School health-plan proposal includes lopping part-timers

A legislative task force voted 8-2 Wednesday to recommend dropping part-time employees from the health-insurance plans for public-school and state employees.

In separate unanimous votes, the State and Public School Life and Health Insurance legislative task force also recommended excluding from coverage employees' spouses who have access to health insurance from their own employers, increasing the premium for the lowest-priced plan and allocating money toward health-savings accounts for employees.

Proponents said the measures, some of which require legislative action, would help improve the finances of the plans.

If no changes are made to the plans' benefits or funding, members of the plans -- which cover about 47,000 teachers and other public-school employees -- would face a 35 percent premium increase next year, Sen. Jim Hendren, task force chairman, said.

The recommendations would keep the plans solvent while sparing many employees from a significant premium increase, he said.

"Quite honestly, the recommendations that we're making are much less draconian than I feared we would have to make when I saw the cash flow situation of the plan," said Hendren, R-Sulphur Springs.

He said he likely will ask that Gov. Mike Beebe call a special legislative session in August to address the recommendations requiring lawmakers' approval.

In the meantime, legislators will discuss possible changes in funding for the plans, along with additional recommendations, at a joint meeting next month of the task force and the House and Senate education committees.

Hendren said he won't ask Beebe for a special session until lawmakers reach a consensus on the changes.

Beebe spokesman Matt DeCample said it's too early to say whether the governor will call a special session.

"It's all very hypothetical until we have something concrete to consider," DeCample said.

While the recommendations were prompted by financial shortfalls in the public school plans, they also would affect plans that cover 28,000 state employees and their families.

Plans covering state and public-school employees are identical, but state employees pay lower premiums, which officials with the Department of Finance and Administration's Employee Benefits Division have said is because the state employees' plans receive more taxpayer funding.

Hendren said state employees' plans are "just a couple years behind the same kind of trouble" as the public-school employees' plans.

The recommendation to drop employees who work fewer than 30 hours per week was the only one to draw dissenting votes.

Bob Alexander, director of the Employee Benefits Division, said the move would affect about 4,000 public-school employees and save about $10.2 million.

School districts, which contribute $150 per month on behalf of each employee enrolled, would save $7 million.

A consultant to the division said last month that the division doesn't have a count of the state employees who would be affected but estimated that the change would save about $2 million for the state employees' plans.

Proponents of the measure said most of the part-time employees would qualify for subsidized coverage that became available Jan. 1 under the federal health-care overhaul law.

Some employees already qualify for Medicaid. The expansion of that program, approved by the Legislature last year, extended eligibility to adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual or $32,913 for a family of four.

Under the so-called private option, most who qualify for coverage are enrolled in plans on the state's health-insurance exchange, with the Medicaid program paying the premium.

Those who do not qualify for Medicaid but have incomes below 400 percent of the poverty level may qualify for tax-credit subsidies to help pay their premiums for plans offered on the exchange.

The tax credits are not available to people who have access to employer-sponsored coverage that is considered "affordable," meaning it would cost less than 9.5 percent of the employee's income.

Sen. Linda Chesterfield, D-Little Rock, who voted against the recommendation to drop part-time employees from the public-school plans, said, "It gives me great angst, especially with the continued talk of the elimination of the Affordable Care Act.

"It seems to me to be jerking them around," she said.

She said she also was concerned that some school districts would cut employees' hours to make them ineligible for insurance.

Bus drivers are currently eligible if they work at least 720 hours during a year, while other employees must work at least 900 hours, Alexander said.

Sen. Jason Rapert, R-Bigelow, who also voted against the recommendation, noted that some lawmakers oppose reauthorizing funding for the state's expanded Medicaid program, which requires a three-fourths supermajority in both the House and Senate.

"I definitely don't want to be a part of something where we throw all these folks off of this plan, and then they're left completely without any options whatsoever when it comes next year or a year after that," Rapert said.

Rapert said he also wanted to get input from rural school-district officials.

Alexander said a provision could be made that allows part-time employees to regain their eligibility for coverage under the state employee and public school plans if other coverage became unavailable.

In addition to Hendren, the task force's vice chairman, Rep. Harold Copenhaver, D-Jonesboro, voted in favor of the recommendation along with Sens. Cecile Bledsoe, R-Rogers, David Sanders, R-Little Rock, Eddie Cheatham, D-Crossett, and Reps. Tommy Wren, D-Melbourne, George McGill, D-Fort Smith, and Bill Gossage, R-Ozark.

Task force members Reps. Allen Kerr, R-Little Rock, and James McLean, D-Batesville, were not at the hearing.

A consultant to the task force said last month that excluding spouses who have access to coverage from their own employers would save about $3.5 million for the public-school plans.

Alexander said he suspects the potential savings would be smaller because he doubts many of the 5,000 spouses covered by the plans have access to other coverage.

Raising the monthly premium for the lowest cost plan, known as the Bronze plan, to $60 for individual coverage would generate about $8.4 million for the public school plans and $850,000 for the state employee plans, according to information presented at the hearing.

The monthly premium for the public school Bronze plan this year is $11 for individual coverage. State employees do not pay a premium for the plan, which has a $2,000 deductible.

The task force also recommended allowing school districts to use money saved by eliminating coverage for part-time employees on health-savings accounts for employees who are in the Bronze plan. Money deposited in such accounts is not subject to federal income tax as long a the money is spent on medical care.

Richard Abernathy, director of the Arkansas Association of Educational Administrators, said the task force seemed to be "headed in the right direction."

That includes dropping part-time employees from coverage -- as long as the Legislature supports funding for the expanded Medicaid program during next year's session and beyond.

"There's going to be a lot more conversation when they get down to the details of it, but a lot of it makes good practical sense," he said.

A Section on 05/15/2014

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