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State Capitol Week in Review – February 27, 2022

LITTLE ROCK – The legislature approved a package of bills that allow greater oversight of two major health insurance plans that cover public school teachers and state employees.

The new laws require the systems to maintain financial reserves, and to take steps to build up their reserves if they fall below a certain point.

More legislative oversight should mean that taxpayers will not have to shore up the systems. The president of the Senate told a news reporter that the legislation would save at least $70 million a year.

A House co-sponsor of the legislation said the bills would not require any cuts in benefits or any increase in premiums, which was cause for celebration.

A group of lawmakers has worked on the list of reforms for most of the past year. Lingering financial problems in the systems had been so consistent that last year, the 2021 regular session, the legislature replaced their governing board.

The package of reform bills creates a multi-tiered system to oversee the health insurance plans. One commission will focus on the teachers’ system and another on the public employees’ system. Both will meet monthly. Members will be paid $500 a month and mileage.

They will evaluate the financial health of the systems and make recommendations on benefits. For example, they will review which prescription drugs are available in the systems’ formularies. Compared to drugs that are not listed in the formulary, drugs that are on it are more easily available and affordable to public employees and teachers who participate in the health plans.

The commissions will study the need for adjustments in premiums and contributions by schools and state government. They will make recommendations if necessary.

The state Board of Finance now manages the systems, and will continue to do so with input from the two commissions. A new law will add the state Insurance Commissioner to the Board of Finance, but only to vote on policy changes affecting the health plans.

The Board of Finance is made up of several constitutional officers, directors of state with financial duties and people with expertise in banking, investments and accounting. The Board decides where to deposit state tax revenue until it is allocated to an agency that will spend it on a program approved by the legislature.

The package of reforms significantly enhances legislative authority over policy decisions by the health insurance plans.

One new law specifically says that a legislative committee shall have oversight over all decisions by the Board of Finance related to the state and public school life and health insurance program.

Legislators will have oversight over proposals to change eligibility of participants, to increase or to change benefits, to increase premiums and to change vendors or contracts from one year to the next.

Legislative oversight will include any changes in the four-year projections of the financial health of the health plans.

Another new law will require a fiscal impact statement before bills can be considered, if they expand benefits or impose any new cost obligation for the health insurance systems. This is similar to a policy that is already in place, which requires a fiscal impact statement when bills are considered that would increase retirement benefits for state employees.


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