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Teachers give low marks to parts of insurance plan

Organizations that lobby on behalf of Arkansas public school teachers say they are glad the Legislature and the governor took up the issue of rising health insurance costs in last week’s special session but are disappointed with some of the results.

Lawmakers approved, and Gov. Mike Beebe signed into law, a package of proposals seeking to prevent an aggregate increase of 35 percent in school employees’ premiums and a $36.6 million deficit in the school employees’ health insurance fund.

One part of the package that has drawn criticism is the decision to exclude part-time school employees from coverage.

“If more participation is better for a plan, how does removing participants help?” said Michele Linch, executive director of the Arkansas State Teachers Association.

“The whole idea of health insurance is to create a large pool to smooth out the risk, and you need to attract healthy bodies so you don’t just have adverse selection,” said Tom Dooher, executive director of the Arkansas Education Association. “What we saw this legislative session, this special one, was just a cost shifting to employees and eliminating a group of employees who really need the health insurance — and it doesn’t help the pool stay healthy.”

Sen. Jim Hendren, R-Gravette, chairman of a task force on school employees’ insurance and Senate sponsor of the legislation on insurance that passed in the special session, said that although there are advantages to having a large insurance pool, reducing the number of participating teachers from 47,000 to 43,000 by excluding part-time employees will not significantly change the risk factor.

On the other hand, he said, the state is providing a fixed amount to the Employee Benefits Division of the state Department of Finance and Administration to distribute among school employees’ insurance plans, and excluding part-time employees will mean that “the amount of dollars per person will go up” while claims go down.

Also, one thing that has been driving up costs is that “the claim history of the part-time population is significantly higher than the full-time population,” he said.

The exclusion of part-time employees from coverage also raises concerns about school districts’ ability to hire part-time employees, according to Jerry Noble, superintendent of the Greene County Tech School District.

“We’re going to have trouble getting bus drivers,” Noble said.

The owner of a plastics company, Hendren said that over time he has found that hiring full-time employees is more efficient for his business than hiring part-time employees.

“I think you’ll see similar things happening in school districts. I think school districts will adjust,” he said.

Hendren said it was hard to remove people from eligibility, “but I think it’s harder for us to see our teachers just getting priced out of this state to where we won’t be able to recruit and retain any good teachers because our insurance is spiraling out of control.”

He also noted that a number of part-time school employees would qualify for insurance under the private option, Arkansas’ version of Medicaid expansion.

Dooher noted that some of the legislators who have been touting the availability of the private option, including Hendren, have voted against it in the past.

“You can’t have it both ways,” Dooher said.

Hendren said decisions had to be made based on the laws that exist today. He said he is focused now on the insurance issue and not on the private option, but he said that when the Legislature revisits the private option in the future, “that’s something that all of have to keep in mind: People who do enroll in that, what are the alternatives going to be?”

The Employee Benefits Division has not yet set rates for the coming year, but Dooher said there is a proposal for a plan with a $6,000 individual deductible and a $13,000 family deductible.

“That’s like having no insurance,” he said. “Education employees aren’t highly compensated anyway, and to have to pick up the first $6,000 is a tremendous burden for them financially.”

Noble said that even after an employee reaches the $6,000 deductible, he or she would have to pay an 80 percent co-payment on health care up to a certain amount.

“It could keep you from going bankrupt, I guess,” Noble said, adding, “That’s about all it’s good for.”

Hendren said he did not know whether the proposed $6,000-deductible plan would be adopted, but he said that even if it is, there will still be a plan similar to the plan now known as the bronze plan, which has a $2,000 individual deductible.

“I think there’s a lot of concern that we’re just taking the bronze plan and putting it up to $6,000, and that’s not the case,” he said.

Hendren also said one of the changes the Legislature approved was to require people on high-deductible plans to have health savings accounts, “the idea being that over time you accumulate money in your health savings account so that you can meet the deductible with those dollars and have the protection of a high-deductible plan but not have the high premium.”

Noble said health savings accounts can help encourage people to manage their health care and not over-utilize services, resulting in lower costs, but he said they are not likely to accomplish much unless the state contributes to them — and state contributions are not promised under the legislation passed in the special session.

Hendren said that although state contributions are not written into the legislation, EBD is building into its pricing models a planned contribution of $25 a month to each account. Legislators did not write a specific amount into the bill because they wanted to leave some flexibility, he said.

Linch and Dooher said they understood that lawmakers were limited in what they could accomplish in a three-day special session, but they said longer-term solutions are needed.

“These are just small bandages on gaping wounds,” Dooher said.

Hendren said the Legislature put a bandage on the problem in a special session in October when it “threw money” at it, but he said the new changes, while not a cure-all, are expected to result in $40 million to $50 million a year in ongoing savings and allow school employees to see an aggregate premium increase of 3 percent rather than 35 percent.

“If that’s a Band-Aid, that’s a pretty expensive Band-Aid,” he said.

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