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“Death Spiral” of School Employee Health Insurance Plans


The legislature is almost certain to be called into a special session before the end of October to address the “death spiral” that is occurring within our public school employee health insurance plan.  Senator Alan Clark (R-Lonsdale) is the author of the following op-ed. I’m sharing it with his permission as I believe he has summed up the situation pretty well.

“I am disappointed in the State and Public School Life and Health Insurance Board and the Employees Benefit Division’s (EBD) stewardship. They knew PSE insurance was going broke years ago. Insurance experts had informed them they did not have a gold plan but a platinum plan. No one in Arkansas or surrounding states, public or private, had a similar plan and hadn’t had in over a decade. Why? It was unaffordable.  What did they do about it? They spent their reserves rather than adequately raise rates or cut benefits. Teachers were blamed because they “wanted” these platinum benefits. The legislature was blamed because they had not provided “more funding”. The board and EBD knew about the crisis in April while the legislature was still in session. They chose to wait until July to inform the legislature and teachers. This board failed miserably. We need to start over with a new board, preferably with 1 board for public school employees and 1 for state employees since they are not joined in any other way.

I am disappointed with the Governor. He is the CEO of state government. He presided over this mismanagement. He appoints the members of the board. He appoints the head of the EBD who serves at his pleasure. The Governor either knew or should have known about the problems with PSE insurance. But he didn’t deal with it. Was he so caught up in implementing Obamacare in Arkansas he forgot about teacher’s health insurance? After the horse is out of the barn he negotiates a fix that doesn’t deal with the real problems he has created until he is out of office. How convenient.

I am disappointed that the Governor continues to complicate the matter with his own personal agenda instead of doing what is best for teachers, This is especially true in his zeal for the state taking away local property tax money paid by local property owners for their local schools. This is especially disappointing since the courts recently ruled in favor of the schools. Why not rather address the 2968 unfilled positions in state government that taxpayers are paying health insurance for? That $14 million is almost 3 times what the state will net by raiding small rural districts. I hope that it is not because that money for “ghost” employees is a backdoor subsidy for the health insurance of elected officials (legislators and the Governor). Is the Governor going after the small rural districts as a matter of fairness? If so it would appear he would be more concerned about taxpayer money paying for unfilled state positions, hundreds of which have been unfilled for 5 years or more. If he wants to help teachers how can he ignore that money?

I am disappointed by the Governor’s inconsistencies. On Obamacare we hear it is the law and Congress just needs to fund it. The Governor vetoed 2 pro-life bills during the last session saying that prior court cases had decided those issues and that it would be expensive to fight them in court. The funding he wants to take away from these rural school districts was decided by the Arkansas Supreme Court and it is the law. He knows pursuing this agenda will produce more lawsuits and legal costs. Those are inconsistent positions.

I am disappointed by legislators in the Little Rock area agreeing to go after rural schools. While their large city schools receive an annual 70 million dollar financial bonanza above and beyond “foundation funding”, they begrudge a handful of rural schools extra money from their own taxpayers.

I am disappointed by the legislature. We promised we would not throw money at the problem unless there was a major structural overhaul. But it appears we are preparing to do just that. A few minor tweaks to the plan and a promise that we will create yet another commission to “study” the problem into the distant future is not a major overhaul. In our defense, the legislature has been backed into a corner by the EBD and the Governor. They created a crisis. Teachers are being held hostage. Time is of the essence. But we must not reward the Governor or EBD. We can act now with a very temporary solution and act soon to overhaul the system. The February fiscal session would be the perfect timetable to have a study group report back.

I am disappointed for teachers. No one deserves to be put in this position. I am especially disappointed for young teachers and retired teachers. Young teachers are at the beginning of their careers and their earning capacity. They only get help from the state and their school if they buy into this over priced nightmare. Retired teachers are especially hit hard because these rates stay at these unsustainable levels and they get no subsidies. The only way retired teachers are helped is if we overhaul the system and make it affordable for everyone.

I am disappointed for the taxpayer. Government grossly mismanages and what do we do? Reward those who mismanaged with more money and hand the taxpayer the bill. Is the taxpayer’s health insurance not increasing also? Who is subsidizing the working taxpayer?

I hope others will join me to demand true reform to PSE insurance. Let’s fund the plan for 3 months, get some experts in to advise us what to do to get benefits and costs in line with what taxpayers have, revamp the board and the system to something that actually works and prepare for a complete overhaul in the fiscal session in February or another special session if necessary. This is one can that has been kicked down the road far too long. Our teachers and taxpayers deserve better.”