On Wednesday, the legislative panel tasked with fixing Arkansas’ public school employee (PSE) insurance fund issued recommendations that will keep the chronically distressed program solvent, according to the chair of the task force, Sen. Jim Hendren (R-Gravette). Assuming its projections are correct, that’s good news for teachers, schools and the state.
One of the major recommendations of the task force involves moving part-time school employees off of the PSE plan so that they will become eligible for federally-subsidized insurance under the Affordable Care Act. For the most part, these are low-wage workers such as janitors and cafeteria staff. Making them ineligible for PSE insurance (that is, employer-provided insurance) would automatically make them eligible for either the private option or Obamacare subsidies, depending on the income of the individual employee.
It’s not a bad idea at all. It makes sense and might well be a better deal for most of the part-time employees involved. The only problem is that its champion, Hendren, also advocates repeal of the private option and an end to the Affordable Care Act.
A little background: last fall, the insurance fund for PSEs faced a choice between raising premiums on teachers and other school workers by 50 percent or going broke by the end of the year. The legislature convened in an October special session to apply a $43 million fiscal bandage to the distressed fund. This limited the rate hike to 10 percent, but everyone knew a larger policy fix would be required to make the fund solvent. Now, as predicted, the next iteration of the crisis is already approaching: Current actuarial estimates say premium rates for school employees must rise by another 35 percent at year’s end to prevent the fund’s collapse. The task force has its recommendations ready — so does that mean another special session?
“I would say it’s fairly likely,” Hendren told me after the meeting. Some of the fixes won’t require changes to statutory law and can be enacted by regulation of the Employee Benefits Division (EBD), the arm of the state revenue agency that manages insurance for both PSEs and state employees. The task force recommends that EBD increase premiums on the Bronze plan only (which are still fairly cheap) and institute a deductible on the Gold plan (which currently costs a great deal premium-wise but has no deductible).
“That would be our fallback position if we can’t get consensus for a special session,” said Hendren, though he’d prefer if those changes were accompanied by several others that do require legislation.
Among those proposed statutory changes is the irony at hand. Hendren, who during the 2014 fiscal session was among the most vocal opponents of the private option, now suggests that Arkansas shift the state’s estimated 4,000 part-time school employees onto the individual insurance marketplace. (Income-wise, it’s unclear how many of those folks would be fall into the private option population — i.e., below 138 percent of the poverty line — and how many would instead be eligible for somewhat less generous assistance via a federal tax subsidy.) Doing so would save the state around $10.2 million, estimate EBD consultants, which would help shore up the PSE insurance fund for full-time employees.
Once again, that would be a fine outcome for low-wage part-time employees, most of whom would receive ample assistance to purchase quality insurance — but expect some of those workers to panic at the thought nonetheless, in large part because conservatives such as Hendren have repeatedly made the case that being shuffled onto Obamacare is tantamount to being sent to the gulag.
Hendren, who is an engineer, has by all accounts done an admirable job of digging into the numbing minutia surrounding this issue. He’s held hours of hearings on the outlays associated with bariatric surgery and pharmaceutical pricing and administration of cafeteria plans. He says that he approached the PSE insurance tangle as a “mathematics problem” and focused only on the policy at hand.
“Our job was to do what we could do to make PSE insurance program sustainable,” he told me. “I did not want to get this dragged into a debate about the ACA, because that’s just not productive. This issue is too important for me — to try to find a fix for our teachers — to let people start trying to make political points…Whether we support the ACA or not, that’s the law of the land and that’s the rules by which we will try to implement a solution.”
He also acknowledges Obamacare is cushioning what would otherwise be a nasty blow. Without the ACA’s newly woven safety net, part-time employees would merely be pushed out of insurance coverage altogether, a politically daunting prospect.
“The fact that the ACA has come into existence and made this more palatable to a lot of people — that’s certainly understandable,” said Hendren. “It makes the job easier, I’m not going to deny that…it’s never easy to say we can’t offer a benefit we can’t afford to offer.”
Unfortunately, Hendren doesn’t take such a pragmatic approach when it comes to extending insurance to the rest of the state. What ACA opponents won’t accept – and what this issue illustrates so well – is that poor Arkansans are very often working Arkansans. Beneficiaries of the ACA are janitors, bus drivers, and food service workers, and they need insurance just as much as teachers, engineers, and state employees do.
The task force cannot make new laws, of course, but its endorsement matters going forward. Sen. Linda Chesterfield (D-Little Rock) was among the two members of the committee who voted not to endorse the recommendation to exclude part-time workers from PSE insurance eligibility. (The other was Sen. Jason Rapert (R-Bigelow), who despite his retrograde views on social issues is capable of being an engaged operator on fiscal affairs. Rapert said he needed time to consider concerns raised by his constituents.)
Chesterfield said she was disturbed by the thought of opponents of the ACA trying to place part-time employees on an ACA-funded plan.
“Over 50 times in the U.S. House of Representatives, they’ve voted to repeal the ACA. Let’s just say it happens…What happens to those part time employees?” she said after the meeting. “Unless we have someone speaking up for school employees other than teachers, they’re going to fall by the wayside…There are too many members even on this committee who are opposed to the Affordable Care Act, but let’s just throw those folks over there whether it exists next year or not.”
The task force presented a laundry list of other recommendations as well, all of which were approved unanimously by the committee or passed over. Some of those changes will help some districts and hurt others. As a whole, they tend to push employees towards individualized plans with Health Savings Accounts (HSAs).
Perhaps most significantly, the task force recommendations haltingly grope towards greater parity between school employees and state employees, whose benefits are much more generous than those of school staff. The panel stopped short of recommending that the two groups’ plans be entirely blended together as some have recommended, but it does apply most of its proposed changes (including the part-time worker exclusion) to both state employees and school employees. It also recommends a restructuring of EBD that would weight the makeup of the EBD board more proportionally in favor of public school employees rather than state workers.
Finally, in another example of Hendren allowing for some pragmatism within the confines of this particular math problem, the task force suggests that the state increase its per-employee contribution, though only by $20 per employee. Where that funding would come from was left vague. Those sorts of details will have to be ironed out when the task force next meets on June 10, in conjunction with the Education committee.