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Fiscal session could see more state health insurance reform proposals

Posted: October 26, 2013 - 2:50pm

LITTLE ROCK — On the heels of a special session to avert a steep rise in health insurance premiums for teachers and other school employees, lawmakers could consider providing help for retired teachers not yet eligible for Medicaid in next year’s fiscal session.

In the recent special session, the Legislature earmarked $43 million from the state surplus to hold a nearly 50 percent increase in premiums set to go into effect Jan. 1 to 10 percent. Lawmakers lopped another $36 million annually from other state sources to shore up the public school employees health insurance system and created a task force to study the system and recommend structural changes for its long-term stability.

Legislators also discussed, but took no action, on legislation aimed at helping retired teachers avoid a scheduled 20 percent hike in health insurance premiums on Jan. 1.

A bill by Sen. Jeremy Hutchinson, R-Little Rock, that would have used $4 million from the state’s surplus to help about 3,000 retired teachers was one of two cost-containment proposals considered. Hutchinson said he hopes to get his proposal on the agenda during the fiscal session in February.

Rep. Jim Nickels, D-Sherwood, wants his proposal that would consolidate all of the public sector insurance plans under one umbrella to be considered by the task force created to look at ways to improve the health insurance plans for teachers and school personnel as well as state employees.

Rep. Harold Copenhaver, D-Jonesboro, co-chairman of the State Public School Life and Health Insurance Program Legislative Task Force, said he expects both proposals to be looked at by the panel.

“We have to look at every option that is available for these teachers and what’s best for the state as well,” Copenhaver said last week after the task force’s first meeting.”

During the special session, Hutchinson told the Joint Budget Committee that more than 700 retired school teachers live in his Senate district and that those who are not Medicaid eligible, under 65-years-old, receive no state assistance in paying their insurance costs.

“If we are, and it appears we are, going to be allocating and appropriating money to assist teachers and school employees with their increased insurance premiums, I think it’s only fair that we do the same, or at least offer some assistance to the retired teachers who don’t have a school district to fall back on or petition for help until they are 65,” he told the committee. “They are on their own and they are being hit very hard.”

Hutchinson said last week that many of the 3,000 are recent retirees and probably were not anticipating such a hike in their insurance rates when they were planning for retirement.

“I don’t think the state can afford to do a long-term premium support for them, but the first year, to help with the sticker shock, I think we could put in $4 million of general improvements funds and that would reduce the premium increase by 50 percent,” he said.

The Legislature’s fiscal session begins Feb.10 and if the funding is approved, the retired teachers would see their premium increase cut in half for most of 2014, Hutchinson said.

Bob Alexander, director of the state Employee Benefits Division, said last week that “a vast majority” of the 3,000 retirees participate in the top-tier Gold Plan and face an premium increase of $97 every two weeks. Those in the Bronze Plan will see an average increase of $114 a pay period.

Nickels proposed during the special session a bill that would establish a unified health care benefit program for all publicly funded employees and retired employees. The measure was discussed in the House Insurance and Commerce Committee but no action was taken.

“I think all the public sector risk pools should be just one risk pool, and that would include university health insurance, city, Municipal League, counties, state police, highway, everybody into one risk pool,” Nickels said.

“I think that the legislation that just passed only kicked the can down the road a little bit, and until we get everybody into one risk pool, we’re going to have this problem,” he said. “There are going to be winners and there are going to be lowers.”

Nickels told lawmakers that if they do try to consolidate all the insurance plans, representatives and lobbyists for everyone will descend on the state Capitol in opposition arguing that their individual plans work, and many will probably be correct.

The goal, he said, is to “do what is in the best interest for the state of Arkansas.”

Nickels acknowledged that analysts from the Bureau of Legislative Research said the fiscal impact of combining the public health insurance plans would be high, but said their report suggested that “overall, it’s a wash as far as the economic impact on taxpayers in the state of Arkansas.”

The fiscal impact statement said consolidation the administrative resources “is expected to create economies of scale in a statewide context, and therefore decrease overall costs.” It also said “there will be winners and losers, for example, while EBD would require expansion, many other systems’ offices would no longer be required.”

Nickels also mentioned a 2010 study by the National Conference of State Legislatures which concluded states that consolidated all public sector insurance plans would save money by containing costs, simplification and with multi-agency purchasing arrangements. Employees would have more choices for health benefit plans, the study said.

Rep. Tommy Wren, D-Melbourne, who sponsored legislation during the special session to create the task force and has appointed to the 12-member panel, said he liked Nickel’s proposal.

He said the premise behind the proposal is, “if we combine (all the plans) we have more participation, we have more money, and when we have a catastrophic event there’s more money in the pool to cover those.”

“I think this is a great idea,” Wren said. “I appreciate Rep. Nickels bringing this up and I do think it’s something the task force will look at immediately.”

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