Business First of Columbus: STRS tempers health premium hike for '07, but is worried about future
The more than 100,000 retirees who get their health-care insurance through the State Teachers Retirement System of Ohio will see their 2007 premiums raised but the increases won't be as high as first expected.
After two months of analysis, the system's chief actuary confirmed changes to the medical plans that were approved in June, including higher co-payments and out-of-pocket expenses, should save the system $16.5 million next year. With those findings in hand, STRS trustees voted 7-1 Aug. 18 to approve the premium increases.
Only board member Dennis Leone, a retired Chillicothe schools superintendent, voted against the hike.
Though premiums will rise, plan changes ensure the system will remain affordable for retirees, said spokeswoman Laura Ecklar.
"We're trying to remain competitive," she said
The system in June warned that premiums in one plan could increase 15 percent for non-Medicare recipients and 19 percent for those with Medicare. But with the changes, 2007's increases will be lower at 10 percent and 15 percent, respectively.
Among the largest increases are for members' spouses. The system had forecast spouses could experience increases of as much as 32 percent, but it now expects increases to top out at about 24 percent for them, Ecklar said.
Premium increases are almost impossible to prevent because health-care costs are rising, Ecklar said.
"But we're trying to keep that manageable," she said.
Some of the STRS changes were meant to help make the system's lower-premium, higher-deductible plan, which often appeals to healthier participants, more attractive by offering to pay for checkups and tests, she said.
Known as the basic plan, it was launched in 2004 and has about 8,700 participants, or 7.7 percent of the 113,000 members.
The system's health-care plans, available to retired public educators, have historically been priced for older or less-healthy participants. Many of the younger or healthier retirees, however, have found better deals elsewhere, Ecklar said.
That's because the retirement system subsidizes a higher percentage of premiums of those who have worked longer and are typically older. But those who are younger and have worked fewer years as teachers get a lower subsidy, which means they pay more to use the system.
In addition, the retirement system does not set premiums based on age or health conditions, but on years worked, which also draws older or unhealthy plan participants, Ecklar said, adding it's hoped steps the system has taken will also help reduce costs and the need for higher premiums.
Still, there are storm clouds on the horizon.
Recent estimates show its health-care plan will run out of money by 2021. To maintain competitive premiums - and remain fiscally solvent - the system has drafted legislation that would raise the contribution from teachers and employers by 2.5 percentage points over five years. That would bring in about $500 million a year for health care, compared to the $94 million in 2005.
STRS Government Relations Director Terri Bierdeman said she's talking with legislators about the threat, but the upcoming election season may make it hard to find a sponsor to introduce the proposal before November, she said.
State Sen. Steve Stivers, R-Columbus, said he must be convinced there is support among teachers and school systems before he's ready to look closer look at the plan.
"I'd like to see them build more interest among their own interest groups," he said.
posted by Kathie Bracy at 2:04 AM
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