Dropping part-time employees from coverage, limiting when employees’ spouses can enroll and increasing funding are among measures the administrator of the state’s health-insurance plans for teachers and other school employees said he will recommend to legislators later this month.
Bob Alexander, director of the state Department of Finance and Administration’s Employee Benefits Division, said he doesn’t yet know how much additional funding he will recommend that lawmakers allocate for the plans, which cover about 86,000 people, including 47,000 teachers, administrators and other public-school employees and their relatives, as well as about 12,000 retirees and their relatives.
“It will be a lot of money,” Alexander told members of the State and Public School Life and Health Insurance Board, which sets the rates and establishes the benefits for the plans.
He noted that last year, he estimated an additional $130 million in taxpayer funding would be required to get the premiums in the plan to a sustainable level, which he described as employees contributing 30 percent of the funding through premiums.
Employees now contribute about 47 percent of the plans’ funding through premiums, which Alexander has said has resulted in rates so high that healthy employees likely will opt not to enroll.
Alexander’s estimate of the additional funding needed last year came before the Legislature, during a special session, allocated an additional $43 million toward the plans to reduce the size of a premium increase.
The Legislature also provided an additional $37 million for the plans for next year.
According to figures presented Tuesday to the board by the Cheiron financial and actuarial consulting firm, that still leaves a gap of $39.9 million in additional funding or benefit cuts that would be needed to avoid a 35 percent increase in premiums.
State Sen. Jim Hendren, R-Sulphur Springs and the chairman of a task force studying possible changes to the insurance plans, said legislators would be willing to consider increased funding if it’s accompanied by other changes.
“My expectation would be that there will be some employees who have a significant increase, and some who have a minor increase,” Hendren said. “The plans aren’t priced appropriately, and that causes instability in the cash flow.”
The premiums for an individual range from $249.38 a month for the gold plan, which has no deductible, to $11 for the bronze plan, which has a $2,000 deductible.
For family coverage, the monthly premium is $1,132.96 for the zero-deductible gold plan and $269.50 for the bronze plan, with a $3,000 deductible.
Dropping part-time employees from coverage was suggested to the task force last week by Atlanta-based Continuous Health LLC, which was hired along with Memphis-based Collier Insurance to help the task force develop recommendations.
Continuous Health estimated that the move would save about $36 million in 2015. Alexander put the savings at a far lower number - about $5 million.
Hendren said the consulting firm’s estimate reflects its expectation that the number of part-time employees who sign up for coverage under the teachers plans would increase because of the mandate under the federal health-care law for individuals to have coverage.
Alexander also said the information he’s seen indicates just over 2,300 part-time employees are enrolled; the consultant had estimated 4,654.
He said he would recommend the change not as a cost-cutting measure but because most of the employees would likely qualify for subsidized coverage through the health-insurance exchange.
Through the exchange, tax-credit subsidies are available to those who do not qualify for Medicaid and have incomes of up to 400 percent of the poverty level for example: $45,960 for an individual or $94,200 for a family of four.
The tax-credit subsidies, however, are not available to employees who have access to employer-sponsored insurance that is considered affordable, meaning it would cost less than 9.5 percent of the employee’s income.
“If we save money, fine, but it’s really to the benefit of the part-time employees,” Alexander said.
Alexander said employees are allowed to join the plan only during certain enrollment periods, but once they are enrolled, their spouses can enroll at any time. To prevent spouses from enrolling only after they get sick, Alexander said, he will recommend changing state law to limit the spouses to signing up during the enrollment periods.
Spouses accounted for only 7 percent of the plans’ enrollees but made up almost 20 percent of enrollees who submitted claims of more than $100,000, Alexander said.
Board Chairman John Kirtley said he would support increasing the premium for covering spouses to reflect their full cost to the plan, although he acknowledged that would likely cause some of the spouses to drop out of the plan.
The board is expected to set rates for 2015 by July 1.
Alexander also said at the meeting that he suspended enrollment last month in a program that covers weight loss surgery for public school and state employees.
The plans spent $16 million on the program last year, including on surgeries and complications from the surgeries, Alexander said. The program had been expected to cost about $3 million a year, he said.
The program was created under a law passed by the Legislature in 2011. Part of the problem is that employees were not given an incentive to lose weight before undergoing surgery, Alexander said. After the procedure many started to regain weight, he said.
He said he was studying possible changes to strengthen requirements for the program before resuming enrollment.
Front Section, Pages 1 on 04/23/2014