By striking a deal to lessen the blow of health insurance changes on state workers, school employees and retirees, Gov. Bobby Jindal's administration lowered the volume of criticism but gave itself and local school boards a new budget headache.
BATON ROUGE (AP) — By striking a deal to lessen the blow of health insurance changes on state workers, school employees and retirees, Gov. Bobby Jindal’s administration lowered the volume of criticism but gave itself and local school boards a new budget headache.
The administration’s latest plan, scheduled to take effect March 1, reduced increases in out-of-pocket costs and deductibles for active employees and did away with those price hikes altogether for retirees. In exchange, premiums for health insurance through the Office of Group Benefits will rise by an estimated 11 percent in the next budget year, about $130 million.
And that’s where the plan hits state agencies and school districts in the pocketbook.
Premium hikes are shared between employees and employers. Retirees and current workers will pay about $36 million more annually for health insurance in the fiscal year that begins July 1. That leaves $94 million in premium increases to be paid by state government and the 44 local school boards that cover their employees through Group Benefits.
School boards are seeking relief from the state to cover their $38 million projected share of the increased premium costs, saying they have been struggling to stay afloat after the recession.
“School boards already are on tight budgets,” said Scott Richard, executive director of the Louisiana School Boards Association. “We recognize that there’s going to be a very difficult budgeting session coming up in the spring. But the trend of the rising cost of health care we feel warrants a very legitimate discussion and a very serious discussion about how it’s funded.”
Trying to get new money from the Jindal administration and lawmakers will be a tough task in an upcoming budget year that has an estimated $1.4 billion hole.
Commissioner of Administration Kristy Nichols, the governor’s chief budget architect, said she’s willing to talk to the boards about additional health insurance money.
But, in a statement, she also noted recent increases in state education spending and said the premium hike planned for next year will “mark the first time rates have risen above where they were in 2012.”
The Office of Group Benefits covers 230,000 state workers, teachers, school employees, retirees and dependents.
Not all of Louisiana’s public school districts chose to join the insurance program years ago. About 25 districts buy health insurance elsewhere.
Nichols blames rising health care costs and new federal regulations for the need to rework the insurance program’s benefit plans. Critics fault what they consider the governor’s mismanagement of the program.
Group Benefits was on track to be nearly broke by the end of this budget year without either cost reductions or an influx of new cash. When the Jindal administration unveiled its plan earlier this year to rewrite program benefits, lawmakers were inundated with complaints.
Retirees and employees said they’d prefer premium hikes, in which higher costs are split with employers, rather than placed entirely on the workers. That’s what the rewritten Jindal administration plan released earlier this month intends to do.
If lawmakers don’t provide additional cash to help school districts cover the premium hikes, local school boards might ask the Legislature to let the districts shop for insurance on the open market and leave Group Benefits without penalty, Richard said.