HB 196 is an affront to conservative values

Rep. Lynn Gattis has introduced House Bill 196, which is a mandate on public education employers and employees. HB 196 is an affront to conservative values. HB 196 not only has an individual mandate that all employees be covered by the school district’s health insurance plan, it also dictates where the insurance must be purchased.

Currently, a public school employee can elect whether or not to participate in the employer’s health insurance plan. If an employee receives health benefits through a spouse/partner, through Indian Health Service or elects to not carry coverage, the employee may choose to opt out. HB 196 mandates that the district may no longer allow the employee to opt out, which results in increased costs to the district with premiums and increased costs to the state with associated health care claims.

If the purpose of HB 196 is to lower health insurance costs, school districts already have many options available to them without mandating that the state become financially responsible for claims. Fully- insured, self-insured, trusts, as well as joint borough and district trusts offer coverage. All of these options are constructed in a way to ensure that neither the state nor the Alaska residents are held liable when benefits paid out are greater than the premiums collected. This variety of options allows a school district to negotiate with their employees and provide a plan that meets their needs. For rural school districts the ability to have input in the benefits provided is important when they recruit teachers from out-of-state.

The NEA-Alaska Health Trust plan recognizes that funding the BSA flat for the fourth year in a row has caused financial concerns for school districts. To respond to these financial concerns, the Health Plan has developed various plan designs in an effort to provide lower premium costs. In addition, the Health Plan is constantly reviewing prescription drug costs, using investment returns to offset premium increases, investigating new ways to provide care at lower costs, and promoting preventative services in an effort to meet school districts’ needs to be financially responsible.

The Trust is a non-profit entity, all premiums collected by the Trust are, and by law can only be, used for health and welfare associated claims of public education employees. The administrative costs of 3 percent at the Trust are considerably lower than nationwide averages of 6 percent. The Institute of Health and Economic Research reports that 10 percent administrative fee is common in Alaska. The Trust works with providers to improve the overall health of the members, improve hours of access to primary care (eliminating the need to seek services in the ER), timely and efficient payment processing, and providing transportation benefits to centers of excellence outside of Alaska where care is less expensive.

The Trust is doing what the bill desires to accomplish — provides reasonable premium prices for benefits in an ever increasing health care market. In addition, the Trust does so by providing multiple benefit design options, which enable school districts to meet their recruitment needs. The Trust does all of this with lower administrative costs.

Cost savings are available when groups are pooled together, for example greater purchasing power reductions are seen in Alaska especially in prescription benefits. However, unlike others states there is limited savings associated when a health plan steers participants to certain health care providers. That scenario is applicable when there is competition for the patients. There isn’t the competition in Alaska that exists in North Carolina or Texas. In Alaska, there is a shortage of both providers and facilities. To reference savings brought about by pooling in other states is not comparing apples to apples.

HB 196 is a mandate with no actuary evidence that it will save money. The state of Alaska currently runs a health insurance policy — state of Alaska Political Subdivision — where school districts can voluntarily elect to have their coverage provided through the State’s plan. If that plan was a better option for school districts and their employees, wouldn’t they have already chosen to join? Instead groups who had elected that plan are leaving due to the high renewals and are seeking relief with the NEA-Alaska’s Trust and other carriers.

HB 196 would add an additional 47,000 lives to the state plan, increasing the state’s liability should claims exceed funding, leaving residents to foot the bill. Are Mat-Su taxpayers willing to assume the costs if Representative Gattis and Senator Dunleavy (sponsor of companion bill SB 90) are wrong?

Rhonda R. Kitter is the Chief Financial Officer of the NEA-Alaska Health Trust, a non-profit self-insured health insurance trust for public education employees. She has lived in Alaska for more than 36 years and has more than 30 years experience in the accounting, finance and insurance community, and 15 years with the NEA-Alaska Health Trust.