Arkansas’ state lawmakers on Wednesday completed action on eight bills that would make changes in state laws about the governing, financing and other matters regarding the state’s health insurance plans that cover more than 100,000 current and retired public school and state employees.
The state Senate voted to send four of the bills to Gov. Asa Hutchinson, and the state House of Representatives voted to send the four other bills to the Republican governor.
The eight bills largely reflect the recommendations of the consulting firm The Segal Group that the Legislative Council approved Nov. 19. The firm’s recommendations are aimed at stabilizing funding and cutting costs for the two health insurance plans.
Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said in an interview that “the biggest benefit is immediately with our consultants we are projecting to save a minimum of $70 million” a year.
He said the measures also are aimed at fixing the state’s two health insurance plans for the public school and state employees and retirees “for the long-term and require that conversation [about the funding for the plans] to come up annually, so we can deal with increased health care costs, whether or not we need to put [state] money in that at that particular time, or premiums need to be raised.”
Retirees in the state’s health insurance plan for public school employees and retired state employees will regain state-funded prescription drug coverage under the consultant’s recommendations.
Retirees in the state’s health insurance plan for state employees and retirees currently have state-funded prescription drug coverage.
The Segal Group’s recommendations call for the state’s Employee Benefits Division to issue a request for proposals for a group Medicare Advantage prescription drug vendor and introduce Medicare Advantage prescription drug coverage in 2023 for both plans. Participants should be automatically enrolled, but the current retiree option should be kept so retirees have choices, according to the consultant.
The consultant’s recommendations also call for the division to issue a request for proposals for a pharmacy vendor that describes the flexibility desired in the program, including the custom formulary, custom clinical rules and the role of independent pharmacies in the state.
Afterward, state Rep. Jeff Wardlaw, R-Hermitage, said he’s excited to send the package of bills to the governor and happy state lawmakers didn’t cut any benefits or raise any premiums in the plans.
“We should have a party about that. We were able to save millions of dollars without doing those two things to the public,” he said.
The Arkansas House voted 95-0 to send the governor Senate Bill 86 by Hickey, which would require the director of the state’s Employee Benefits Division to aim for an optimal reserve balance of 14% of expenses to ensure the solvency of each plan, beginning in plan year 2023.
Under the bill, if the division’s director determines the amount of revenue collected by the division is not projected to equal or exceed the acceptable reserve balance amount of 12% of expenses for a plan in a plan year, the director would be required to notify the Legislative Council of the need to convene to consider providing more funding.
If more funding is needed to maintain the acceptable reserve balance, the Legislative Council may recommend the governor call a special session of the Legislature or take further action as may be appropriate.
If by July 30 the General Assembly fails to provide funding to maintain an acceptable reserve balance, the director would be required to start a process to collect the required additional revenue from program participants through premium rate increases and/or reduce program benefits for the next plan year under SB86.
If the director determines the reserve balance for either plan is projected to exceed 16% of expenses, the director may elect to use the excess to directly benefit the plan through lowering of premium rates for the next plan year or through expanding benefits with the approval of Legislative Council.
ADVISORY PANELS PROPOSED
The Senate voted 32-0 to approve House Bill 1100 by Wardlaw, under which the state Board of Finance would continue to be the governing board for the health insurance plans and the state insurance commissioner would be added to the board solely for voting on health benefit plans.
The Board of Finance has 10 members who include the governor, treasurer, auditor, secretary of the Department of Finance and Administration, securities commissioner, bank commissioner and two appointees each named by the House speaker and Senate president pro tempore.
The finance board has governed the plans since Act 1004 of 2021 dissolved the 15-member State and Public School Life and Health Insurance Board, which was largely appointed by the governor, and transferred its duties to the finance board.
HB1100 establishes two new advisory boards, the Public School Employee Health Benefit Advisory Commission and the State Employee Health Benefit Advisory Commission. Each commission would be composed of three governmental appointees, one current public school or state employee, and one retired public school or state employee.
The two commissions would meet monthly and each appointee would be paid a stipend of $500 per month plus mileage. Each advisory commission would make recommendations by Jan. 31, starting in 2023.
Hickey has described the two advisory commissions as “operating boards” that would be hands on with the health insurance plans and make recommendations to the state Board of Finance, which would in turn make recommendations to the Legislature.
The Senate voted 32-0 to send the governor House Bill 1099 by Wardlaw, which establishes a subcommittee of the Arkansas Legislative Council to oversee the Employee Benefits Division.
Certain decisions of the state Board of Finance pertaining to the program would be referred to the board, including any change in plan options offered under the program, potential funding changes to the program and any premium increases or decreases over the previous plan year.
The state Board of Finance and the director of the Employee Benefits Division would be required to give quarterly reports to the Legislative Council on the program as well.
The proposal also would require the Employee Benefits Division oversight subcommittee, with the cooperation of the division director, to study general diabetes management programs to evaluate the viability and sustainability of such a program for the health insurance plans. A report summarizing the results of the study would be required to be filed with the Legislative Council no later than July 1, 2024, under HB1099.
In other action, the House voted 95-0 to send to the governor Senate Bill 85 by Sen. Missy Irvin, R-Mountain View, which would require future state and public school employees to be enrolled in the respective state health insurance plan for at least five cumulative years to receive health insurance coverage as a retiree.
The proposal would grandfather in current public school and state employees for health insurance coverage as retirees, according to Hickey.
The House voted 91-2 to approve Senate Bill 87 by Sen. Terry Rice, R-Waldron, which would require each state and public school employee’s health insurance plan under the program that is offered, issued or renewed on or after Jan. 1, 2023, to offer coverage for the diagnosis and treatment of morbid obesity. The bill goes to the governor.
The coverage for the diagnosis and treatment of morbid obesity would be required to include gastric bypass surgery, adjustable gastric banding surgery, sleeve gastrectomy surgery and duodenal switch biliopancreatic diversion under the bill.
To ensure the financial soundness and overall well-being of the program, the state Board of Finance may discontinue or suspend a plan option, promulgate a rule to establish an annual expenditure limit as a plan option, or promulgate rules to implement the bill with the approval of the Legislative Council.
The House voted 95-0 to approve Senate Bill 88 by Rice, which would eliminate the cap of $550 per month contribution for each budgeted position of state agencies to contribute to the state employee health insurance plan.
The bill goes to the governor.
On the other end of the state Capitol, the Senate voted 32-0 to approve House Bill 1097 by Rep. Brian Evans, R-Cabot, which would require school districts to pay the health insurance contribution rate established by the House and Senate education committees through the biennial adequacy review process for each eligible employee electing to participate in the public school employee health insurance plan, starting Jan. 1, 2023.
The bill goes to the governor.
The Senate voted 32-1 to send to the governor Senate House Bill 1098 by Rep. Jim Dotson, R-Bentonville, which requires a fiscal impact statement for any proposed legislation imposing a new or increased cost obligation for health benefit plans. The bill also requires that those bills be introduced within the first 15 days of a regular session.