adults under the expanded Medicaid program until 2017, when states will begin paying 5 percent of the cost. The state’s share will then increase every year until it reaches 10 percent in 2020.

The expansion extended eligibility to adults with incomes of up to 138 percent of the poverty level: for example, $16,105 for an individual or $32,913 for a family of four.

Under the so-called private option created by the Legislature, most adults who enroll receive the coverage by enrolling on a private plan on the state’s health insurance exchange, with the Medicaid program paying the premium.

Tax-credit subsidies are available to adults who do not qualify for Medicaid, but have incomes of up to 400 percent of the poverty level: for example, $45,960 for an individual, or $94,200 for a family of four.

The tax credits are not available to employees who have access to employer-sponsored insurance that is considered affordable, meaning it would cost less than 9.5 percent of the employees’ income.

The teachers plan meets that test: Its lowest-cost option, the bronze plan, has a monthly premium of just $11 for an individual.

If the state excluded part time employees from its health insurance plan, many of them would become eligible for the tax-credit subsidies, Helman said.

Employees with incomes below 138 percent of the poverty level already qualify for Medicaid - their eligibility for that program isn’t affected by having access to employer-sponsored coverage.

But some employees may not make the switch because the premium for the bronze plan is so low, Helman said.

One option he suggested is raising the premium for the bronze plan to $85. Along with increasing the number of plan options from three to four and adjusting the premiums, that option would save about $90 million, he said.

Helman said the state could also save an estimated $3.5 million by eliminating coverage for employees’ spouses who have access to coverage from their own employer, a move he said many businesses are adopting.

An audit to verify the eligibility of dependents covered under the plans could save $5 million, he said. The estimates were for the savings associated with each measure taken, assuming no other changes were made, he said.

Because of overlapping effects, if multiple measures were taken, the savings associated with each change would be reduced.

Enrollees in the private option pay no premium, and subsidies reduce any required co-payments so that recipients’ annual out-of-pocket spending is no more than $604.

For those who qualify for tax-credit subsidies, the amount of the subsidy and required out-of-pocket spending for medical care varies according to income.

The plans on the exchange are designed to pay between 94 percent and 60 percent of a typical enrollee’s medical expenses, depending on the plan chosen and the enrollee’s income.

The premium for a family under the teachers bronze plan, which is estimated to cover 71 percent of a typical enrollee’s expenses, is $269.50 a month.

The monthly premium for the teachers silver plan, estimated to cover 76 percent of medical expenses, is $173.32 for an individual or $787.36 for a family.

The premium for the gold plan, estimated to cover 85 percent of medical expenses, is $249.38 for an individual or $1,132.96 for a family.

Those premiums are reduced for employees in school districts that contribute more than the $150 per month per employee required by the state.

Under the federal healthcare law, employers with 100 or more employees must offer coverage to at least 70 percent of employees who work at least 30 hours per week starting next year or face penalties.

Employers with 50 or more employees must offer coverage to at least 95 percent of such employees starting in 2016.

Tom Dooher, director of the Arkansas Education Association, the state’s largest teachers’ union, said the organization wants to see a comprehensive plan before taking a position on any possible changes.

“We want to cover as many lives as possible, to spread the risk and make sure employees are being treated fairly and that it’s a fair shake to Arkansas taxpayers,” he said.

Front Section, Pages 1 on 04/17/2014