The East Baton Rouge Parish School Board voted 8-2 late Thursday to allow Superintendent Bernard Taylor to discuss health-insurance options for active and retired employees with United Healthcare and Humana, two companies competing to be the provider of choice.
Earlier Thursday, Taylor asked the School Board to vote on a process for choosing a health insurance plan instead of choosing one as expected during a special meeting, which started at 8 p.m. after a Committee of The Whole board meeting and ended at 11 p.m.
The issue is whether to shift thousands of Medicare-eligible retirees from the school system’s self-funded health insurance plan to a system that relies on Medicare through a privately managed Medicare Advantage Plan.
“I’m not asking you to finalize anything this evening,” Taylor said before the board listened to presentations from Mercer, a health-care consulting firm hired by the school system, as well as from United Healthcare and Humana.
Taylor said he would like the board to consider what the health insurance for the system could be, decide to move forward with negotiations with the providers and then bring it back to the people who would be affected by the changes before any final decision is made.
“This issue (of health insurance) consumes us six months out of the year,” Taylor said about last year’s and this year’s discussions. “We can’t let it go on a third year.”
The School Board rejected a similar plan brought forward by Taylor last year to move Medicare-eligible retirees out of the district’s plan and instead raised rates on all employees, reserving a greater increase for retirees.
In previous reports, Mercer found that there isn’t a need to increase premiums for active employees based on the medical claims made.
However, Medicare-eligible retirees would need to generate 25 percent more in premiums than they do now, or about $4.4 million, to cover the need, Mercer found.
Another group of retirees, called non-Medicare retirees, are insured entirely by the school system group plan which is administered by Blue Cross Blue Shield of Louisiana. There will be about 2,000 retirees in this group by 2014, all of whom worked for the school system when public school employees weren’t eligible for Medicare.
Some members of a special health-care advisory committee, chosen by Taylor to vet health insurance proposals, however, are pressing for an across-the-board increase on both active and retired employees, similar to what was done last year.
Susan Nelson, interim director of communication and external relations for the school system, has said Taylor may opt to ignore the committee’s advice.
Active employees have not received a raise in several years and at the same time have had to contribute more to their health insurance. Retiree advocates counter that retirees live on fixed incomes, and they have not seen a cost-of-living increase in their pensions either.
The amount of money in premiums generated by non-Medicare retiree premiums would need to increase by 10 percent in 2014, or $2.3 million more, to cover their expected claims, according to Mercer.
The proposed new premiums, though, are much more than 10 percent for the non-Medicare retirees. The premiums range from about 25 percent to nearly 54 percent. These retirees would pay $72 to $185 a year more than they pay now in premiums, depending on whether they are single or if they have families.
Medicare-eligible retirees generate even less in premiums than non-Medicare retirees compared to their cost, according to Mercer. Medicare-eligible retirees would need to collectively generate 25 percent more than they do now, about $4.4 million, to cover the shortfall, according to Mercer.
Moving to Medicare Advantage would likely mean no increase in premiums at all for these retirees, Nelson has said.
The Medicare-eligible retirees, according to the latests estimates by Mercer, are expected to number almost 2,900 in 2014. It’s not clear how much higher their premiums would go up if the School Board again shies away from the Medicare Advantage idea.
In February, Mercer calculated that an across-the-board increase would have to be 12 percent more in premiums for everyone, but in April, it lowered its costs estimates for 2014. Mercer hasn’t released a revised across-the-board calculation.
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