Raising insurance premiums considered

LITTLE ROCK — A vote Tuesday put public school and state government employees in the possible position of having to foot the bill for projected deficits in their collective health insurance funds.

On Tuesday, the State and Public School Life and Health Insurance Board voted to consider plans to raise health insurance premiums for public school and state employees, but Gov. Asa Hutchinson and lawmakers will have to weigh in before the plan can be finalized.

Under the proposals, active school employees would face a 10% increase in premiums. Retirees under 65 will face a 15% increase while retirees older than 65 will see a 20% increase.

Active state employees would see their health insurance premiums increase 5%, while retirees, both older and younger than 65, will have a 10% increase to their premiums. Both plans would reduce the wellness credit for active employees from $50 to $25, but deductibles will not change.

Members of the board emphasized Tuesday’s vote was a preliminary one, saying they voted to approve it only so they could have something to show lawmakers and the governor.

While some members of the board were hesitant about approving a plan, Amy Fecher, secretary of the Arkansas Department of Transformation and Shared Services, said the board needed to vote on a plan to show lawmakers before the General Assembly passes its budget.

“Right now, the Legislature is voting on a budget for the next two years, so we really need to have those discussions before the session adjourns,” Fecher said.

Fecher said the board will get a better idea of how much money the General Assembly will contribute to narrowing the deficit after members of the board meet with lawmakers.

The biggest question during Tuesday’s meeting was how to cut the projected $72 million deficit for the public school employees’ fund. While the plan to increase premiums won’t wipe away the deficit completely, it will reduce it to $31.9 million by the end of fiscal 2022, Fecher said.

Greg Rogers, an assistant commissioner for the Arkansas Department of Education, said the plan was about making a “good faith effort” to cut the $72 million deficit down to size, saying “we’re not trying to make up this whole thing today.”

“This isn’t a one-year problem, this is a multiyear project,” Rogers said. “And so trying to fix it all this time, I’m struggling trying to get there.”

The $72 million deficit is what the board projects for the next fiscal year as the costs of health care outweigh the money coming into the fund. John Kirtley, who is the vice chairman of the State and Public School Life and Health Insurance Board, said the reason for the deficit is because “health care is crazy expensive.”

For state employees, the proposal would eliminate the projected $33 million deficit for their health insurance fund and create a $6.6 million surplus.

To help out with expensive health care costs, Hutchinson last week asked the General Assembly’s Joint Budget Committee to transfer $20 million to the Employee Benefits Division for additional contributions to the insurance program.

The $20 million Hutchinson requested was already factored into the plan the board voted on Tuesday, a Transformation Department spokeswoman said.

While teachers may have to pay more for health insurance, some of those costs could be offset by raises after Hutchinson signed a bill Monday that will raise the median teacher’s salary in Arkansas by over $2,000.

Currently, the median teacher’s salary in Arkansas is $49,822, with officials projecting that to increase to $51,822 after Hutchinson signed the pay increase into law.