The board overseeing health insurance plans for state government and public school employees would be dissolved and its duties shifted to the state Board of Finance under legislation introduced by Senate President Pro Tempore Jimmy Hickey, R-Texarkana, who says “we have a huge problem we have to correct.” He was referring to a deficit faced by the insurance plans for both types of employees.
Under Senate Bill 693, the Board of Finance would make decisions and policy determinations for the State and Public School Life and Health Insurance Program until the General Assembly adopts “a permanent governance system to ensure solvency of the program and state and public school employee benefits.” Hickey said the Legislature helped bail out the public school employees health insurance plan with a transfer of $43 million in surplus funds in 2013.
Now “we are in a bigger financial situation than we were in” back then, he said, with the potential combined deficit of upward of $100 million in both insurance plans for 2022.
Hickey filed the bill Thursday, about two weeks before lawmakers are expected to go home. Legislative leaders aim to recess the ongoing regular legislative session by April 30.
“I am reviewing the bill, and I have not taken a position at this time,” Gov. Asa Hutchinson said in a written statement Friday.
Hickey said Friday that he has been reviewing options for changing the State and Public School Life and Health Insurance Board throughout this session and the Board of Finance’s members are more capable of overseeing the insurance plans.
SB693 states that all actions taken by the insurance board with regard to “plans, plan design, plan benefits, premiums, premium increases, deductibles, or cost-containment measures” to take effect Jan. 1, 2022, or later can be changed by the Board of Finance but submitted to the Legislative Council for approval before implementation.
A Legislative Council co-chairman, Rep. Jeff Ward-law, R-Hermitage, is the House sponsor for SB693. A subcommittee authorized the Bureau of Legislative Research to issue a request for proposals from consultants to help develop and implement a strategic plan and legislative framework for the two health insurance plans. The aim would be for the selected consultant to present a final report to the Legislative Council on Oct. 15.
BOARD APPOINTMENTS
The State and Public School Life and Health Insurance Board has 15 members and most of them are appointed by the governor.
Its chairwoman is Renee Mallory, deputy director of public health programs at the state Department of Health, and the vice chairman is John Kirtley, director of the Arkansas Board of Pharmacy. The board’s other members include Department of Human Services Secretary Cindy Gillespie and Department of Transformation and Shared Services Secretary Amy Fecher. The board members include current and retired state and school employees.
The Board of Finance has 10 members who include the governor, treasurer, auditor, secretary of the Department of Finance and Administration, securities commissioner, bank commissioner and two appointees each named by the House speaker and Senate president pro tempore. Finance department Secretary Larry Walther serves as acting chairman.
The public school employees health insurance plan covers 100,832 people and the separate plan for state employees covers 58,992 people, said Department of Transformation and Shared Services spokeswoman Alex Johnston.
The state’s options include increasing funds for the health insurance plans or adjusting the premiums of the plans’ members or a combination of these options, Hickey said.
REACTIONS TO BILL
House Speaker Matthew Shepherd, R-El Dorado, said Friday that he is generally supportive of the bill.
Sen. Larry Teague , D-Nashville, said legislators are “mad” at the board.
But he said he’s “cautious” about Hickey’s bill.
“I don’t know what is right,” Teague said.
“I think it is going to take some more money. We’ll see,” he said.
Hickey filed his bill with the state’s budget administrator Jake Bleed scheduled to assume a new job as director of the state’s Employee Benefits Division after the session recesses.
Hickey said Bleed would report to the state Board of Finance under his bill.
“I have a ton of confidence in Jake Bleed,” he added.
Asked about the bill on Friday, Mallory referred the Arkansas Democrat-Gazette to Fecher, whose department oversees the insurance board.
Fecher said Friday that “SB693 is being proposed by the legislature.
“The Department of Transformation and Shared Services Employee Benefits Division did not request this legislation,” she said in a written statement. “As always, our Department will implement any law the legislature passes.” State Treasurer Dennis Milligan, who serves on the state Board of Finance, said that “If the Legislature sees fit to pass this bill, I am confident in the abilities of my staff and the State Board of Finance to take on this challenge.
“We will work hard to ensure these vital benefits for state employees and teachers all across our state are protected, and will do so in the most effective and efficient manner possible for the taxpayers of Arkansas,” he said in a written statement.
Milligan added, “I am proud of the work we’ve done alongside the State Board of Finance to clean up the Treasurer’s office following the Martha Shoffner era of kickback schemes. We’ve restored public faith in and built a solid foundation for the future of the Treasury.” He was referring to a former state treasurer.
Asked about Hickey’s bill, Kirtley said Friday that he wants to fully review the legislation.
For now, Kirtley said he’s interested in getting feedback from lawmakers and the governor on the board’s proposed changes for the health insurance plans.
Tracey-Ann Nelson, executive director at the Arkansas Education Association, said the association “is deeply concerned by the looming deficit in the public school employees health insurance plan.
“Arkansas’s educators have risked their lives to keep our schools open during a public health crisis,” she said in a written statement.
“It is imperative their health insurance plan be affordable and provide meaningful benefits. It is also critical that educators have a seat at the table for all current and future decisions regarding their insurance plan,” added Nelson.
John Bridges, executive director of the Arkansas State Employees Association, said Saturday in a text message to the Democrat-Gazette, “The board of ASEA supports any efforts to make health insurance affordable for active employees and for retirees without a cut in benefits and we have voice in the decision making process.” Under state law, the State and Public School Life and Health Insurance Board includes two public school employees, a retired public school employee and a public school administrator, all appointed by the governor. Its members also include a current and a retired state employee, also appointed by the governor.
RECENT DECISION
Last Tuesday, the insurance Board voted to consider plans to raise premiums.
Under the proposals, active school employees would face a 10% increase in premiums. Retirees under 65 would face a 15% increase while retirees older than 65 would see a 20% increase.
Active state employees would see their health insurance premiums increase 5%, while retirees, regardless of age, would have a 10% increase in their premiums.
Both plans would reduce the wellness credit for active employees from $50 to $25, but deductibles will not change.
While the proposal wouldn’t erase the projected $72 million deficit completely for the public school employees’ plan, it will reduce it to $31.9 million by the end of calendar year 2022, Fecher said Tuesday.
For state employees, the board’s proposal would eliminate the projected $33 million deficit for their health insurance plan and create a $6.6 million surplus at the end of calendar year 2022.
At that time, Kirtley said the reason for the deficit is because “health care is crazy expensive.” In late September, the insurance board reversed its decision in early August to discontinue pharmacy benefit coverage for about 13,800 Medicare-member retirees in the state employees health insurance plan and force them to go through the Medicare Part D for the coverage. The board’s reversal came after some lawmakers and some retirees sharply criticized the board’s initial decision amid the covid-19 pandemic.
Information for this article was contributed by Neal Earley of the Arkansas Democrat Gazette.
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