The Statewide Health Care Proposal

1
The Statewide Health Care Proposal

• What it means for local education agencies and
  consortia

2
Overview of the Legislation

• Public School Employees Benefit Board ( 9311
  p.9)
• Four Cabinet SecretariesEducation, Budget, Admin
  and Insurance Commissioner
• Four Employee RepresentativesPSEA
• Four School Board Representativesa consortium
  board member is one of the four initially
  appointed
• Qualified majority voteat least two votes from
  each group of appointees

3
Overview of the Legislation

• Qualified Majority Voting Provision 9335(k)
  p.44
• Statewide plan implementation, standard benefit
  package, eligibility, major contracts, excess
  funds utilization, per employee cost, cost
  containment measures, by-laws and major internal
  operating policy and procedures.

4
Overview of the Legislation

• School Employee Health Benefits Study and
  Evaluation ( 9321 p.15)
• Data collection on existing health care
  arrangements covering school employees from all
  providers and employers cost is a ???
• Cost, coverages, financial obligations for plan
  termination, claims run-off, collective
  bargaining agreement provisions on health care,
  employee cost sharing arrangements and post
  retirement coverage claims data.
• No later than 60 days after the board is
  constituted

5
Overview of the Legislation

• Post Retirement Benefits Study 9312 (i) p. 14
• The board shall conduct an assessment of
  postretirement health care liability and publish
  a report detailing the scope of the liability.

6
Overview of the Legislation

• Board Review and Election ( 9322 p.22)
• Examine options to aggregate either statewide or
  regionally
• Investigate creation of a statewide health
  benefits program
• Goal improving the overall affordability
• Cost projections predicated on a plan that
  provides a levelconsistent with those now
  provided to most school employees.

7
Overview of the Legislation

• Election to Proceed 9322(b) p.22
• Ten months after board is constituted
• the board shall decide whether to implement a
  statewide programor to implement an alternative
  measures program.

8
Overview of the Legislation

• Plan Adoption ( 9323 p.23)
• Within three months of electing to proceed with a
  statewide plan, the board shall verify that
  implementation of statewide health care program
  will result in reduction in the statewide
  aggregate cost of the purchase of benefits or the
  rate of growth in costs
• Qualified majority vote

9
Overview of the Legislation

• Parameters of the Plan 9323 (b)(1) p.23
• Eligibility for school employees/dependents
• Definition of school employee
• Any person regularly employed by or in a public
  school entity for which work he or she is
  receiving regular remuneration as an officer,
  administrator, employee, or long-term substitute
  excluding, however, any independent contractor,
  person compensated on a fee basis, or, unless
  otherwise determined by the board, any hourly
  school employee provided that, school employee
  shall include any employee of public school
  entity who has a position for which eligibility
  in a health care plan sponsored by the public
  school entity is offered by virtue of his or her
  employment is in effect as of the effective date
  of this part.

10
Overview of the Legislation

• Parameters of the Plan 9323 (b)(1) p.23
• Benefits
• Disclosure of any cost sharingpercentage, flat
  fee with escalator, statewide or regional
• Establishment of regions
• The design of the statewide pool or regional
  pools for purchasing services and managing risks
• Transition rules

11
Overview of the Legislation

• Legislative and Public Review 9323 (e) p.25
• Plan published in PA Bulletin and on the web
• Three public hearings
• Submitted to Senate and House Education
  Committees for comment within 45 days

12
Overview of the Legislation

• Final Plan Adoption 9323 (f) p.26
• After publication and hearings the board will
  review all testimony and comments
• Changes by qualified majority vote
• Final plan within 90 days of publication

13
Overview of the Legislation

• Failure to Reach Consensus 9323 (g) p.26
• The board can adopt an alternative measures plan
  if it fails to approve a final plan by a
  qualified majority vote
• If no plan is adopted notice is required to the
  Governor, Senate President Pro Tem and Speaker of
  the House

14
Overview of the Legislation

• Program Design 9322 (b) p.27)
• Upon adoption of a statewide health plan, the
  board shall design a plan that provides a level
  of health care benefits consistent with those now
  provided to most school employees.
• May be administered differently within each
  region as long as the standard benefit package is
  substantially equivalent in coverage.

15
Overview of the Legislation

• Mandatory Participation ( 9332 p.29)
• All districts, IUs, CTCs and charter schools
• Philadelphia excluded
• Philadelphia opts out of statewide health plan.
• In continuing coverage from previous briefings,
  Pennsylvania's Bulletin (9/24, McCaffrey)
  reported that Philadelphia "teachers have opted
  out of participating in a state plan to reduce
  healthcare costs for Pennsylvania school
  districts." Ted Kirsch, the former president of
  the Philadelphia Federation of Teachers and now
  the president of the statewide Pennsylvania
  Federation of Teachers, announced the decision.
  State Rep. Steve Nickol (R-Hanover) "hopes to
  lure them back." Nickol said, "I hope the state
  picking up some of the healthcare increase may
  cause Philadelphia to voluntarily enter." Jack
  Steinberg, chief trustee of the Philadelphia
  Federation of Teachers (PFT) Health and Welfare
  Fund, explained, "We already have a health and
  welfare plan. ... If there were a regional
  consortium, we would dwarf it." Regarding the
  projected benefits of the statewide plan,
  Steinberg added, "We are already doing what the
  state is proposing to do and we are doing it more
  successfully."

16
Overview of the Legislation

• Mandatory Participation ( 9332 p.29)
• Transition plans submitted within reasonable
  period of time
• Where collective bargaining agreements are in
  effect covering health care, participation not
  required until expiration (contract by contract)
• Earlier if mutual agreement

17
Overview of Legislation

• Continuation of Coverage and Transfer Employees
  ( 9333 p.32)
• Annuitants may opt in at their own expense
• Eligible school retirees pay the 2 admin fee
• Others not eligible for coverage under 513 of
  the School Code can also elect to continue
  coverage by district policy or collective
  bargaining agreement
• At a minimum COBRA coverage shall be provided by
  the board at the employees expense

18
Overview of Legislation

• Continuation of Coverage and Transfer Employees
  9333 (c) p.34
• If a school employee on or before January 1, 2008
  is regularly employed at a school worksite by a
  non-school employer, the employer shall pay for
  coverage in the plan.
• School responsible for collection from employer.

19
Overview of Legislation

• Partnership for Stable Benefits Funding
  9334(b) p.35
• Plan costs for school employees are regionally
  determined

20
Overview of the Legislation

• Limitation on Commonwealth Cost Share 9334(f)
  p.35
• If the aggregate plan cost exceeds any surplus
  carryover from the previous year plus the amount
  of employee premium sharing, the board shall
  submit a request to the Secretary of the Budget.
• The board shall request the lesser of
• 50
• The percent increase in the per enrollee private
  health insurance premium for all benefits as
  defined the National Health Expenditure Data
  published by the Centers for Medicare and
  Medicaid Services of the U.S. Department of HHS
  (see next slide for index history)

21
Percent Change in Per Enrollee Private Health
Insurance Costs 1970-2005
22
Overview of the Legislation

• Allocation of Commonwealth Contribution 9334(h)
  p. 35
• The Commonwealth contribution is based on the
  public school entitys market value/ income aid
  ratio.
• During the transition, payments by school
  entities shall be no less than the total amount
  paid in the previous year less employee cost
  sharing.

23
Overview of the Legislation

• Applicability 9334 (l) p.39
• Any expenditures necessary to fund participation
  in this program shall qualify as costs incurred
  under section 333(f)(2)(ix) of the Act of June
  27, 2006 (1st Sp.Sess., P.L. 1873, No. 1), known
  as the Taxpayer Relief Act.

24
Overview of Legislation

• Collective Bargaining, Mediation and Binding
  Arbitration 9338 (e) p.54
• This law or any other law may not permit,
  authorize or require collective bargaining,
  mediation or binding arbitration to create, alter
  or modify health benefits.
• Any collective bargaining agreement executed
  after the effective date of the law must contain
  a will join provision
• Schools and employees may bargain any benefits
  that are not included in the standard benefit
  package and may bargain post retirement benefits

25
Whats On the Table?

• OFF
• Standard Benefits Package
• Coverage for hourly employees
• Premium sharing

• ON
• Vision
• Dental
• The Cost of Retiree Coverage

26
Overview of Legislation

• Alternative Measures Program (9351 p.55)
• Largely based on Ohio consortium plan
• Default, only after statewide approach fails
• Formation of pools
• Establishment of best practices

27
Overview of Legislation

• Retirement Health Savings Plan ( 9361 p.58)
• Required plan creation
• Employee contributions
• Bargainable
• A mandatory school employee contribution may be
  established in a collective bargaining agreement
• A mandatory school employer contribution equal to
  the public school entitys savings in FICA and
  Medicare

28
The Big Questions

• What is the plan?
• What is the cost?
• Who is eligible?
• What is the cost of a new state bureaucracy?
• What happens to consortia?

29
Opt Out?

• If the legislation is designed to save school
  resources shouldnt the board identify costs and
  allow an opt-out for any school employer with
  lower costs?
• Unfortunately, we wont know until after the
  fact.

30
Governors Newsletter Health Care Solutions that
help Taxpayers, School Employees September 21,
2007 The rising cost of providing health care
to employees is one of the greatest financial
challenges facing Pennsylvanias school districts
today. This mounting burden drains precious
resources and detracts funds from the core
mission of our public school system educating
students. Statewide, school districts spend 1.5
billion on medical and prescription drug
coverage. Between 2003 and 2005, health care
premiums paid by school districts soared a
shocking 24 percent. This week, I called on the
General Assembly to adopt legislation creating a
statewide health benefits system for school
employees, similar to the system that covers
state employees. We have already proven that it
is possible to protect taxpayers while
maintaining high-quality benefits, and it is time
to replicate these results in Pennsylvanias
school districts.
31
There are several major benefits to this
approach. In addition to preserving the quality
of health benefits our educators receive and
controlling costs, adopting a statewide system
will help to eliminate a major stumbling block in
local contract negotiations. Once health care is
off the bargaining table, we hope to see a drop
in the number of strikes by teachers. The
legislation, House Bill 1841, will not affect any
existing collective bargaining agreement.
Instead, school districts would enter the
proposed statewide program after existing
contracts expire. Participation would be
mandatory for all school districts except
Philadelphia and the program would serve
approximately 230,000 school employees. My
proposal also includes first-ever state funding
to help pay for increases in school employee
health benefit costs. By leveraging the
purchasing power of all school districts and
making the state a partner, we will at a minimum
curb the rising cost of health care and at best
achieve significant savings for Pennsylvania
taxpayers. With strong bipartisan support, I
hope that the General Assembly will take action
this fall to make this statewide school employee
health benefits system a reality for Pennsylvania
taxpayers and educators. Sincerely,
                      
32
Questions and Concerns

• The creation of PEBTF for state workers in 1988
  is not a model for school employees. Regional
  consortia which have already realized cost
  savings for schools were not in place. State
  workers have for the most part have one employer
  not more than 600!

33
Questions and Concerns

• The transition period will be significant since
  those with longer term collective bargaining
  agreements will not be in the state plan in fact
  some schools may have some employees in and some
  out.
• State funding is a great benefit. But the state
  share is capped. Who pays the difference?