State, school plans expect to cut 2,300 in '15

Under new law, insurers to shed part-timers, spouses with employer option

About 1,700 spouses of state and public-school employees are expected to be dropped from health insurance plans covering those workers starting next year because they qualify for coverage from their own employers or did not respond to inquiries from the health plans' administrators, a state official told lawmakers Tuesday.

In addition, about 600 part-time school employees are expected to be dropped from the plans, said Bob Alexander, director of the state Department of Finance and Administration's Employee Benefits Division.

Alexander spoke at a meeting Tuesday of the Legislature's State and Public School Life and Health Insurance Task Force, which was formed last year to explore ways to improve the finances of the plans, which cover 46,000 public-school employees and 28,000 state employees.

Following the task force's recommendations, the Legislature passed laws during a special session this year that excludes from coverage part-time school employees as well as spouses of school and state employees who can get coverage through their own employers.

The changes were meant to prevent an estimated 35 percent increase in the premiums for public-school employees next year.

To keep their coverage past Dec. 31, employees' spouses were required to submit forms to the Employee Benefits Division by Nov. 1 indicating that they did not have access to coverage from their own employers.

About 800 spouses of school employees and 900 spouses of state employees are expected to be dropped because they did not submit the forms or indicated that they qualified for coverage from their own employers, Alexander said.

The plans currently cover about 5,000 spouses of school employees and 10,000 spouses of state employees, he said.

At one point, state officials estimated that about 4,000 part-time school employees were covered by the plans. Alexander said some school districts increased their part-time employees' hours to allow them to keep their coverage.

The plans' actuaries will study whether dropping the part-time employees and spouses ultimately saved money for the plans, he said.

Alexander also told task force members that about 1,100 school employees switched from the most expensive plan, currently known as the gold plan, to cheaper plans with higher deductibles during the open enrollment period in September.

That was in contrast to previous years, when several thousand school employees migrated from the gold plan to cheaper plans as a result of premium increases in the gold plan.

Starting Jan. 1, the gold plan will be replaced with the premium plan, which will have a lower premium but a deductible of $1,000 for individual coverage or $2,000 for family coverage. The current gold plan does not have a deductible.

"We've stabilized the plan," Alexander said.

Alexander also said Tuesday that the school plans are on track to end the year with about $10 million in unallocated reserves, which could be used to hold down premiums in future years. By contrast, the school plans ended last year with no unallocated reserves.

He attributed the change to efforts to curb the growth of prescription drug costs as well as a drop in large medical claims.

But he said it's "way too early" to predict what will happen to the premiums in 2016.

"You can't base everything on one year's experience," Alexander said. "We'll have to look at a four- or five-year average and then look at where we think our claims will be next year."

Also Tuesday, the task force recommended paying a Russellville consulting firm up to $45,000 to analyze the effectiveness of a wellness initiative for state and public-school employees and to recommend other strategies for reducing employees' medical expenses.

The contract calls for the company to deliver a report to the Bureau of Legislative Research by Feb. 15.

Under the initiative, employees who visited a doctor for a preventive health screening from Jan. 1, 2013, through Nov. 1 will receive a $75 discount on their monthly premiums next year.

To qualify for the discount in 2016, employees will have to get another wellness exam next year. Employees and spouses covered under the plans will also have to take a phone or online survey meant to assess their health and their risk of developing chronic illnesses such as diabetes.

"What I want to know is, the efforts that we're making, are they producing a return on investment for the taxpayers and for the teachers' and the state employees insurance funds, or are they just feel-good measures that don't really have any impact?" Sen. Jim Hendren, R-Sulphur Springs and chairman of the task force, said.

The consulting contract will go to the Legislative Council's Policy-Making Subcommittee for approval today and to the full Legislative Council on Friday.

Metro on 12/17/2014

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