Health trust CEO, financial consultant anxious about Obamacare's effect on finances

CEO says cash-strapped trust has 2.5 years 'if we do nothing,'
speculates on trust’s future with Obamacare regulations

LAS VEGAS  —  The Teachers Health Trust’s financial situation could grow even more precarious due to fees associated with the Affordable Care Act, says CEO Peter Alpert.

“There will be fees. There will be cost increases,” said Alpert. “[The Affordable Care Act is] a subject [on which] I’ll keep the rest of my comments to myself.”

Alpert’s remarks came during a March 19 news conference where he presented THT’s updated financial report and discussed the organization’s overall financial health.

THT, the main health insurance provider for Clark County School District teachers, has had its financial viability questioned over the past two months since Nevada Journal reported that a teacher union representative told members in a Jan. 29 closed-door meeting that the trust would go “belly-up in 60 to 90 days.”

The trust also unveiled a new website, Teachersfacts.com, displaying its financial data and video testimonials from teachers.

According to Alpert, the trust is “financially strong,” with $27.7 million in investments as of March 1, 2013, the same as February, but he added that the trust averaged $225,000 per month in deficit spending over the past eight months.

“If we do nothing, we’ll last two and half years,” Alpert said, “but we’re not going to do nothing. We’re not going out of business.”

The Affordable Care Act — commonly called “Obamacare” — will also increase the financial burden on the trust as various aspects of the law come into effect, according to Alpert and Terry Van Noy, a financial consultant to the trust.

According to Van Noy, some Obamacare requirements that could affect the trust include keeping children on health care plans until they’re 26 — increasing the number of dependents on THT’s plans, the number of claims paid out, as well as several fees, including a $63 per-employee fee scheduled for 2014.

“Since we’re not a for-profit insurance company, we’ll avoid many of the larger fees aimed at big insurance companies,” said Van Noy, “but there’s no question we’ve had to make some adjustments.”

Two upcoming Obamacare requirements the trust should be able to avoid, according to Van Noy, are a 2.54 percent insurance company tax, and the 15 percent “minimum loss ratio,” under which insurers must spend at least 85 percent of their premium income on claims and “activities that improve health care quality.”

The trust should avoid these requirements, says Van Noy, because the trust is self-funded through the district’s premium payments and currently has a minimum loss ratio of 5 percent.

“Some of the taxes we’ll avoid, but not the fees,” said Van Noy.

“In general, I think you’ll see more people will go self-insured [because of Obamacare] if their employer raises premiums as a result of the costs.”

Premiums have been a major sticking point between THT and the district. CCSD hasn’t increased its contribution to the trust since 2008, and dependent premiums haven’t increased since 2002, according to Alpert.

Alpert displayed a graph showing the district’s health care premiums haven’t kept up with rising health care costs, which have increased 180 percent since 1999, according to Alpert’s data. Alpert confirmed THT and the district are getting set up for arbitration over the disputed increases, but couldn’t give a time frame.

“Our revenue [premiums] is flat, expenses are going up, and people wonder why we can’t maintain our cash flow,” Alpert said.

CCSD maintains that premium increases are part of the collective bargaining process, telling Nevada Journal in a statement:

“The District’s first priority is ensuring teachers and their dependents have health coverage. Teachers Health Trust is a business that the Clark County Education Association (CCEA) chose for health coverage for teachers. The Teachers Health Trust is correct, it cannot unilaterally order the District to take more money from hard-earned paychecks to hand over to them for a band-aid fix to finical problems. Employee contributions to health plans are bargained into their annual contract. It’s been widely reported that this business has an uncertain financial future and we are watching that issue closely so that we can be ready, if needed, to step in and ensure all of our employees have comparable or better heath care with no lapse in coverage. We want all employees to know the District is doing the responsible thing and planning for any scenario and believes we will be successful in providing this service with no lapse if it should be needed.”

Alpert said the trust shouldn’t be a “volleyball” between the district and the union, but in the meantime, he’s still looking at different ways to keep the trust afloat.

“We’ll still be here [in two and half years],” Alpert said. “If we do nothing, we’re in trouble, but we’re always working around here to get things in order.”

Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit http://nevadajournal.com/ and http://npri.org/.

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