Merging state health plans put on table

Idea would help equalize premiums, legislators told

The state would have to come up with $59.4 million a year to raise funding for public school employee health insurance to the same level provided for state employees' health plans, the director of the Department of Finance and Administration's Employee Benefits Division told lawmakers Tuesday.

On the other hand, reducing funding for state employees' plans to equalize the benefits with those of teachers and other school employees would save $39.1 million, said Bob Alexander, the benefits division director.

Alexander spoke at a meeting of the Legislature's State and Public School Life and Health Insurance Task Force, which is exploring recommendations to improve the finances of the plans that cover 46,000 school employees and 28,000 state employees.

The plans for the two groups of employees have similar benefits, but school employees generally pay higher premiums, which Alexander has said is because the state employee plans receive more taxpayer funding per employee.

Including funding for retiree coverage, the state and school districts will spend $171 million on the state employee plans and $187 million for school employee plans in 2015, Alexander said.

That funding includes an average $427 a month for each state employee enrolled in a plan, compared with an average $310 a month for each school employee, Alexander said.

Combining the two sets of plans, without adding any new funding, would generally increase the rates for state employees and lower the rates for school employees, Alexander said.

For instance, the monthly premium for state employees in the most popular plan, known as the premium plan, would increase by about $35, to $140, for individual coverage and $89, to $574, for family coverage.

Under the same pricing scenario, the monthly premium for public school employees in the same plan would fall by about $39 for individual coverage and $240 for family coverage.

Sen. Jim Hendren, chairman of the task force, said combining the plans "merits further consideration."

"There's obviously winners and losers," Hendren, R-Sulphur Springs, said. "The winners would be the public school employees, and the losers would be state employees. The rate sheet makes that very clear."

The task force was formed during a special session of the Legislature in 2013, when lawmakers approved $43 million in one-time funding to prevent a 50 percent premium increase in the teachers' plans.

Following the task force's recommendations, the Legislature passed laws during another special session this year that will exclude part-time school employees from the plans starting Jan. 1, as well as spouses of state and public school employees who can get coverage from their own employers.

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

Hendren said the task force will continue to explore combining the plans, as well as other possible changes in preparation for next year's legislative session.

At Tuesday's hearing, legislators also heard about differences in the salaries and retirement systems for teachers and state employees.

George Hopkins, director of the Arkansas Teacher Retirement System, and Gail Stone, director of the Arkansas Public Employees Retirement System, told legislators that neither retirement system is facing financial trouble and that they see few advantages, if any, to combining the systems.

Hendren said legislators needed the information to consider the total package of benefits that school and state employees receive.

"That's just part of the data collection process, to make sure we don't make a decision and then be surprised by what the ramifications of that might be," Hendren said.

Tom Dooher, director of the Arkansas Education Association, the state's largest teachers union, said combining the health insurance plans for teachers and state employees "makes a lot of sense."

The increases for state employees could be phased in, he said, adding that state employees could end up seeing those rates drop if more young, healthy school employees enrolled.

"We just want a fair system for school employees, and we think that's a do-able solution," he said.

He called talk of merging the retirement systems a "distraction."

"There are enough issues with education in the state of Arkansas that we should be working on those that are the challenges, not on two systems that are healthy and managed very well," Dooher said.

Richard Abernathy, director of the Arkansas Association of Educational Administrators, said combining school employees health plans with those for state employees wouldn't be enough to stabilize the school employees plans unless more funding was added.

"I'd hate to tell state employees, y'all are fixing to take a big hit" to lower the rates for school employees, he said.

Marc Watts, senior legislative analyst for the Arkansas State Employees Association, said his group would oppose combining the plans under the scenario Alexander presented to legislators.

"I don't think we could be supportive of a 30 percent increase in premiums for state employees," he said.

Metro on 08/27/2014

Upcoming Events