Division of Legislative Services > Legislative Record > 2007
SJR 372: Joint Subcommittee to Study the Feasibility of a Statewide Health Insurance Experience Pool for Educators and Local Government Employees
October 10, 2007
The joint subcommittee held its second meeting in Richmond on October 10, 2007, with Senator Norment as chair.
Staff presented an overview of the constitutional issues regarding General Assembly mandates to local school boards. The state Constitution divides public educational responsibility among the General Assembly, the Board of Education, and the local school boards. The General Assembly is responsible for the provision of free public primary and secondary schools and establishment and maintenance of a high quality educational program; the Board of Education is responsible for the general supervision of the Commonwealth's public school system; and local school boards are required to supervise just those schools in its respective school division.
The law is not clear as to the constitutionality of a General Assembly mandate that local school boards participate in The Local Choice, the state's health insurance program created exclusively for local governments, authorities, school divisions, and constitutional officers. Staff discussed several relevant Virginia Supreme Court cases of interest to the members and the hypothetical legislative mandate that school boards purchasing health insurance for its employees must purchase such insurance through a state program. Staff concluded that a General Assembly mandate that local school boards participate in a state-created health insurance program with choices for specific coverage may avoid some constitutional questions.
PROGRAMS IN OTHER STATES
Goals of statewide health insurance pooling
The goals of statewide
health insurance pooling include the expansion of health plan bid opportunities,
the creation of greater leverage with carriers and providers, the spreading
of pool risks across a larger group of people, and the restraint and stabilization
of health insurance premiums and administrative costs. Additional goals
include the reduction and/or elimination of broker, consultant, and other
commission payments, the achievement of better health plan cost management,
and the assurance of long-term health plan solvency and viability. The
most important goals, however, are the improvement of school employee
health status, the provision of the highest quality plan, benefits, and
provider choices, and the attraction and retention of qualified educators.
Ms. Malone discussed insurance pools that have been established by states legislatures that pool employees statewide, including those implemented in Alabama, New Mexico, and Texas. In these pools, the same rates exist throughout the state for the same plan, but there may be some regional rate differences for HMOs. Characteristics common to pools include:
Ms. Malone provided
the members with a list of NEA state affiliate pools, including those
in existence in Indiana, Maine, Michigan, Vermont, Washington, and Wisconsin,
and further listed those states that pool education employees and state
employees. The states of Delaware, Georgia, Kentucky, and North Carolina
mandate that education employees and state employees be pooled together.
The pooling of education employees and state employees is voluntary in
Oklahoma, Tennessee, New Jersey, Utah, and Massachusetts.
Ms. Malone discussed current legislation being considered by Massachusetts, Michigan, Oregon, Pennsylvania, and Montana. The passage of state pooling legislation depends on the vital support of large localities and school districts, NEA state and local associations, and other stakeholders. Deal breakers for state pooling legislation often turn on whether pooling is mandatory or voluntary, the choice of plans and providers or lack of choice, and whether the insured see benefits cut or costs increased. She suggested that legislators identify and include opposition and supporter participation early in the legislation process, identifying the current health plan, service, and prescription drug providers.
Feasibility studies compare and contrast localities and school districts by cost and utilization experience, benefit package and value, and premiums, contributions, and other costs and current plans are compared to more standardized. Feasibility studies usually require at least three years of health plan data. Ms. Malone discussed New Mexico and Pennsylvania that mandate school districts provide health data for feasibility studies. She noted that states without mandates are hindered in collecting necessary data for a thorough feasibility study.
The goal of a feasibility study is to determine whether savings will result from pooling. Savings should result from the creation of a large pool and not from cuts to benefits or the shifting of costs to employees. Ms. Malone provided information on projected savings in Oregon, Minnesota, and Pennsylvania. She cautioned that who conducts a feasibility study and how the study is conducted influences the validity of projected savings. Savings may depend on aspects of the pool, such as:
Ms. Malone noted that projected savings correlated with the existence of a state wellness and health management program, and states with these programs estimated higher savings. Some states look at statewide carve-outs and/or pooling of the following:
Ms. Malone explained that too many plan options could create two pools, one for the sick and one for the healthy and listed some of the important questions that should be answered before considering legislation for a statewide pool:
Issues Facing Localities
Dean A. Lynch, Director of Intergovernmental Affairs for the Virginia Association of Counties (VACo), and Mr. Wayne Faddis, Administrator of Risk Management Programs for VACo, gave an overview of the issues facing various localities throughout the Commonwealth.
was unable to self-insure county and school board employees, because the
costs were too high with its existing $25 million budget and one severe
claim would significantly affects rates. The county claims that its rates
increased 31.9% in 2002 due to one heart surgery and one kidney disease
claim. The county reported that the average annual increase in health
insurance coverage costs has been approximately 15% over the past 10 years.
As a result of escalating insurance costs, the Northumberland County board
of supervisors considered dropping certain benefits and establishing an
The members decided that a feasibility study by a college or university was most likely needed before the joint subcommittee could recommend legislation to the General Assembly for a statewide health insurance experience pool for educators and local government.
Division of Legislative Services > Legislative Record > 2007