With a billion-dollar surplus counting various reserves, Arkansas could easily afford to make up a relatively trivial shortfall of $70 million in the teachers’ health insurance fund and still have plenty left over to cut the top income tax rate for millionaires, Governor Hutchinson’s top priority.
From the Arkansas Education Association:
Despite working through the COVID-19 pandemic and showing up in school buildings every day, educators are now facing an additional challenge. Rising health care costs and a flawed funding mechanism have created a projected shortfall of approximately $70 million in the Public School Employee health insurance plan.
In response to this shortfall, the State and Public School Life and Health Insurance Board overseeing the plan adopted a proposal that would dramatically harm educators by increasing monthly insurance premiums by an astonishing 10, 15 and 20 percent in the 2022 plan year. In addition, educators would lose half of a wellness benefit that currently reduces premium costs. This means the monthly contribution for a single employee on the classic plan would jump 45% from $71 to $103 each month.
These dramatic increases in insurance premiums will erode the progress made in teacher pay this year, and drive educators who are not teachers out of the plan altogether. This reduced pool will make the plan less financially secure and more expensive to operate while robbing people of a key benefit that helps secure a stable workforce.
“Arkansas’s educators risked their health to keep our schools open during the pandemic,” said AEA President Carol Fleming. “It is imperative their health insurance plan be affordable and provide meaningful benefits. Educators must have a seat at the table for decisions regarding their plan.”
After hearing of the shortfall, the state legislature abolished the board and shifted that responsibility to the State Board of Finance, which is now considering this untenable proposal. The board is scheduled to meet again this Tuesday, May 18th.
This painful proposal won’t solve the underlying issue. Health care costs are rising at an annual rate of 7%, but there is no built-in state funding mechanism to anticipate this, resulting in the state contributing a smaller percentage of the plan’s cost each year.
Now, policy makers must step up and do right by educators. The state has reported a surplus of over $700 million. The plan needs a short-term infusion of state revenue to avoid shifting the cost to educators in the coming months. In the long term, the state must act responsibly by creating a sustainable funding mechanism that anticipates the annual increase in health care costs.
The teachers could have mentioned that their plan costs much more than the plan for other state employees, including the legislators themselves.