Using government in a more responsible manner

January 6, 2014

Authors:  Mike Coons and Sandi Williams

SB 90: An Act relating to group insurance coverage and self-insurance coverage for school district employees sponsored by Michael Dunleavy and HB 196: School District Employee Health Insurance, sponsored by Lynn Gattis. Both bills are mirror images of each other.

SB 90 was introduced in the last session and from what I saw of one Senate Education Committee hearing, had a lively debate. The main opponent to this bill is NEA Alaska. Senator Dunleavy held back this bill for two basic reasons. One was to get a review to determine if the intent of this bill would indeed save money. The second was that several other Borough and Municipal governments were interested in pooling through the State, could this be used in other areas legally and effectively? The main issue here is the reduced cost by the Boroughs and Municipalities for their health insurance policies. 

The Hay’s Report came out a few weeks ago and can be viewed at, then look for link  12102013 SFC Hay Report.pdf on that page.

In reviewing SB90, there are many documents from across Alaska in support of this concept, with far fewer opposing. There are 16 letters supporting and 9 opposing, NEA Alaska has 4 of the 9. 

In reviewing the support and opposition documents, the support by School Districts has a common theme. The cost to their budget for healthcare per the Hay’s report is 16%. The Matsu School District (MSBSD) is estimating a 12% increase in the coverage. According to Dr Deena Paramo, “MSBSD could potentially experience a $3.6 million increase, which is the equivalent of 36 teaching positions.” From the Hay’s Report, they recommend the following with listed cost savings:  “Centrally Managed School District Program with Standard Health Plan Options and Cost Sharing provides an independent set of three health plan options that are customized to best suit the needs of school districts, using a State-managed health program that is independent of AlaskaCare. Under this option, there would be uniform premium cost sharing  Estimated financial impact: savings ranging from $22.6M – $33.7M, which represents savings of 7.7% – 11.4% of current health care costs.”  If the above option were to pass, not only would the 12% increase NOT happen, but the taxpayers would see a SAVINGS of potentially 9.5% (a potential DECREASE of 21.5% total) from the current budget , that’s huge! I have no way of knowing what that would equate to in property tax savings, but it would have to be noticeable to say the least. 

As to the opposition from NEA Alaska. They believe they have an outstanding health-care plan. The covered items per Rhonda R. Kitter, Chief Financial Officer for NEA Alaska are as follows: “Eight different medical plan designs. Two different dental plan designs. Vision and prescription benefits. Member (employee) assistance programs. Orthodontia coverage. “  I am curious as to the cost and reasoning for having eight different medical plan designs, two different dental designs? SB 90 covers all those and more. In the letter from NEA Alaska, there is no discussion of spouses and children, although I am sure they are covered as well.  Rhonda Kitter goes on to state: “The comments from the sponsor suggest that the State would negotiate with carriers. This implies that the State might enter into a fully-insured contract on behalf of the school districts. This would do nothing but add costs to the programs as new PPACA taxes are going to much more aggressive for fully-insured plans than self-funded programs.” As to the PPACA or more commonly known as Obama Care, there may be those added costs, however, since Rhonda Kitter doesn’t say anything about projected increases to their coverage, I wonder is that because of the sweetheart deal the big unions have worked with President Obama to not pay the Cadillac Plan taxes?

According to SB 90 Section 4, a (1) and (2) the coverage would be:  A group insurance policy shall provide one or more of the following benefits: life insurance, accidental death and dismemberment insurance, weekly indemnity insurance, hospital expense insurance, surgical expense insurance, dental expense insurance, audiovisual insurance, or other medical care insurance. Each eligible employee of the state or a school district, the spouse and the unmarried children chiefly dependent on the eligible employee for support, and each eligible employee of another participating governmental unit shall be covered by the group policy, unless exempt under regulations adopted by the commissioner of administration.”

I will let the reader pull up and read the many documents that I have linked to as to the further pro’s and con’s from the supporters vs those who opposes. I do have some concerns however and answers to those concerns, which if adapted would save taxpayers even more money.

 Section 4 a(1) has a lot of benefits, some of which is pretty standard with private employers. However, with the cost of good term life insurance and accidental death and dismemberment insurance policies available, do we as taxpayers (or in this instance oil revenue taxes, etc.) need to pay for term life?  Section 4 a(7) states:  “A person receiving benefits under AS 14.25.110, AS 22.25, AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in effect under this section at the time of termination of employment with the state or participating governmental unit.”  Having their own term life and accidental death and dismemberment insurance would make any move or leaving the job that much easier and portable. The last item, “other medical care insurance” brings a question to mind, since in the Lower 48, there are many reports of teachers unions with plans for Botox, breast enhancement, belly tucks, etc.  If that is what is meant by “other medical care insurance”, then if the teacher wants to get a breast enhancement or a face lift, they can pay for that themselves (only exception would be due to trauma or breast cancer).   As to subparagph (2), many private companies are dropping spouses in the benefits plans, specifically if they have a job with employee health care benefits. This is not stated and would further reduce the costs.

In closing, this issue will be on-going throughout the session. I have read the Hay’s Report and I encourage all to read it. Lot’s to it with some really good information. I have sent an e-mail to Senator Dunleavy and Representative Gattis with several questions this morning. I encourage all to read the report, then ask questions. Most importantly call in to testify during the session, let your voices be heard and help develop a true good government fix that has undergone solid scrutiny and truly makes sense (unlike the Democrats who call for “common sense solutions” that are neither common nor makes sense). This topic will most likely be discussed in future articles as I gain further knowledge on the facts.



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