Legislators today expressed displeasure at the State and Public School Life and Health Insurance Board’s decision in August to drop drug coverage for retirees who are covered by Medicare and require them to buy private Medicare Part D policies.
Chris Howlett, administrator of the Employee Benefits Division of the Department of Finance and Administration, told members of the Public Health, Welfare and Labor Committee that the step, which will increase drug costs, some substantially, to some of the 10,845 Medicare-eligible retirees, was necessary to offset a deficit of $49 million in 2021.
A caller to the Arkansas Times on Tuesday who asked to remain anonymous for fear of retaliation said one retiree is going to have to pay an additional $7,500 a year for a drug he takes for Parkinson’s Disease once the new rule goes into effect Jan. 1, 2021. At present, he pays a premium of $175 for both medical and drugs, plus a co-pay.
Sen. Missy Irvin (R-Mountain View) asked Howlett she had been hearing from “a ton of retired state employees that are very angry and upset” that the decision was made without any input from them, and she wondered why the division was not negotiating with the plan manager. “I would like the name and phone number and email of every board member so I can send that to my constituents. Because I didn’t make this decision,” Irvin said; the board, not the legislature, sets the rate, but legislators are getting the blame.
Irvin, who chairs the committee, also requested meeting minutes and reports on “how the decision was made.” She also wondered why the division had not negotiated on the cost of benefits with the plan manager.
Though Howlett said the agenda for the virtual meeting was made public, Shelby McCook, a former board member, said most members were not aware of the coverage loss until they read about it in the newspaper. He said minutes of the meeting referred to the decision in one line, as a recommendation from the board’s consultant. “As far as I’m concerned, this is a misappropriation of funds,” McCook said. “This is going to ruin some families.”
Sen. Kim Hammer (R-Benton) also said he’d been hearing from retirees, and wondered if the board had assessed the financial impact of the change. He said he was hearing that the move to Medicare Part D was going to cost some families $4,000 to $5,000 a year, “a kick in the britches.”
The board will also raise health premiums for state employees who are not on Medicare by 5 percent, which should raise $3.26 million for the plan. A cut in the wellness benefit from $75 to $50 a month should save $5.9 million, according to consulting actuarial firm Milliman.
Medicare Part D enrollment begins Oct. 1.