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Arkansas lawmakers release drafts of health insurance plan changes for state, school employees

Measures aim at stabilizing, cutting costs of school, state employee coverage by Michael R. Wickline | January 26, 2022 at 7:01 a.m.
FILE — The state Capitol is shown in this file photo.

Legislative leaders are circulating several draft bills that would change state laws over governing and financing of the state's health insurance plans that cover more than 100,000 current and retired public school and state employees.

The draft bills largely reflect the recommendations of the consulting firm The Segal Group that the Legislative Council approved on Nov. 19.

The Segal Group's recommendations are aimed at stabilizing funding and cutting costs for the two health insurance plans.

Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said Monday the drafts are being circulated to allow people to start reviewing them and make suggestions for potential changes.

"It's been a monstrous process to get through and figure it out," he said.

Gov. Asa Hutchinson said Monday he supports in principle changes in state law to protect the health insurance plans.

"I haven't seen the final draft, but I want to be supportive of that and want to do what is necessary either to have those passed in the fiscal session or very likely a special session that will be called in conjunction with the fiscal session," the Republican governor said in an interview. The fiscal session starts Feb. 14.

Under a draft bill proposed by Hickey and a Legislative Council co-chairman, Rep. Jeff Wardlaw, R-Hermitage, the state Board of Finance would continue to be the governing board for the health insurance plans and the state insurance commissioner would be added to the board solely for voting on health benefit plans.

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.

The finance board has governed the plans since Act 1004 of 2021 dissolved the 15-member State and Public School Life and Health Insurance Board, which was largely appointed by the governor, and transferred its duties to the finance board.

The draft bill also would create five-member benefit advisory commissions for each plan.

The two commissions would meet monthly and each appointee would be paid a stipend of $500 per month plus mileage. Each advisory commission would make recommendations by Jan. 31 starting in 2023.

Hickey described the two advisory commissions as "operating boards" that would be hands on with the health insurance plans and make recommendations to the state Board of Finance, which would in turn make recommendations to the Legislature.

RESERVE BALANCE

A second bill proposed by Hickey and Wardlaw would require the director of the state's Employee Benefits Division to aim for an optimal reserve balance of 14% of expenses to ensure the solvency of each plan, beginning in plan year 2023.

Under this proposal, if the division's director determines that the amount of revenue collected by the division is not projected to equal or exceed the acceptable reserve balance amount of 12% of expenses for a plan in a plan year, the director would be required to notify the Legislative Council of the need to convene to consider providing more funding.

If more funding is needed to maintain the acceptable reserve balance, the Legislative Council may recommend the governor call a special session of the Legislature or take further action as may be appropriate.

If by July 30, the General Assembly fails to provide funding to maintain an acceptable reserve balance, the director would be required to start a process to collect the required additional revenue from program participants through premium rate increases and/or reducing program benefits for the next plan year.

If the director determines that the reserve balance for either plan is projected to exceed 16% of expenses, the director may elect to use the excess to directly benefit the plan through lowering of premium rates for the next plan year or through expanding benefits with the approval of Legislative Council.

OVERSIGHT COMMITTEE

A draft bill proposed by Wardlaw and Legislative Council Co-Chairman Terry Rice, R-Waldron would require the Legislative Council to create the Employee Benefits Division subcommittee to oversee the plans.

The proposal would require the Employee Benefits Division director to enter into a memorandum of understanding with the director of the Bureau of Legislative Research to share services with the consultants hired by the bureau for the most cost-effective vendor for prescription pharmacy services and medical services within 10 business days of the effective date of the proposal.

Hickey said it's possible that the Legislative Council extends the bureau's contract with The Segal Group for additional work with the Employee Benefits Division on drafting requests for proposals, "but that is not set in stone yet."

The proposal also would require the Employee Benefits Division oversight subcommittee, with the cooperation of the division director, to study general diabetes management programs to evaluate the viability and sustainability of such a program for the health insurance plans. A report summarizing the results of the study would be required to be filed with the Legislative Council no later than July 1, 2024, under the draft bill.

OTHER BILLS

The other drafts include:

• A proposal by Rep. Brian Evans, R-Cabot, and Sen. Missy Irvin, R-Mountain View, that would require school districts to pay the health insurance contribution rate established by the House and Senate education committees through the biennial adequacy review process for each eligible employee electing to participate in the public school employee health insurance plan, starting Jan. 1, 2023.

• A proposal by Rep. Mark Berry, R-Ozark, and Hickey, that would eliminate the cap of $550 per month contribution for each budgeted position of state agencies to contribute to the state employee health insurance plan.

• A proposal by Rep. Jim Dotson, R-Bentonville, and Irvin that would allow the Board of Finance to establish an annual expenditure limit on a plan option for coverage for the diagnosis and treatment of morbid obesity, subject to the approval of the Legislative Council.

• A proposal by Evans and Hickey that would require future state and public school employees to be enrolled in the respective state health insurance plan for at least five cumulative years to receive health insurance coverage as a retiree. The proposal would grandfather in current public school and state employees for health insurance coverage as retirees, Hickey said.

Officials for the Arkansas Education Association and Arkansas State Employees Association on Monday lauded the proposed measures.

John Bridges, director of the Arkansas State Employees Association, said the association's "board and myself agree that these bills will go a long way in improving the transparency and the overall health of the plan."

Arkansas Education Association Executive Director Tracey-Ann Nelson said, "We appreciate the hard work of the legislators who have led the charge on this package of bills.

"At this time, the last thing educators need to worry about is healthcare access and cost," she said in a written statement. "This package will ensure that the public school health insurance program is sustainable and salient for the long term."


Print Headline: Changes floated for insurance plans

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