An updated forecast suggests that a state board will not need to increase insurance premiums for public school and state employees after all, a consultant told a board subcommittee Friday.
John Colberg, an actuary with the Cheiron financial and actuarial consulting firm, said in March that a preliminary forecast indicated insurance rates would need to increase 7 percent next year for school employees and 4 percent for state employees, assuming that plan benefits stayed the same.
The updated projections discussed Friday predict that medical costs next year will be lower than the earlier forecast, eliminating the need for the increases.
Colberg said the earlier projections were calculated using medical and drug costs from June 2013 through May 2014. The more recent projections are based on costs during all of 2014, which were lower than during the earlier period.
"The last half of 2014 was really good," Colberg said after presenting the updated projections to the State and Public School Life and Health Insurance Board's benefits subcommittee.
According to a report commissioned by the State and Public School Life and Health Insurance Program Legislative Task Force, overall medical expenses for the school employees' plans fell to $199 million in 2014, compared with almost $211 million in 2013.
Drug expenses fell to $52.3 million, compared with $68.7 million in 2013.
Cheiron's projections don't assume that expenses will continue falling. Instead, they factor in an 8 percent increase in medical costs and a 10 percent increase in drug costs.
The projections will be updated with more recent claims data before the board sets rates for next year in July.
Officials with the Arkansas Education Association, the state's largest teachers union, hope the rates will stay flat after years of increases, President Brenda Robinson said Friday.
"Right now it looks pretty promising, even though we know it's preliminary right now," she said.
Sen. Jim Hendren, chairman of the legislative task force, said the projections confirm what monthly financial reports from the two plans have indicated.
"To me, that's what the numbers show, is that there is not a need to ask teachers to pay more," Hendren, R-Sulphur Springs, said.
The potential for a large rate increase two years ago prompted the state Legislature to create the task force and allocate $43 million in surplus state tax revenue to shore up the plans during a special session in 2013.
After recommendations of the task force, legislators passed laws during a special session last year that limited coverage of weight-loss surgeries and excluded from coverage part-time employees as well as employees' spouses who can get coverage from their own employers.
Bob Alexander, director of the Department of Finance and Administration's Employee Benefits Division, has said the drop in medical expenses stemmed in part from efforts to better manage the care of employees with costly medical conditions.
The plans also expanded a program that encourages employees to use generic drugs instead of more expensive brand-name drugs.
"All the little things we've done add up, and some of it's the luck of the draw," Alexander said Friday.
Metro on 05/16/2015