Tuesday, July 15, 2014

New teacher insurance rates to be announced July 29th

Posted By on Tue, Jul 15, 2014 at 7:27 PM

FIX STILL COMING: Sen. Jim Hendren says more work is yet to come
  • FIX STILL COMING: Sen. Jim Hendren says more work is yet to come
Sen. Jim Hendren (R) opened Tuesday's meeting of the legislative task force assigned to fix the troubled public school employee (PSE) insurance system with a frank acknowledgement that the recent special session didn't truly fix the problem. Some school superintendents have criticized the changes approved by the legislature as woefully insufficient. Hendren (who chairs the task force) said that the goal of the special session was always to prevent a catastrophic rise in rates at the end of 2014, not to tackle the entire broken system — a task that Hendren said was too complex to consider during the special session. Now's the time to start considering the big, systemic overhaul, he told the committee, with the tentative goal of delivering recommendations to the General Assembly in 2015 for a major policy change.

That might involve merging school employees' insurance with the healthier system for state employees, said Hendren. It might involve "letting school districts go their own way" from the state entity that currently manages both insurance pools, the Employee Benefits Division (EBD) — that is, privatizing PSE insurance. Or, it might be something completely different. Either way, it looks as though the task force is actually serious about pushing for a more systemic fix in 2015, and Hendren promised the committee's meetings throughout rest of the year would be devoted to exploring such ideas.

But what about the short-term piece? EBD Director Bob Alexander said the finalized rates for public school employees will be released at the department's next board meeting, on July 29th. Did the special session at least accomplish the goal of holding back huge cost increases for teachers and other PSEs come January 1st?

That  remains to be seen, and it partly depends on what's considered "huge" and what's considered a "cost increase." As many teachers have pointed out, EBD often cites rates for individual-only coverage, when it's really family and spousal coverage that incur the truly backbreaking premiums. For example, in the current plan year — 2014 — the employee share of premium on a Bronze plan for an individual teacher is $11; if that teacher wants to insure his spouse and children, though, it's $269.50. A 50 percent cost increase on one is not comparable to a 50 percent cost increase on the other. Alexander told me that EBD is planning the rates with that complication in mind and that families won't end up eating inordinately high costs. We'll have to wait until the rates are released to see the details.

The good news, according to the numbers Alexander released, is that the PSE pool is no longer in the red at the moment. "The actuary projects $8 to 9 million to the good by the end of the year for the PSE plan," he said.

In the meantime, EBD has released 2015 rates for the other side of the looking-glass, the state employees insurance pool. The PSE side will look similar. Gone are the familiar Gold, Silver, and Bronze categorizations, replaced by "Premium", "Classic", and "Basic." The reasoning here is that the old "metallic" tiers were misleading to consumers because they weren't comparable to metallic plans of the same name sold on the ACA exchange. The Silver plan previously offered by EBD had an equivalent actuarial value to a Gold plan on the exchange, said Alexander, and EBD's Gold plan was closer to a Platinum. That is, EBD's old classifications underrepresented how rich the plans actually were, so they're renaming everything.

Confusing as hell, yes...but unfortunately, the new change will be as well. The old EBD Bronze plan? That's now dubbed "Classic", and EBD says it has an actuarial value similar to that of some Silver products offered on the ACA exchange. The new "Basic" plan offered by EBD is a new creature. It will have a very high deductible and an attached health savings account (HSA). It looks to be the barest catastrophic coverage that's still considered acceptable under the Affordable Care Act, about as rich as the flimsiest Bronze plans sold on the exchange. The new "Premium" plan is the old EBD Gold, with a $500 deductible added for state employees (Alexander told me after the meeting that the "Premium" deductible for school employees will likely have to be $1,000. Also, as a weary aside, I predict that naming a plan "Premium" is going to create semantic headaches for a lot of people.)

This, plus the other grab bag of changes happening, is sure to sow additional confusion among school employees. EBD says it's now working to educate the HR professionals in districts to make sure employees comprehend what's happening with their insurance. Godspeed.

Support for education reporting provided by the Arkansas Public Policy Panel.

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