Funding for the state’s health insurance program for public school districts is “adequate” for now, a pair of consultants told members of the Arkansas House and Senate Education committees Tuesday.
Patrick Klein and Matthew Kersting, consultants from the Segal Group, briefed lawmakers on the change in the state’s minimum health insurance contribution rate.
The current minimum monthly state contribution rate for districts is $150, but is set to increase to $300 in January. They said the state will have to continue raising minimum contributions from school districts to keep up with rising health care costs.
“Based on our projections, we think the funding is sufficient in the short term, but changes are likely needed in the longer term to account for the medical inflation associated with the program over the next five years,” it said. Kersting.
During the fiscal session earlier this year, lawmakers approved allowing the Senate and House Education Committees to set the minimum health insurance contribution rate for school districts.
Projections show that at the minimum contribution of $300, the health insurance program for participating school districts will begin to lose money in fiscal year 2025.
Under these projections, the state’s total assets under the health insurance program through fiscal year 2027 will fall below the state’s target reserve of $89 million.
The increase in costs is expected to come from increased medical claims and prescriptions and from administration, according to the consultants. Kersting recommended that the state increase the minimum contribution from school districts and funding from the Department of Education for the medical consumer price index.
For the state, it’s about balancing contributions from school districts, employees and the state Department of Education with projected rising health care costs, said Republican state Sen. Missy Irvin of Mountain View, chairwoman of the Senate Education Committee.
Consultants put forward projections to minimize future losses in the state’s school health insurance program by keeping reserve levels high in fiscal year 2025 and beyond.
Lawmakers could raise the minimum contribution to $328 or gradually increase it from $300 in 2023 to $347 in fiscal year 2027 under one of the proposals from the consultants.
“What they’re telling us is that we’re good for a few more years, but maybe this coming session we’re going to have to implement new legislation that will keep us stuck with it,” said Rep. Bruce Cozart, R. -Hot Springs, chairman of the House Education Committee.
