Solutions to rising teacher insurance rates discussed

Arkansas lawmakers discussed how to handle a $53 million deficit in the Public School Health Insurance program that is threatening near 50% increases in premiums to be paid by teachers and other plan participants.

A meeting of the Joint Education and Insurance committees convened for most of the day on Monday (Sept. 9) as legislators, state officials and teachers debated options for closing the gap, including a call for a special session from one state senator.

The public school health insurance plan, which provides coverage for roughly 47,000 teachers and school personnel in Arkansas, has been troubled for months. Lawmakers were made aware of the problem as early as December 2012, according to minutes from an insurance subcommittee meeting. Towards the end of the session, the issue was debated with lawmakers and Gov. Mike Beebe (D) agreeing to move $8 million in general improvement funds to handle several catastrophic claims that hit the system.

Those big events had depleted reserves for the health insurance program, but other long-term factors have also wreaked havoc on the financial stability of the plan. Under-enrollment in the program was cited as one problem and the lack of allotment of state funds by local school districts for insurance premiums was also discussed.

This summer, state benefits officials said they learned of forthcoming rate hikes and in August, the oversight board voted to approve the increases that led to Monday’s committee hearing.

State Sen. Jason Rapert, R-Conway, chairman of the Senate Insurance Committee, suggested a special session may be needed to deal with the crisis. But, Beebe said he was opposed to calling a special session. His spokesman, Matt Decample, said the Governor would not consider a call if the issue could be handled in next year’s fiscal session or unless a consensus solution emerged.

In a meeting with key legislators last week, Decample said short-term financial solutions and long-term system options were discussed.

LEGISLATORS REACT
Rep. James McLean, D-Batesville, chairman of the House Education Committee, said he thought the day’s discussion was educational to bring lawmakers up to speed on how the funding for school personnel health insurance works.

In the short run, he sees the need for immediate action either in a special session or in February 2014′s fiscal session.

“It seems to me there’s going to have to be some infusion of one time money very quickly,” McLean said. “I don’t think we can wait until 2015 to do this.”

Sen. Joyce Elliott, D-Little Rock, a member of the Senate Education panel, said the debate did not provide clarity on every issue, but it did help dispel misunderstandings about the complexity of the program.

“No question, we must figure out a short-term solution, which – unfortunately – means more funding,” Elliott said. “Long-term, we must be open to re-thinking the whole structure on which the system is built.”

Sen. Johnny Key, R-Mountain Home, chairman of the Senate Education Committee, said more incentives could be used to empower school employees to “take charge” of their health care decisions and be more invested as consumers.

“In the long run, this would drive down costs, benefitting both the employees and the taxpayers,” said Key. “Another is to continue pouring funds to prop up the current plan options, and I don’t sense an appetite for that among my colleagues.”

Sen. David Sanders, R-Little Rock, a member of the Senate Revenue and Tax panel and an architect of the private option plan approved in the last session, said the school personnel insurance program is “a huge mess” and “an actuarial nightmare.” Sanders said it will be hard to come up with a short-term fix.

“We don’t have a mechanism to ease the shock during the new plan year now, but we need to try,” he said.

Like Key, he wants to see a push for consumerism as a long-term solution for the public school health insurance plan.

“Throughout the state and country, numerous self-funded/insured plans have pursued plan management strategies aimed at injecting consumerism, personal responsibility and employee participation into plans. As a result, prices have stabilized in those plans. That’s not been the case in this situation,” said Sanders.