Panel backs state-job premium rises

Health insurance premiums would increase 2 percent for school employees and 3 percent for state employees next year under recommendations made Friday by an advisory panel.

The increases unanimously recommended by the State and Public School Life and Health Insurance Board's benefits subcommittee are meant to help the plans covering 45,000 school employees and 26,000 state employees build up reserves and reduce the need for large increases in future years.

The full board is expected to set the rates for 2017 on Tuesday.

Even with the recommended increases, the reserves are expected to run out for state employee plans by 2018, and for school employee plans by 2019, assuming medical and drug expenses grow by 6 percent each year, according to figures presented to the subcommittee by John Colberg, an actuary with the Cheiron financial and actuarial consulting firm.

But the 3 percent increase for state employee plans would make the increase needed for those plans in 2018 somewhat smaller: 25 percent, compared with a 30 percent increase that would be needed if rates stay the same in 2017.

Likewise, increasing the rates for school employees by 2 percent in 2017 and 2018 would reduce the size of the increase that will be needed for their plans in 2019 from 27 percent to 20 percent, Colberg said.

"Right now, today, if we want to be shortsighted, we don't have to do anything, but I don't think it serves the plan well to be shortsighted," said Jeff Altemus, the subcommittee chairman and deputy superintendent of the Marion School District.

He said after the meeting that avoiding the need for double-digit increases altogether will require other steps, including asking the Arkansas Legislature for increased funding during next year's session.

"I think it's going to include measures from every possible aspect," Altemus said.

Marc Watts, senior legislative analyst for the Arkansas State Employees Association, noted that state employees did not receive a cost-of-living wage increase for this fiscal year, which started July 1.

"We would have preferred to see no increases" in the health premiums, Watts said.

Brenda Robinson, president of the Arkansas Education Association, said in a written statement that any increase in school employees' health insurance premiums would affect the state's "ability to recruit and retain top talent to the education profession."

"AEA encourages the creation of a formula that gives districts state investment to meet the local needs," Robinson said.

The state is expected to contribute about $88 million toward the school plans and $174 million toward the state employee plans next year, according to Colberg's figures.

School districts, which are required to contribute $154.48 a month for each covered employee, are expected to contribute at least an additional $83 million toward the school plans.

The possibility of a large rate increase for the teachers' insurance in 2013 prompted then-Gov. Mike Beebe to call a special session of the Legislature in which lawmakers allocated $43 million in surplus tax revenue to shore up the school plans.

The next year, the Legislature passed laws during a special session to limit coverage of weight-loss surgeries and exclude from coverage part-time employees and employees' spouses who can get coverage from their own employers.

This year, the rates for teachers and state employees are the same as they were last year. But Colberg said medical costs this year are on track to increase 10 or 11 percent after years of decreases or slight increases.

Under the subcommittee's recommendation, the maximum monthly premium for the school employees' premium plan, the most expensive option, would increase by $4.08, to $183.46, for individual coverage and by $18.52, to $833.44, for family coverage under the subcommittee recommendation.

The premiums are lower than the maximum for employees of districts that contribute more than required to the plans.

The monthly premium for state employees in the premium plan would increase by $3.14 to $107.92 for individual coverage and by $14.54 to $498.88 for family coverage.

For school employees in the classic plan, the midlevel option, the maximum monthly premium would increase by $1.02 to $46.02 for individual coverage and by $7.96 to $358.32 for family coverage.

For state employees, the premium for the classic plan would increase by $1.40 to $47.88 for individual coverage and by $9.18 to $315.18 for family coverage.

For the basic, or high-deductible, plan, the maximum premium for school employees would increase by 26 cents to $11.26 for individual coverage and by $6.12 to $275.62 for family coverage.

State employees don't pay a premium for individual coverage in the basic plan. For family coverage in the plan, the monthly premium would increase by $4.82 to $165.46.

The premium plan has a deductible of $500 for an individual or $1,000 for a family for state employees.

For school employees, the deductible is $1,000 for an individual or $2,000 for a family.

The classic plan has a deductible of $2,500 for individual coverage or $5,000 for family coverage for state employees. For school employees, the deductible is $2,000 for an individual or $3,000 for a family.

The basic plan has a deductible of $6,450 for individual coverage or $12,900 for family coverage for state employees. For school employees, the deductible is $4,250 for individual coverage or $8,500 for family coverage.

A Section on 07/09/2016

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