Benefits panel opposes rate rise

The health insurance premiums and benefits for public school and state employees should stay the same next year, a state panel recommended Friday.

The unanimous recommendation by the State and Public School Life and Health Insurance Board’s benefits subcommittee came after a consultant told the panel that the health plans have enough reserves to offset the need for a rate increase next year.

Based on the available reserves and expected

growth of expenses for medical care and drugs, rates likely won’t need to be increased until 2020 for the school employees’ plans and at least 2019 for state employees’ plans, John Colberg, an actuary with the consulting firm Cheiron of McLean, Va., told the subcommittee.

A small increase in the rates for state employees’ plans next year would reduce the likelihood that a large increase for those plans will be needed in 2019, Colberg said.

But committee member Shelby McCook, who made the motion to keep the rates the same, said it’s too early to predict what shape the plans’ finances will be in then.

“I’d rather turn the heat up gradually when it’s justified, but right now it’s not justified,” McCook said.

The panel’s recommendation will go to the full board Tuesday.

The plans cover about 148,000 people, including 45,000 school employees and 26,000 state employees as well as retirees and the spouses and dependents of employees and retirees.

The possibility of a large rate increase for the teachers’ insurance in 2013 prompted then-Gov. Mike Beebe to call a special session of the Legislature in which lawmakers allocated $43 million in surplus tax revenue to shore up the school plans.

Lawmakers also increased the amount of state funds that go to the school plans each year from $50 million to more than $80 million.

Laws passed during a special session the next year limited coverage of weight-loss surgeries and excluded from coverage part-time employees and employees’ spouses who can get coverage from their own employers.

The board also overhauled the coverage offered by the plans, adding deductibles to the most expensive option, now known as the premium plan, and creating a new, high-deductible option called the basic plan.

The rates for the plans did not increase in 2016. This year, they increased 2 percent for school employees and 3 percent for state employees.

Based on projected annual increases of 5 percent in medical costs and 11 percent in drug expenses, Colberg told committee members in May that the state employees’ plans would run out of reserves over the next few years, creating the need for a 32 percent rate increase in 2019.

But he said Friday that low medical expenses during the first part of 2017 had improved the outlook, lowering the increase predicted to be needed in 2019 to 14 percent.

The needed increase that year could be bigger or smaller, depending on how expenses compare with the forecast, Colberg said.

Groups representing state employees and teachers said they support the subcommittee’s recommendation.

Marc Watts, senior legislative analyst for the Arkansas State Employees Association, noted that the pay for some state employees will increase by just 1 percent under the pay plan, which was adopted by the Legislature this year and begins July 1.

“We’re just happy that the recommendation was to not increase premiums or change benefits,” Watts said.

Brenda Robinson, president of the Arkansas Education Association, the state’s largest teacher and support-staff union, said in an email that her organization is “optimistic” about the subcommittee’s recommendation and “will remain vigilant” when it goes to the board Tuesday.