The Arkansas Legislative Council on Friday approved a consultancy contract worth up to $ 575,000 with the Segal Group to review the health insurance plans of more than 100,000 state and state school employees and retirees , and recommend changes to ensure their long-term solvency.

Without any changes in either plan, state officials predict that the two health insurance plans would collectively have a deficit of $ 103.3 million by the end of 2022.

The Bureau of Legislative Research’s contract with the Segal Group of Atlanta began Friday and ends on December 31 with an option to renew for six months.

The office hired the Segal Group to provide detailed and accurate information on a multi-year strategic plan for the public and public schools life and health insurance program as per the contract.

The Legislative Council executive subcommittee recommended hiring the Segal group after the group interviewed two consultants, Segal and Cheiron Inc. in North Carolina.

Segal submitted a maximum bid of $ 575,000, while Cheiron submitted a maximum bid of $ 393,750. Cheiron is the former actuary of the state employee benefits division, and his project team included a former deputy director of the division.

The two firms are among six consultants who submitted responses to a tender to help develop and implement a strategy and legislative framework for the plans.

The request for proposals asks the consultant to present a final report to the Legislative Council by October 15.

Law 1004 of 2021 transferred the governance of schemes on a temporary basis from the now dissolved State and Public Schools Life and Health Insurance Council to the State Finance Council. The finance council will make its own recommendations to the Legislative Council. On Friday, the board approved rules to direct the initial review of board recommendations to the board’s staff subcommittee.

“We understand the importance of the task given to us and we will do all we can to make a balanced recommendation,” said Finance Board Chairman Larry Walther.

“We have to be comfortable with what we recommend to you, so we’ll look at what the former EBD board came up with, we’ll look at what other considerations they had, and then make our decision. on what we think the direction should be, ”he says.

Walther said the finance board must work with the Segal Group to make the best decision for public and state school employees.

“We have to watch … [adjusting] premium rates and state contribution on an ongoing basis, ”he said.

“What we have done in the past is we haven’t done it regularly, and we have the rising cost of health care … but we’re not keeping pace with the premiums paid by employees and from the state. Walther said.

He said the 10% reserve fund for the plans is not enough and will require more money.

Senator Kim Hammer, R-Benton, asked an employee benefits division actuary Milliman how much duplication there would be in the services provided by Milliman and The Segal Group.

Courtney White, representing Milliman, said: “There is definitely some overlap.

“We are looking at the short and long term goals of the program to make sure that number 1 covers your expenses today, and number 2 you have enough money to make it happen.”

White said that Milliman “followed the previous actuary [Cheiron Inc.] throughout the rate setting process for 2020, so we didn’t really start to be fully involved until the fall of 2020, and we helped set the rates for 2021 and now 2022.

“I think there will be some duplication of effort, and we’re happy to help work with Segal to find the best answer for this committee and for the employees and for the retirees,” White told lawmakers. “Maybe 30-40% of things are duplicative, but we’re happy to work with them and find them data that we’ve analyzed and help them provide you with information.”

The state employee benefits division paid Milliman $ 1 million in 2020, division manager Jake Bleed said afterwards.

Under the late April 20 Insurance Commission proposals for 2022, active school employees would face a 10% increase in premiums. Retirees under 65 would see a 15% increase, while retirees over 65 would see a 20% increase.

Active state employees would see their premiums increase by 5%, while retirees of all ages would see their premiums increase by 10%. The state would also increase its monthly funding per employee by $ 50 per month under this plan.

According to the dissolved council’s proposals, state health insurance plans for public schools and state employees would reduce the welfare credit for active employees from $ 50 to $ 25 per month, create a $ 50 per month non-welfare contribution for active employees and would eliminate welfare. Preventive screening requirement to see physicians in person.

These proposals are expected to reduce the projected deficit of the public school employee plan from $ 70 million to $ 29.7 million for 2022 and turn the projected deficit of the state employee plan of $ 33.3 million into a surplus of $ 6.2 million, according to state officials. Both plans have dwindling reserve funds.

Senator Linda Chesterfield, D-Little Rock, said: “We have given people a raise on the one hand, and we seem to be taking it on the other hand with health insurance.”

Senator Clarke Tucker, D-Little Rock, said: “We are also discussing the proposed increases [in health insurance contributions] for government employees, and I’m curious to see a merit increase on that side. “

Bleed, who is the former state budget manager, said: “We haven’t integrated the health insurance payment process and the way we cover it into the budgeting process.

“But I would like to integrate it into the budget process at the same time as we look at things like employee increases so that we can look at these two in conjunction with each other so as not to give with one hand and take away with the other necessarily, but instead, I hope you can tell people more years as you go along. “

Amy Fecher, secretary of the State Department for Transformation and Shared Services, said that “our plan … is richer in benefits than most business plans and even other states.”

The proposals recommended by the dissolved Medicare board “did not affect benefits in any way, and most were based on feedback received by the EBD division, as well as by the board and many of you,” he said. she declared.

“We were told that people would rather their rates go up rather than their benefits change, so there’s always that option as well,” Fecher said.

In a special session in October 2013, the state legislature approved legislation authorizing the use of $ 43 million of state surplus funds in 2014 for health insurance for public school employees in a short term solution to help avoid 50% premium increases.

State Senator Jim Hendren, independent from Sulfur Springs, said the Legislature passed health insurance plan changes in 2015 based on recommendations from a legislative task force, and that he having regard to some of the changes removed in the next sessions, either by law or by law. rule of the board. He said he wanted a summary of changes in plans “since this last crisis”.

Pro Tempore Senate President Jimmy Hickey, R-Texarkana, said: “We’re probably going to have to put money into this plan, the premiums are going to go up and it’s going to take legislation to correct some of that.

“We’re going to have to design new long-term governance for the plan, so it won’t be under the State Finance Council … unless they decide to keep it after that,” he said. he declares. “There could be triggers that would go off if we don’t pay cash that… premiums would go up or be presented to us on a semi-annual or quarterly basis, so we’ll know that will happen over the long term. term.”