Teacher coverage running low again

Chief: Add funds or premiums rise

As it prepares to set rates for next year, the board that governs the health-insurance plans for state employees will once again have to consider significant premium increases or benefit cuts for teachers and other school employees - unless additional money is allocated to the plans, the director of the state’s Employee Benefits Division told board members Tuesday.

“We have a lot of Band-Aids, but it’s hard to put a Band-Aid on an amputated leg,” Director Bob Alexander said. “We need $71 million just to keep rates where they are.”

Last year, a $50 million gap between projected medical claims and premium revenue prompted the state Legislature to allocate $43 million of surplus state tax revenue to the teacher plans, which cover more than 40,000 teachers, cafeteria workers and other school employees and their families.

The additional money reduced a proposed rate increase from 50 percent to about 10 percent for 2014.

This year, Alexander told members of the State and Public School Life and Health Insurance Board that the plans will face an even bigger gap when setting rates for 2015.

That’s because the onetime infusion of cash didn’t address the plans’ central problem - that the state and school districts don’t contribute enough money to keep rates affordable, he said.

The higher premiums, in turn, keep healthy employees from enrolling, which puts further pressure on the rates.

“We have a funding issue, and that’s the structural issue that has to be corrected,” Alexander said.

Alexander said in December that the number of public school employees covered by the plans dropped by more than 1,400 from 46,227 in 2013 to 44,779 who signed up for coverage for this year.

The board’s actuary, John Colberg of the Cheiron financial and actuarial consulting firm, told board members that premiums and state and school district contributions are expected to cover this year’s medical claims and replenish the plans’ reserves for catastrophic claims.

But next year the plans face a gap in premium revenue over expected claims of $55 to $70 million, he said.

State Sen. Jim Hendren, R-Sulphur Springs, chairman of a legislative task force investigating possible changes to the health plans, said “it’s possible” that the solution the panel recommends will include additional money from the state or school districts.

But, he added, that money would have to be accompanied by “major changes” to make the plans financially sustainable.

“What you won’t see a willingness to do is just continue to throw more money into a system that’s not been changed,” Hendren said.

The premiums for the gold plan - the most popular and most expensive option - increased this year to a maximum of $249.38 a month for individual coverage, up from $226.70 last year, and to $1,132.96 for family coverage, up from a minimum of $1,029.96 last year.

Premiums for the low cost bronze plan, meanwhile, increased from $10 to $11 for individual coverage, and from $245 to $269.50 a month for family coverage.

Premiums for the midrange silver plan increased from $157.56 to $173.32 for individual coverage and from $715.78 to $787.36 for family coverage.

The board also cut benefits,including an increase in the deductible for an individual on the bronze plan from $1,500 to $2,000. The deductible for the silver plan increased from from $750 to $1,000 for an individual and from $1,500 to $2,000 for a family.

The gold plan does not have a deductible for individual or family coverage.

State employees have identical plans, but pay lower premiums. This year, the premium for the state employees’ gold plan is $96.68 for an individual and $423.60 for a family.

For the silver plan, the premium is $62.72 for an individual or $327.68 for a family. The premium for the bronze family plan is $93.08. State employees do not pay a premium for individual coverage under the bronze plan.

Alexander has said the main reason for the difference in premiums is the plans’ funding. State agencies contribute $410 toward their employees’ insurance for each of their budgeted positions.

In addition to any one-time funding, the state contributes about $50 million annually toward public school employees’ premiums, or about $90 per employee. School districts are required to contribute an additional $150 per month for each employee, although some districts contribute more than the minimum required.

Among the options Alexander suggested that the board’s benefit subcommittee consider is dropping spouse coverage for public school employees. The monthly premium for an employee and spouse on the gold plan this year is $1,129.92.

Alexander said employee spouses of any age could sign up for a cheaper gold plan on the state’s health insurance exchange, even with no subsidy.

“It’s better for them. It’s better for us,” Alexander told board members.

Hendren said he is waiting to see what changes are recommended by Osborn, Carreiro & Associates, which was commissioned by the Bureau of Legislative Research to study the issue. He said he expects the recommendations to be presented in April.

“I think you’ll definitely see some restructuring of the types of plans that are offered, some of the services that are provided under those plans and some effort to get higher enrollment,” Hendren said.

The board will set rates and benefits for 2015 by July 1.

Front Section, Pages 1 on 02/19/2014

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