Lafourche school board to vote on insurance hikes

Active employees with Lafourche Parish School Board will pay 5 percent more toward their health insurance premiums if the board chooses to pass the recommendations of its Insurance Committee at next Wednesday’s board meeting.

Retirees, no matter if they are covered under Medicare Humana or Blue Cross, would pay an additional 10 percent toward premiums.

The premium hikes would create an additional $370,000 in revenue, which is needed to offset the a projected shortfall of $900,000 for the board’s 2012 total contribution, which is all the money paid into the system, according to brokers with Gallagher Benefit Services Inc., who handles the board’s health insurance plan.

“When the actuaries did all the calculations based upon trending, for inflation and all the different things that they do to calculate what you need to go into your fund to keep up with the claims, they said you need about a 5 percent increase in your contribution levels, in your funding, which amounts to about $900,000 that needs to go into the fund to cover the costs for next year,” said Byron Landry, a broker with Gallagher.

The board would create an additional $370,000 in revenue, which would be devoted to offsetting an expected increase of $900,000 the board needs to raise for its 2012 insurance costs, per representatives with the board’s insurance brokers.

The board would create $130,000 by increasing its prescription drug deductible from $100 to $150, and $140,000 by decreasing the co-insurance from 90 percent to 80 percent of the cost of outpatient lab and X-ray benefits, according to Gallagher projections.

In trying to save an additional $100,000, the board will look to increase usage of generic drugs by 2 percent through the deployment of educational programs, Landry said.

“We’ve talked about this a lot in the past, but these changes are changes that affect people who utilize the benefits, utilize the plan more than the people that don’t use it,” Jim Stentz, another broker with Gallagher said. “So instead of costing everybody the same thing, or raising the premium to a higher level, this is for people who are actually using the plan.”

The remaining $160,000-projected shortfall, keeping in mind it could be more or less as 2012 comes to pass, could be covered by the insurance reserve fund, which has about $7 million on hand, without taking into account the “run-out claims” the fund provides for, according to the business manager.

Gary Foret, the committee’s chairman, said more teaching positions could be cut if the school board absorbed the hikes rather than putting the burden on its employees. The board will not adjust its rates.

“We’re facing it, and if I can say this as such, if we take any further cuts, we’re going to have to cut employees to fund the insurance plan,” Foret said. “If we have the shortfall, the board will cover the $160,000, or whatever falls above that amount. But if we would have to increase the contribution at this time, we would probably have to look at (firing employees).”

Five certified teachers were terminated prior to the current school year, as the board reacted to continuous yearly declines in funding sources with a 7 percent cut in 2012 expenditures.

The board agreed that it would approach withdrawing from the reserve fund with trepidation.

“It wasn’t that long ago it was down to $2 million,” Gaudet said. “If you remember correctly, (the board) chipped in $3 (million). … We’re holding in there as a buffer for like the years when we had three people all go over the $2 million claim.”

Patton Pierce, an adaptive physical education teacher with Lafourche Parish, spoke before the school board, saying he works four jobs during the summer to provide for his family. He said he understands the board’s position, but he’s “concerned” about shortfalls of his own.

Pierce is insured under the board’s active employee and family plan. His yearly rate would increase by $332 if the board approves the hikes, or $28 per month. He said he works four jobs during the summer, because “It’s tough for a father to provide for his family.”

“I seem to be falling into the foam rather than being at the top,” Pierce said. “It’s tough, it really is. I understand your situation too, but it’s tough.”

Lafourche Superintendent of Public Schools JoAnn Matthews, in an amiable discussion with Pierce, said employee welfare weighs on the board’s mind when making decisions such as premium increases.

“We do know, and I know I can speak for these board members, we feel your pain, we’re discussing various options, our hands are very tied, but do know we are looking out for the employees to do the very best we can,” Matthews said.

Landry called the premium hikes “equitable.” LPSB Business Manager Don Gaudet said active employees would see the lesser hikes because the board is mandated to pay a certain percentage.

The board pays 65 percent of active employees’ insurance premiums, 70 percent of Blue Cross-insured retirees’ and 76 percent of Humana retirees’.

Of the $18.2 million projected total 2011 contribution, spanning all employees and retirees, the board is expected to pay 67 percent, or $12.2 million. The board paid $7.1 million of the $10.6 million total contribution through July, with 2,287 beneficiaries splitting the difference based on their coverage.

The board’s total claims, including specialized plan’s medical costs, outpatient and drug costs, through August was $10.5 million, 7.1 percent higher than 2010. Claim payouts were steady between 2008 and 2010, increasing by only three-tenths of a percent.