A legislative panel Wednesday authorized the Bureau of Legislative Research to enter contract negotiations with the Segal firm to be the bureau's consultant to review health insurance plans for public school and state employees.
State officials are looking for options to counter projected deficits in both plans in 2022.
The Legislative Council's Executive Subcommittee action was taken after subcommittee members spent 2½ hours listening to and questioning officials from two employee health benefits consultants -- Segal in Atlanta and Cheiron Inc. in North Carolina.
The two firms are among six consultants that submitted responses to a request for proposals to help develop and implement a strategic plan and legislative framework for the two health insurance plans. The aim would be for the consultant to present a final report to the Legislative Council in October.
After Wednesday's meeting, Sen. Missy Irvin, R-Mountain View, who made the motion for the bureau to negotiate a contract with Segal, said, "I think we are in a situation where Segal provides a very fresh look and a new look, completely unattached to our situation."
Cheiron Inc. was the actuary for the state's Employee Benefits Division for 11 years, and its project team included a former deputy director of the division. The division oversees the insurance plans.
The Legislative Council's Policy Making Subcommittee is expected to consider the negotiated contract with Segal on May 20 and the full council is expected to consider the proposal on May 21.
Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said, "We are in a short-term crisis."
Act 1004 of 2021 transferred the governance of the two health insurance plans on a temporary basis from the now-dissolved State and Public School Life and Health Insurance Board to the state Board of Finance. The finance board is scheduled to meet Tuesday to continue reviewing the insurance board's recommendations for changes to the plans in 2022 as well as other options that the board wants to review. The finance board will make its own recommendations to the Legislative Council.
Hickey told Segal officials that "one thing that we want to see is that we would have some kind of recommendation from you all on how to structure the governance" so that all stakeholders are involved, but the governing board includes the needed expertise to avoid a similar crisis in the future.
Hickey said he wants recommendations from Segal on proposed "triggers" in case a health insurance plan's expenses exceed revenue or a plan's reserve funds fall below a certain level, "then your premiums at that point would go up or there is some mechanics that would have to be reported to this body, where we would have to make a decision on whether the premiums would increase or whether the [state] dollars would have to put in from this level.
"I think, from my standpoint, at this point we would consider all things on the table," he said.
Under the defunct insurance board's proposals for 2022, 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 premiums increase 5%, while retirees, regardless of age, would have a 10% increase in their premiums. The state also would increase its monthly funding per employee by $50 a month under this plan.
Both plans would reduce the wellness credit for active employees from $50 to $25 a month, create a $50-a-month non-wellness contribution for active employees and eliminate the wellness preventive-screening requirement to see a doctor in person.
These proposals are projected to reduce the public school employees plan's forecast deficit from $70 million to $29.7 million for 2022 and turn the state employees plan's projected deficit of $33.3 million into a surplus of $6.2 million, according to state officials. Both plans have dwindling reserve funds.