The Arkansas Legislative Council on Friday approved a consultancy contract worth up to $ 575,000 with The Segal Group to review health insurance plans for more than 100,000 public and state school employees and retirees and recommend changes to ensure its long-term solvency.
With no change in either plan, state officials project that the two health insurance plans would have a $ 103.3 million deficit by the end of 2022.
The Bureau of Legislative Research’s contract with The Segal Group in Atlanta began Friday and runs through Dec. 31 with a six-month renewal option.
The office hired The Segal Group to provide detailed and accurate information on a multi-year strategic plan for the public and public school life and health insurance program, according to the contract.
The Executive Subcommittee of the Legislative Council recommended hiring the Segal group after the group interviewed two consultants, Segal and Cheiron Inc. in North Carolina.
Segal submitted a maximum bid of $ 575,000, while Cheiron submitted a maximum bid of $ 393,750. Cheiron is the former actuary of the State Employee Benefits Division, and his project team included a former deputy director of the division.
The two companies are among the six consultants who sent responses to a call for proposals to help develop and implement a strategy and legislative framework for the plans.
The call for proposals requires the consultant to submit a final report to the Legislative Council before October 15th.
Law 1004 of 2021 temporarily transferred the governance of the plans of the life and health insurance board of public and state schools, already dissolved, to the state finance board. The finance council will make its own recommendations to the Legislative Council. The board on Friday approved the rules for assigning the initial review of board recommendations to the council staff subcommittee.
“We understand the importance of being given this task and will do everything we can to make a balanced recommendation,” said Larry Walther, chairman of the finance board.
“We need to be comfortable with what we recommend to you, so we’ll look at what the old EBD board proposed, we’ll look at what other considerations they had, and then we’ll make our decision on what I think management should be “, he said.
Walther said the finance board should work in concert with The Segal Group to make the best decision for public school and state employees.
“We have to look … [adjusting] premium rates and the state contribution on an ongoing basis, ”he said.
“What we have done in the past is that we have not done it periodically and we have the rising cost of health care … yet we do not keep pace with the premiums paid by employees and the state.” dir Walther.
He said the 10% reserve funds for the plans are inadequate and will require more money.
Senator Kim Hammer of R-Benton asked an employee of the Employee Benefits Division’s actuary, Milliman, how much duplication there would be in the services provided by Milliman and The Segal Group.
Courtney White, representing Milliman, said “there is certainly some overlap.
“We are looking at the short- and long-term goals of the program to make sure No. 1 is covering your expenses and No. 2 has enough money to get there.”
White said Milliman “cast a shadow over the previous actuary [Cheiron Inc.] through the rate-setting process for 2020, so we didn’t really start participating fully until the fall of 2020 and helped set the rates for 2021 and now for 2022.
“I think there will be some duplication of effort and we are excited to help work with Segal to find the best answer for this committee, for employees and for retirees,” White told lawmakers. “Maybe between 30% and 40% of things are duplicates, but we’re happy to work with them and find them data that we’ve analyzed and help them provide you with information.”
The benefits division for state employees paid Milliman $ 1 million in 2020, the division’s director, Jake Bleed, later said.
Under the proposals of the defunct insurance commission of April 20 for 2022, employees of active schools would face a 10% increase in premiums. Retirees under the age of 65 would see a 15% increase, while retirees over the age of 65 would see a 20% increase.
Active state employees would see their premiums increase by 5%, while retirees, regardless of age, would see their premiums increase by 10%. This state would also increase its monthly funding per employee by $ 50 a month.
Under the proposals of the dissolved board, state health insurance plans for public schools and state employees would reduce the welfare credit for active employees from $ 50 to $ 25 per month, creating a $ 50 per month contribution. for welfare for active employees and would eliminate the welfare preventive screening requirement to see physicians in person.
These proposals are projected to reduce the projected public school employee plan deficit from $ 70 million to $ 29.7 million by 2022 and turn the projected state employee plan deficit of $ 33.3 million into a $ 6.2 million surplus, according to state officials. Both plans have dwindling reserve funds.
Senator Linda Chesterfield, D-Little Rock, said “we have given a raise to people on the one hand, and it looks like we are retiring them on the other hand with health insurance.”
Senator Clarke Tucker of D-Little Rock said “we are also discussing the proposed increases [in health insurance contributions] for state employees, and I’m curious about an increase in merit on that side. ”
Bleed, who is the former state budget director, said that “we have not integrated the process of paying for health insurance and how we cover it within the budget process.
“But I would like to integrate it into the budget process while analyzing things like employee increases, so that we can consider these two things together so as not to give them one hand and eliminate them with another necessarily, but, on the other hand, hopefully people who have not been moving forward for more years can be told. “
Amy Fecher, secretary of the State Department of Transformation and Shared Services, said “our plan … is much richer in benefits than most corporate plans and even other states.”
The proposals recommended by the dissolved health insurance board “did not affect the benefits in any way, and most were based on the comments received by the EBD division, as well as the board and many of you,” he said.
“We were told that people would prefer rates to increase to change their profits, so there is always that option,” Fecher said.
At a special session in October 2013, the state legislature passed legislation that authorized the use of $ 43 million in state surpluses in 2014 for health insurance for public school employees in a solution in the short term to help prevent 50% premium increases.
State Sen. Jim Hendren, an independent from Sulfur Springs, said the legislature enacted changes to health insurance plans in 2015 based on the recommendations of a legislative task force and saw some of the changes they withdrew in the next sessions by legislation or council rule. He said he wants a summary of changes to plans “since the last crisis.”
Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said “we will probably have to invest money in this plan, premiums will increase and there will have to be legislation to correct it.
“We will have to define a new long-term governance for the plan, so it will not be under the state Finance Board … unless they decide to keep it afterwards,” he said. “There may be triggers if there are no cash outlets that … increase premiums or are presented to us semiannually or quarterly, so we know it will happen over time. Term.”