HomeHealthHealth CareKetchikan's borough assembly to tackle health insurance deficit

Ketchikan’s borough assembly to tackle health insurance deficit

Ketchikan’s Borough Assembly will address the growing shortfall in a major health insurance fund during a working session on Monday.

As of 2019, the Ketchikan school district has paid out more in insurance claims than it has received in premiums. At the end of last month, the school district owed $4 million to the council for unpaid medical expenses.

The Ketchikan Ward and School District does not have a traditional insurance company. They are self-insured, meaning the council collects monthly employee contributions and pays for things like doctor visits and hospital stays. A type of backup insurance, known as reinsurance, protects it from runaway costs.

As it stands, the Municipality of Ketchikan pays claims for school district employees and bills the school district for reimbursement. But in a memo to Ketchikan’s Borough Assembly, the council’s finance director says the district has not paid enough to cover the costs, leaving the council to make up the difference.

“Under a long-standing MOA between the Borough and District, both entities are required to transfer the monthly premiums (employee and employer) to their respective funds sufficient to cover claims as they arise. This has not happened and the chronic and growing shortfall in the school district fund is a result of this underfunding,” wrote Finance Director Charlanne Thomas.

on multiple occasionsthe school district and the municipality have each tried to support the fund with cash injections.

But a 2018 contract with the union representing Ketchikan’s teachers that cut premiums by half means there is a structural shortfall in the health insurance program. Simply put, the health insurance premiums of the district’s nearly 300 employees are too low to support growing health care costs.

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Borough finance officials have been ramping up pressure on the school district to address the issue in recent months. Starting next year, the district plans to send bills from the insurance administrator directly to the district instead of paying them and asking for a refund.

“This is intended to take the district out of the ‘billing and payment cycle’ in the hope that the district will have to make full payments directly to the seller,” Thomas wrote.

As of this month, the municipality says it has not yet received a plan from the district to tackle the shortage.

Ketchikan’s Borough Assembly is scheduled to discuss what comes next in a work session scheduled for Monday.

Two possible approaches suggested by the finance director are for the district to reimburse the city for the $4 million in outstanding health care costs from the budget — in a lump sum or on a payment plan basis.

Another option is to give another cash injection for the program. But city officials say they can only provide up to about $800,000 until it starts draining government funding for education. That is the result of the so-called “cap,” the upper limit of local funding that the municipality of Ketchikan can provide to the local school district under state law. If the assembly elects to pay off some of the school district’s debt, city officials recommend billing future health care costs directly to the district.

Ketchikan’s Borough Assembly meets Monday at 5:30 p.m. at the White Cliff Building. The meeting will be broadcast on local cable channels and on the council’s website, and there will be an opportunity for public comment at the start of the meeting.

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