Lawmakers Calculating Costs Of State-Run Health Insurance For Public School Employees

Lawmakers are looking into what it would cost to implement a state-managed health insurance program for public school employees.

The Senate Finance Committee put out a call for studies this week, and they’ve set aside up to $350,000 to figure out just how much the state’s school districts are currently spending on private plans and if there would be any benefit to the state stepping in.

The study’s results could either bolster or sink a bill that would allow a state takeover of public school health plans. Instead of letting individual school districts negotiate their own insurance plans, the legislation would put a commissioner in charge of picking a single plan for the whole state.

Sen. Mike Dunleavy, a Republican from the Mat-Su region, sponsored the legislation, and he says he introduced it in response to rising premiums.

“If we can reduce the costs outside of the classroom, we can put more money inside of the classroom. That’s the idea.”

The bill would nearly quadruple the number of people on the state’s employee health plan. There are 20,000 public school employees with 30,000 dependents in Alaska, and Dunleavy thinks pooling them all together could help achieve economies of scale.

His bill was introduced in the final weeks of the legislative session, and made it to the Senate Finance Committee before getting put on hold. Superintendents from school districts like Yukon Koyukuk, Mat-Su, St. Mary’s, and Kenai offered support for the legislation, suggesting that it could bring down their health care expenses. But others had concerns. Individual teachers called the legislation an attack on collective bargaining rights. Union groups — like the NEA and Anchorage’s Local 71 — that provide health coverage to Alaska school districts were skeptical that the state could beat their rates. There were also questions about the speed at which the bill was moving — the Unalaska School District, the consulting firm Northern Economics, and others asked if more financial analysis of the bill needed to be done.

According to Department of Administration projections, it would cost the state over $300 million a year to administer its own health insurance program for public school employees. Dunleavy says that this study should help satisfy those who wanted more information and that it should give legislators a sense of how expensive it would be to stick with the status quo.

“The goal is cost savings. If there’s no cost savings, and this is the best system we have — hey, we stay with it.”

The Senate Finance Committee plans to award their contract for the study in July, and the final report on public school health plans will be due this fall. Lawmakers are asking bidders to look at what sort of benefits school districts are already offering and how much benefits could change should the bill become law. The study will also examine how a switch to a state-run plan might affect collective bargaining, and it will consider the risk of litigation from public school districts and employees who believe they are losing benefits. Additionally, the Senate Finance Committee is asking for the study to address how the NEA health trust and other insurance groups administer their funds and whether those funds can be used for political purposes.

While lawmakers can collect more information on the bill during the interim, the earliest they could move it forward is January, when the legislature gavels back in.