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Committee Receives Recommendations on School Health Care Plans

Report shows centrally-managed school district program would create large cost savings while benefitting employees

ANCHORAGE-Today, the Senate Finance Committee met in Anchorage to review a report on how to best achieve health care savings for the State’s 53 school districts.   The Committee commissioned the Hay Group to conduct a study of the group health programs currently managed by each school district with the purpose of estimating the cost and overall impact of consolidating Alaska’s public school employees under a state-managed group health insurance program.

“When four of the largest school districts come to us asking for relief, not more money, we can’t help but to respond,” said Senate Finance Co-Chair Pete Kelly (R-Fairbanks).  “Health care costs are eating everyone’s lunch.  School districts came to us with what appeared to be an elegant solution.  So we hired this group of professionals to analyze it before we go forward.”

The Hay Group consultants surveyed all 53 school districts and conducted interviews with the NEA-Alaska Health Plan Trust, the Department of Administration, the Alaska Association of School Boards, the Alaska Association of School Administrators as well as commercial health insurance companies.

The analysis showed the State’s school districts spend roughly $264 million on group health care programs annually covering almost 16,000 employees.  That’s an average of more than 15-percent of school district funding that is spent on health care costs.

“Principals from around our State have indicated the single largest increase in their budgets is health care costs,” said Senator Anna Fairclough (R-East Anchorage/Eagle River).  “This report is a first step in a journey to help our schools and provide health insurance to our school district employees.”

The Hay Group examined four options to reduce these costs and recommended an option which creates a centrally managed school district program with health plan options and cost sharing in which the State provides a menu of health plan options customized to best meet the needs of individual school districts.  Under this option, a cost-sharing strategy would be implemented that would provide a savings of almost 7-percent for most school districts. 

“We understand the necessity of looking at the single largest cost driver for our school districts,” said Senate Finance Co-Chair Kevin Meyer (R-Anchorage).  “We have two main objectives- Number one is to find efficiencies and cost savings and number two is direct more resources into the education of our children without jeopardizing the health of our teachers.  We will continue to review the report with these objectives in mind.”

When the Legislature reconvenes in January, the Senate Finance Committee will consider Senate Bill 90, which is sponsored by Senator Mike Dunleavy (R-Mat-Su Valley).   Under SB90, all Alaska public school district employees would be covered by a state-managed group health insurance program, like the Hay Group Report recommends. 

“We have much to discuss as a result of this study,” said Senator Mike Dunleavy (R-Mat-Su Valley).   “I appreciate the work the Hay Group has done.  I believe SB90 is a viable vehicle to reduce the cost of health care without sacrificing the quality of care for individual, hard-working educators.”

To read the Hays Report and Presentation, please click here.

For more information, please contact Suzanne Armstrong in Senator Meyer’s Office at (907) 269-0199.

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