Health-plan rates to climb, educator group warns panel

Wednesday, July 16, 2014

Despite changes mandated under laws passed during a special session of the Legislature this month, thousands of teachers and other public school employees likely face significant health insurance rate increases, the president of the Arkansas Association of Educational Administrators told lawmakers Tuesday.

Under a preliminary scenario developed by an actuarial consultant to the state Department of Finance and Administration's Employee Benefits Division, those now in the public school employees' most expensive plan, now known as the gold plan, would pay lower rates in exchange for reduced benefits if they stay in the same plan, which would be renamed the premium plan.

Meanwhile, the rates for the cheaper bronze plan, which would be renamed the classic plan, would go up. For individual coverage, the monthly premium would rise from $11 to $50. For family coverage, it would go from $269.50 to $370.56.

About 23,000 public school employees are in the bronze plan.

If the preliminary rates are adopted by the State and Public School Life and Health Insurance Board later this month, "I think you're going to hear from a lot of public school employees," Jeff Altemus, the association president, told members of the State and Public School Life and Health Insurance Task Force on Tuesday.

State Sen. Jim Hendren, R-Sulphur Springs and the task force chairman, responded that premiums are "not out of line" with what employees in the private sector pay and that the low premiums for the bronze plan in the past led to escalating premiums for the other plans.

Legislators are continuing to explore further changes to improve the plans, he added.

Among the possibilities that will be considered in future meetings, he said, are combining the plans for teachers with the plans for state employees, letting school districts form their own plans and providing incentives for healthy behavior.

"There are a lot of long-term things that we're going to investigate, and hopefully we'll find one that will give us some long-term stability," Hendren said.

The laws passed during the three-day special session will drop about 4,000 part-time public school employees from the plan starting Jan. 1 along with employees' spouses who can get coverage from their own employers.

The laws also limit coverage of weight loss surgeries and will eventually transfer money to the plans from school districts' payroll-tax savings.

Officials have said that about $4.6 million would be transferred from the districts, but Employee Benefits Division Director Bob Alexander said Tuesday that the precise amount isn't yet known.

The changes were meant to reduce a projected 35 percent rate increase for the 47,000 teachers and other school employees covered by the plans to an increase of about 3 percent.

But Alexander said keeping the rate for the bronze plan low wouldn't be feasible. As rates for the gold plan increased over the past few years, more employees with expensive health conditions have moved to the bronze plan, he said.

"It's not the young and healthy like it should be," Alexander said. "It's half the people, so you have higher claims, and therefore you've got to charge more."

The State Public School Life and Health Insurance Board approved rates and benefits for the plans covering 28,000 state employees last month but has not yet set rates and benefits for the public school employees plans.

Altemus, who is a member of the board's benefits subcommittee and deputy superintendent of the Marion School District, said the preliminary rates he cited were developed using the assumption that the benefits of the plans for public school employees would be similar to those of state employees, except that the deductible for the school employees premium plan would be higher -- $1,000 instead of $500 for individual coverage.

The gold plan, which covers about 18,300 school employees, currently does not have a deductible. Employees in the plan pay a monthly premium of $249.38 for individual coverage or $1,132.96 for family coverage.

Under the scenario cited by Altemus, the premium would fall to the same level as the current premium for the silver plan, which has a deductible of $1,000 for an individual or $2,000 for a family.

That premium would be $173.32 for individual coverage or $787.36 for family coverage. The 5,000 school employees who are now in the silver plan would be moved to the premium plan, and the silver plan would be eliminated.

The classic plan would have a deductible of $2,500 for an individual or $5,000 for a family, compared with $2,000 for an individual or $3,000 for a family under the current bronze plan.

School employees also would have a new option, the basic plan. It would have the same premiums as the current bronze plan, but a higher deductible -- $6,600 for an individual or $13,200 for a family.

The state also would contribute $25 a month to a health savings account for individuals enrolled in the basic or classic plans or $50 a month for families in those plans.

Altemus said the public school employees' plans need more taxpayer funding, either from the school districts or the state.

School districts are required to pay $150 per month for each employee enrolled in the plan, although some districts pay more. The required monthly contribution will rise to $153 per employee next year.

The state is expected to contribute about $86 million next year in addition to the money from payroll tax savings, Alexander said.

Some lawmakers said districts should contribute more.

Sen. David Sanders, R-Little Rock, noted that about half the state's school districts, including the Marion district, only contribute the minimum amount required.

Altemus said his district has struggled with declining enrollment and hasn't given employees raises in the past four years.

"There hasn't been a surplus of money," he said.

A Section on 07/16/2014