Last week, the Supreme Court ruled that the health care premium subsidies granted in the Affordable Care Act will remain available to income-qualified individuals in all states, regardless of whether that state had set up their own health care exchange or not. That includes Georgia!
So, for those Georgia school systems struggling with the cost of State Health for classified staff and looking for a less costly health insurance alternative, this decision removes, for the foreseeable future anyway, one of the big unknowns: Will the cost of an alternative plan fall to our system and our employees alone or will funding from a third source be possible? Now we know.
Why is this important? Because despite what a number of intrepid insurance brokers are peddling, a financially viable group health insurance plan for this population is not feasible. If it was, State Health would simply adjust the contribution requirements slightly and the problem would largely be solved. After all, they can do it cheaper than an insurance company can. Why? Because SHBP is a huge, self-funded plan that has extremely low administrative cost and no insurance coverage or cost -- no individual stop-loss, no aggregate stop-loss -- and no commissions being paid to insurance brokers. Let's say these costs are only 15% of the total (A very low guess). That means a district's stand-alone plan would need to have claims costs that were at least 15% lower than what they are today to break even. But why doesn't State Health want to keep these folks in the plan? Because their claims costs are much higher than the SHBP average! So what's the bottom line? If it's a cost problem for State Health, it's a complete non-starter for your system or RESA. And that's before you consider the additional responsibilities and financial liability that will fall to your system with a stand-alone plan. In short, any comparable, stand-alone plan will cost much more than SHBP. Your system could never lower its cost and stay in compliance with the affordability test in the ACA and even if you could, the cost to the employee -- whether it be to join or to pay high deductibles, would never be affordable.
What the Court decision means to us in Georgia is that if we conclude that the cost to keep our classified staff in SHBP is simply unaffordable to our system -- either for our entire classified population or perhaps just those working under 30 hours -- then we are now free to devise a solution that has these lower-paid folks accessing the ACA Marketplace and taking advantage of the subsidies they can get there. This will be more challenging and more costly to pull off for the over-30 hours folks but it would likely be financially feasible, where a stand-alone plan would not. For the under-30 hour population, it will be far easier.
The lone, missing data point is how much SHBP will demand for each classified participant.
We know the original 3-year plan was to increase that amount by $150/month for an aggregate increase of $450/month and a grand total of about $750/month. But the third $150 increment was never taken. We anticipate that the 2016 increase will be much more than the foregone $150 and that it could take us from the current level (just under $600/month) to $850 or more. We should know the actual number very soon. How many systems can find that money? For those who can't, the solution will lie in taking advantage of the ACA subsidies and not in a stand-alone plan.
Taking advantage of an ACA exchange-based approach will still require significant planning, employee education and assistance, and potentially significant system funding to create a workable plan if the goal is to keep these much needed people working for you. Finding a trusted advisor to help you create and implement such a plan, rather than a broker interested in selling you more insurance and capturing more commissions will be key to your success.