Board OKs uptick in insurance rates for public school employees, state workers

Health insurance premiums next year will rise 2 percent for many Arkansas public school employees and 3 percent for state employees, a state board decided Tuesday.

Under the increase approved by the State and Public School Life and Health Insurance Board, the maximum monthly premium for a school employee covered under the classic plan, the most popular plan for school employees, will increase starting Jan. 1 by $1.02, to $46.02, for individual coverage, and by $7.96, to $358.32, for family coverage.

For coverage under the more generous premium plan, the maximum premium for school employees will increase by $4.08, to $183.46, for individual coverage, and by $18.52, to $833.44, for family coverage.

Some school employees pay less than the maximum premium because their districts contribute more than the minimum amount required by state law.

For state employees enrolled in the premium plan, the most popular choice for state employees, premiums will increase $3.14, to $107.92, for individual coverage and by $14.54, to $498.88, for family coverage.

The premium for state employees' classic plan will increase $1.40, to $47.88, for individual coverage and by $9.18, to $315.18, for family coverage.

The plans cover about 45,000 school employees and about 26,000 state employees.

Although the plans have enough reserves to keep the rates flat next year, the board's benefits subcommittee recommended the increases as a way of building more reserves to reduce the need for large increases in future years.

The money generated by the 3 percent increase for state employees will reduce the rate increase that will be needed in 2018 from 30 percent to 25 percent, according to figures presented to the subcommittee by John Colberg, an actuary with the Cheiron financial and actuarial consulting firm.

For school employees, rate increases of 2 percent in 2017 and 2018 would reduce the increase that will be needed in 2019 from 27 percent to 20 percent, Colberg said.

The projections assume that the plans' benefits and funding from the state stays the same and that medical and drug costs grow by about 7 percent in 2017 and 6 percent after that.

This year, the plans' medical and drug costs are on track to increase by about 10 percent, Colberg said.

Sen. Eddie Cheatham, D-Crossett, and chairman the State and Public School Life and Health Insurance Program Legislative Task Force, which monitors the plans, said after the meeting that he hopes the increases can still be avoided.

He said he plans to discuss the matter with Gov. Asa Hutchinson and hold a task force meeting to explore the state's options.

"My preference is that the state do something to help these people out," Cheatham said.

Brenda Robinson, president of the Arkansas Education Association, said in an email that the increase will have a "significant financial impact on educators."

"It is time for the state in collaboration with school districts to develop a formula that makes the plan solvent over the long-term," Robinson said.

Marc Watts, senior legislative analyst for the Arkansas State Employees Association, said he understands the reason for the board's decision but wishes the increase could have been avoided.

Hutchinson was preparing for his speech at the Republican National Convention in Cleveland on Tuesday and was unavailable for comment on the rate increases, his spokesman J.R. Davis said.

The board approved the increases in a voice vote, with one member, Joe Thompson, director of the Arkansas Center for Health Improvement, dissenting.

Thompson said he wanted the board to consider increasing co-payments as a way of discouraging the use of health care services.

He noted that an increase in the use of services, rather than price increases, was the primary reason costs have been rising this year after years decreasing or staying the same.

"It's utilization that's driving our rate increase, across the board, in every category," Thompson said.

But board member Shelby McCook said benefit cuts in recent years have already increased employees' out-of-pocket costs for medical care.

"Some of them are saying, 'Why have insurance?'" he said.

In a divided voice vote, the board rejected a proposal by member John Kirtley, director of the state Board of Pharmacy, to raise state employees' rates by 5 percent to help better shore up the plans.

McCook said the board will explore options such as reducing administrative costs, making changes to a wellness plan and seeking more money from the Legislature as a way of avoiding the double-digit increases in future years.

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 are expected to contribute at least an additional $83 million, he said.

The districts are required to contribute at least $154.48 per covered employee this year. Next year the minimum contribution rises to $155.93.

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.

Metro on 07/20/2016

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