Consultants: Arkansas school districts’ health insurance program adequate for now

FILE — This 2015 file photo shows public school buses. (AP Photo/File)
FILE — This 2015 file photo shows public school buses. (AP Photo/File)

Funding for the state's health insurance program for public school districts is "adequate" for now, a pair of consultants told members of the Arkansas House and Senate Education committees Tuesday.

Patrick Klein and Matthew Kersting, consultants from the Segal Group, briefed lawmakers about the change in the state's health insurance minimum contribution rate.

The state's current minimum monthly contribution rate for districts is $150 but is set to increase to $300 in January. They said the state will have to continue to increase minimum contributions from school districts to keep up with rising health care costs.

"Based on our projections, we think the funding is adequate for the short term, but there's likely going to be needed changes in the longer term to account for the medical inflation associated with the program over the next five years," Kersting said.

During the fiscal session earlier this year, lawmakers approved allowing the Senate and House Education Committees to set the minimum health insurance contribution rate for school districts.

The projections show at the $300 minimum contribution, the health insurance program for participating school districts will begin losing money in fiscal year 2025.

Under those projections, the state's total assets under the health insurance program by fiscal year 2027 will dip below the state's target reserve of $89 million.

The increase in costs is projected to come from rising medical and prescription claims and on the administration, according to the consultants. Kersting recommended the state tie increasing the minimum contribution from school districts and funding from the Department of Education to the medical consumer price index.

For the state it's about balancing the contributions from school districts, employees and the state Department of Education with the projected rising costs of health care, said Republican state Sen. Missy Irvin of Mountain View, chair of the Senate Education Committee.

The consultants laid out projections to minimize future losses in the state's school health insurance program while keeping the reserve levels high in fiscal year 2025 and beyond.

Lawmakers could raise the minimum contribution to $328 or gradually raise it from $300 in 2023 to $347 in fiscal year 2027 under one of the proposals from the consultants.

"What they're telling us is, we're good for another couple of years, but probably this next session we'll have to run new legislation that will keep us caught up with it," said state Rep. Bruce Cozart, R-Hot Springs, chair of the House Education Committee.

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