by Michael R. Wickline, Arkansas Democrat-Gazette

November 20, 2021

The Arkansas Legislative Council on Friday approved a consultant’s recommendations aimed at stabilizing funding and cutting costs for the health insurance plans for current and retired public school and state employees.

The Segal Group consulting firm recommended that the state link future funding increases for the two insurance plans to an inflation measure, such as the health care consumer price index.

Rep. Jeff Wardlaw, R-Hermitage, said the average increase in that index has been about 5% a year.

The state would build a multiyear projection model for the two plans and establish target reserve fund ranges equal to between 12% and 16% of claims, under the consultant’s recommendation.

The state’s Employee Benefits Division would be responsible for managing the plans’ expenses so that the fund balances would be at the midpoint target of 14% of claims by the end of the projection period, the Segal Group said in a written report.

If the projected reserve funds fall below 12% of claims, a funding “trigger” would be executed to stay within the range by increasing contributions from employees and the state, Wardlaw said.

If the projected reserve funds exceed 16% of claims, the plans may decide to reduce premiums and state contributions, he said.

The consultant said the state should also consider increasing employee contributions at a slower rate than state contributions in the near term.

“The last thing we want is our teachers to get a raise and it all goes to insurance,” Wardlaw said.

Afterward, John Bridges, executive director of the Arkansas State Employees Association, said Friday, “We appreciate the approach and recommendations [the Legislative Council] has taken of trying to create a stable health care plan for the long term.

“The retirees who have been following the process are happy that they will not be removed from the pharmacy plan permanently as they faced last year and now can stay in the state’s pharmacy plan if an Advantage plan does not fit their needs,” he said in a written statement.

“Hopefully with the new metrics in place going forward active state employees will not be faced with sudden, large premium increases that erodes their yearly performance pay increases.”

The state’s health insurance plans are “generally middle of the pack” from a design perspective, though employer contributions are low relative to the benchmarks of neighboring states, Segal’s College and University Benefits Survey and overall market trends, according to the Segal Group.

The state should combine the funds of the health insurance plans for public school and state employees and retirees to maximize stability and provider consistency between programs, the consultant recommended.

Read the full article HERE.