Many small school districts would face higher employee health insurance costs if they bought insurance on their own, rather than participate in a statewide program, the director of the state Department of Finance and Administration's Employee Benefits Division told state lawmakers Tuesday.
At a meeting in Hot Springs of the Legislature's State and Public School Life and Health Insurance Task Force, benefits division Director Bob Alexander said that even a small school district with relatively low medical claims would be more expensive to insure on its own than as part of the statewide plan.
Meanwhile, he said, "if you have a district with low participation and a higher claims count, more toward the average, their [costs] would go up significantly."
The task force discussed allowing school districts to buy insurance on their own instead of participating in the statewide program as a possible way of improving the finances of the school plans, which cover 46,000 employees.
The Legislature created the task force during a special session in 2013, when lawmakers approved $43 million in one-time funding to prevent a 50 percent premium increase in the teachers' plans.
The Legislature passed task force-recommended laws during another special session this year aimed at forestalling an overall increase of 35 percent in premiums for the covered employees. Those measures excluded part-time school employees from the plans as well as spouses of employees who can get coverage through their own employers.
The task force also is exploring changes to the plans covering 28,000 state employees in preparation for next year's legislative session.
Alexander told legislators that he asked Health Advantage, which administers the health plans for state and public school employees as an affiliate of Arkansas Blue Cross and Blue Shield, to estimate the cost of coverage for three school districts -- one with 46 enrolled employees, one with 162 enrolled employees and one with 563 enrolled employees.
Including both the employee and employer contributions, the cost of employee-only coverage for the smallest district would be between 6 percent and 69 percent higher than next year's estimated cost under the statewide plan, depending on which plan the employee enrolled in.
The cost would be as much as 44 percent lower for the medium-sized district and as much as 34 percent lower for the larger district, Alexander said.
But, he said, most districts have lower participation and higher medical costs than the districts that were examined.
And he said the quotes from Health Advantage did not include the cost of covering retirees. Retirees who are not eligible for Medicare are covered under the statewide plan, although they pay the full cost of their coverage.
Retirees who are eligible for Medicare receive a monthly subsidy of $71.78 for individual coverage that supplements Medicare. That subsidy will fall to $55.18 per month starting Jan. 1.
If districts were left to buy coverage on their own, "we basically terminate coverage for retirees," Alexander said.
The state's association of school administrators and the state's largest teachers union would oppose dissolving the statewide plan because of the likely impact on small districts, their respective leaders said.
But Richard Abernathy, director of the Arkansas Association of Educational Administrators, and Brenda Robinson, president of the Arkansas Education Association, expressed support for another idea being explored by the task force -- merging the health plans for teachers and state employees.
At a meeting last month, Alexander told lawmakers that such a merger would cause premiums to drop for school employees and increase for state employees unless the state contributed more money to the plans.
Rep. Bill Gossage, R-Ozark, said he wants to explore the possibility of covering the full cost of insurance for new teachers for the first two years of their employment. The subsidy would drop gradually in subsequent years.
"You're going to have a substantially increased number of healthy people, young people in the pool without having expended a tremendous amount of money," he said.
Rep. Harold Copenhaver, D-Jonesboro and a chairman of the task force, said the panel likely will discuss the idea at a future meeting. The task force plans to discuss possible improvements to programs designed to encourage employees to seek health screenings and contribute to health savings accounts.
Metro on 09/24/2014