Legislators Consider Insurance Subsidy For New Teachers

Paying health insurance premiums for new public school employees during their first two years of employment and then gradually decreasing the subsidy over the next three years could shore up a system that has lost too many young and healthy participants in recent years.

The idea, advanced by Rep. Bill Gossage, R-Ozark, could benefit the public school employee health fund by more than $10 million by 2021, according to a study by Cheiron, a financial analyst and actuarial consulting firm.

Cheiron’s findings were presented Tuesday by Bob Alexander, executive director of the state Employee Benefits Division, to the State & Public School Life and Health Insurance Task Force, a legislative committee of which Gossage is a member. Cheiron’s analysis noted that “there is a great deal of uncertainty around these figures.”

The task force has been meeting to find ways to strengthen insurance offerings for both state employees and public school employees – particularly school employees, whose system has seen higher and higher rates in recent years that have been driving younger, healthier participants to other providers.

Gossage’s idea would subsidize 100% of insurance premiums of $179 per month for school employees during their first two years of employment, 75% in year three, 50% in year four, and 25% in year five. That would add a group of young, healthy employees to the risk pool who wouldn’t file many costly claims. Hopefully, they would remain in the system once the subsidy ends, paying into the fund when they are still young and healthy, officials hope.

By 2021, about $22.2 million in insurance premiums would be subsidized, but employee claims would be projected to cost $11.8 million, creating a net positive of $10.4 million. School districts would be contributing $8 million to the premiums of the extra employees.

Alexander said the idea would reduce the system’s total claims cost by 1 to 2%. Gossage pointed out that it would serve as a recruiting tool for potential teachers. In later years, money from the subsidies could come from the plan itself, but a funding source for the start of the policy has not been identified.

Alexander told task force members earlier in the meeting that both the state employee and school employee health plans are in much stronger positions than in recent years. The school employee fund has had a net gain of $31.3 million this year, compared to a loss of $11 million last year. The state employee fund has had a net positive of $24.1 million this year, compared to a negative of $3 million last year.

Savings have occurred because of changes in the division’s policies regarding pharmaceutical drugs and because the system has had fewer large claims, and those large claims have been smaller than in recent years. Reforms passed by the Legislature removing part-time employees and some employee spouses from coverage have not had time to take effect.

The task force also heard a presentation from David Toomey of Compass Care Engineering, a national health care consultant with more than 2,000 clients, including more than 100 governmental entities. Toomey said his organization would set up a research center in Arkansas and help guide employees through the medical system, helping them understand benefits and assisting them in finding the best and most cost-effective medical care. The cost would be $6 per employee per month, and he guaranteed a savings of 1.5 times the investment.

The task force also gave its approval for a $40,000 contract with Richard Kersh of Russellville-based Human Factor Analytics, which will study the effectiveness of Arkansas’ state and school employee wellness programs. The contract must be approved during a Friday meeting of the Arkansas Legislative Council, the group of legislators that meets to conduct business when the Legislature is not in session.