Teacher, worker insurance rate decision put off

Board awaiting pay-raise data

Members of a state board decided Tuesday to wait another month before setting the health insurance rates for public school and state employees for 2019.

At a meeting earlier this month, the benefits subcommittee of the State and Public School Life and Health Insurance Board recommended that the rates for both groups of employees stay at their current level next year.

Board member Rett Hatcher, who is deputy director of the Arkansas Teacher Retirement System, said Tuesday that he wants to know the size of merit-based pay increases that state employees are set to receive before deciding on the rates for those employees.

If state employees receive a 3 percent pay increase, "I would feel very comfortable about asking for a 3 percent increase" in premiums to help offset the need for a large rate increase in 2020, Hatcher said.

Board member Carla Haugen, deputy director for the Department of Finance and Administration, said she was ready to accept the subcommittee's recommendation.

She noted that the state employees' health care costs have come in below projections in recent years. She also said she doesn't want to lessen the benefit of the raises.

"They get an increase, and we take their increase," she said.

The board's next meeting is June 19.

Scott Hardin, a spokesman for the Finance and Administration Department, said Gov. Asa Hutchinson will likely announce the size of the raises -- the first awarded under a new pay plan that took effect in 2017 -- later this week or next week.

Under the old pay plan, which had been in place since the 1980s, employees received bonuses, but not salary increases, for good performance, Hardin said.

State employees received a 1 percent cost-of-living increase in 2016.

The new pay plan raised the average employee's salary by about 6 percent, state officials have said.

The health plans cover about 45,000 school employees and 26,000 state employees, along with employees' family members and retirees.

Thanks to lower-than-expected spending in recent years, the school employees' plans have built up enough reserves that their rates likely won't need to be raised until 2021, said Gaelle Gravot, an actuary with the consulting firm Cheiron of McLean, Va.

The state employees' plans have enough reserves to keep rates at their current level next year, but may need a large increase in 2020, she said.

For instance, if medical costs grow 5 percent each year, and drug expenses grow by 8 percent, the rates for the state employees' plans would need to increase by 20 percent in 2020, she said.

The board faced a similar scenario last year and ended up keeping the rates the same. As it turned out, the lower-than-expected health care costs left the state employees' plan with enough reserves to delay the need for a large increase for at least a year.

In 2017, the rates increased 2 percent for school employee plans and 3 percent for state employee plans.

Metro on 05/23/2018

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