Legislators to Address Rising Cost of Teacher Health Insurance

LITTLE ROCK, Ark., Sept. 4 -- The Arkansas Senate issued the following weekly update:

The Senate Committee on Education will meet in joint session with the Senate Insurance and Commerce Committee, beginning on September 9, to explore ways to hold down spiraling costs of teacher health insurance.

The state board that oversees the self-funded health insurance plan for public school teachers recently set the rates for 2014, and they entail substantial rate increases. For example, the Gold Plan for families will cost the employee 1,538 dollars a month, up from 1,029 dollars.

Based on past patterns, this rate hike will likely drive future rates even higher because it will force more school employees to drop the Gold Plan and choose a cheaper option. This "migration" from a comprehensive plan to a less expensive option has happened in significant numbers over the past two years.

The school employees who choose the cheaper option tend to be healthier. They don't need all the options available under the Gold Plan. At the same time, those who remain in the Gold Plan tend to have more illnesses. They need the enhanced options of the Gold Plan because of their health issues.

But in 2014 even the cost of the cheaper Bronze Plan will go up significantly, from 245 dollars to 374 dollars a month per school employee. Coverage for an individual in the Gold Plan will go up from 227 dollars to 341 dollars a month, and for the Bronze Plan from 10 dollars to 50 dollars a month. That represents only the cost to the teacher or school employee. The school districts that employ them will also see increased costs.

In the 2013 regular session the legislature voted to raise the minimum contribution that districts must make for each school employee, from 131 dollars a month to 150 dollars a month.

About half the districts in Arkansas contribute the minimum 131 dollars and the others contribute more. The 150 dollars minimum contribution will be effective on January 1, 2014.

State government subsidizes teacher health insurance with about 50 million dollars a year in funding. That amount has stayed the same for several years, even though the number of teachers and dependents has risen. Therefore, it doesn't go as far as it used to in alleviating health insurance costs for individuals.

When the legislature meets in fiscal session in February of 2014, there will be a push to increase state funding to defray more of the costs of health insurance paid by school employees. A spokesman for the governor said that he would ask for more funding during the fiscal session.

The teacher health insurance fund took another financial hit last year when its Catastrophic Reserve Fund was totally depleted by four separate claims, which amounted to a total of 10 million dollars. The claims for catastrophic illnesses also depleted a different 3.6 million dollars reserve fund that had been set aside to offset increases in premiums in 2014.

In order to replenish the reserve funds, each adult in the teacher health insurance plan was assessed an additional 5 dollars fee. The board hopes that imposing the fee will prevent it having to raise premium rates in the middle of 2014. The plan covers about 50,000 school employees and 30,000 dependents.

The price of health insurance goes up because of higher medical costs, higher prescription drug costs, an increase in the number of major claims and an increase in the total number of insured people who file claims.

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