If your district participates in the School Employees Health Benefits Program (SEHBP), the cost to the board and its employees is going up – significantly – on Jan. 1.
On Aug. 8, the School Employees Health Benefits Commission met and approved the rate increases for Plan Year 2018. The increase for the local education active employees group is 13 percent. This follows an 8.4 percent increase for the current year, Plan Year 2017.
A review of the state-sponsored medical benefits plans over the last decade is useful in understanding the cost structure of SEHBP.
- In 2007, the state established the School Employees Health Benefits Program. Up to then, school districts were able to provide coverage for their employees through the State Health Benefits Program (SHBP).
- The State Health Benefits Program, the plan for state and local municipal workers, on Aug. 3 approved a zero percent increase in premiums for the SHBP.
- For local municipal employees, there was a 0.1 percent decrease for Plan Year 2017.
- Under both state plans, employees can choose from an array of plan choices. The predominant plan choice for the School Employees Health Benefits Program is Horizon DIRECT 10. Family coverage, including prescription, for this choice will have an aggregate cost of $37,744 in 2018.
- In contrast, the most popular choice under the SHBP for local municipal employees is Horizon DIRECT 10, which will cost $31,312.
Why the staggering 20.5 percent difference in the cost of the predominant plan choices for the two programs?
Some of the difference is a function of the overall risk involved in providing medical coverage to the participants of the two plans. That difference in risk has been exacerbated by districts with relatively healthy employees moving out of the SEHBP and into less-costly commercial insurance plans. The school employee program rate hike was also necessary to help boost its level of reserves, which had been deemed inadequate by the state’s insurance consultant.
Much of the difference, however, can be directly attributed to the failure of the SEBHP Plan Design Committee (PDC) to adopt many of the common sense reforms, which have been adopted by the program for state and municipal employees. These reforms include Medicare Advantage; an emergency room co-pay increase; limiting reimbursement for out-of-network chiropractic and acupuncture; limiting reimbursement for out-of-network physical therapy; mandatory generic prescription drugs; and prescription drug formulary management. These changes have generated substantial savings for both the state and local municipal units participating in the SHBP and played a major role in mitigating the program’s rate increases.
Over the past several years, the state treasurer has implored the School Employees Health Benefits Program Plan Design Committee to adopt these changes and allow school districts to enjoy the same cost savings. However, the PDC has cancelled six of its eight meetings so far this year. It is scheduled to meet again on Sept.18, 2017.
Unsurprisingly, districts are leaving the SEHBP. As of August, 49 percent of the state’s school districts (281) participate in the SEHBP. That is down from 51 percent this past February. In 2015, the proportion of school districts participating in the plan had been as high as 55 percent.
At the Aug. 8 SEHBP rate-setting meeting, Cynthia Jahn, NJSBA general counsel, who represents NJSBA on the School Employee Health Benefits Commission but does not serve on the Plan Design Committee, addressed the issue. She made a motion that was approved unanimously by the five other commissioners in attendance to formally request the Plan Design Committee to consider the common sense reforms approved for municipal employers and workers.