Retirement Board Continues Detailed Review of Health Care Program
The State Teachers Retirement Board dedicated a significant portion of its September meeting to the STRS Ohio Health Care Program. Earlier this year, the board identified health care funding challenges as a key area of focus for 2016–17. The presentations at the September meeting included the results of member and retiree surveys, a report on how other states provide health care coverage for retired teachers and how STRS Ohio’s plan compares to the market.
STRS Ohio’s health care program covers nearly 130,000 individuals and paid $673 million in benefits during fiscal year 2015. The Health Care Fund is valued on a calendar year basis, and as of Jan. 1, 2016, its balance was $3.26 billion; however, there is currently no dedicated source of funds for the health care program. STRS Ohio no longer allocates 1% of the 14% employer contribution to the Health Care Fund because these funds are needed to strengthen the pension fund. Under current assumptions, the pension fund is not projected to be sufficiently funded and able to resume this allocation to the Health Care Fund for about 20 years. The board and staff are exploring ways to continue to offer a meaningful program for retirees.
STRS Ohio conducted an email survey of active and retired members to determine what coverage features matter to them most. Results show that most are satisfied with their current health care program. The survey results also indicated:
- Retirees rate the physician network as critical when choosing a health care plan, while active teachers rate premiums as their top concern.
- Both groups are least willing to reduce the hospital or physician networks to prolong the program’s solvency.
- There is generally a higher tolerance to changes regarding prescription drug benefits.
- Nearly half of all respondents are willing to accept a 20% increase in premiums to extend the fund solvency five years.
- Nearly half of active member respondents said they are willing to delay enrollment until Medicare eligibility to improve the likelihood of lifetime coverage.
Staff shared information with the board about how other states provide health care coverage for retired teachers. Key findings included:
- There is no clear “normal” with regard to the entity that provides coverage. Ohio is one of 16 states that provide coverage through the retirement system. Other sources include state agencies, the last employer and the open market.
- Subsidy levels and designs vary greatly among states.
- Some states limit coverage based on Medicare enrollment.
- STRS Ohio’s total contribution rate of 28% (member + employer) is in the bottom quartile of states’ contribution rates.
Staff also shared that STRS Ohio’s Aetna Medicare Plan has high enrollee satisfaction and competes well with the Medigap Plan F and other Medicare Advantage plans’ total costs. The non-Medicare Basic Plan appears to be competitive with exchange plans for all subsidized benefit recipients.
The board plans to continue its review of the health care program at its October meeting. Staff is expected to present information on potential health care pathways and funding options.
Governor’s Appointee Takes Seat on Retirement Board
Governor John Kasich’s new appointee to the board, Wade Steen, was seated at the September meeting. Steen is president and founder of Steen & Company LLC, with offices in Columbus. His previous experience includes serving as the first fiscal officer for Cuyahoga County’s charter government and as chief financial officer for Lutheran Social Services of Central Ohio. Steen also formerly served as an assistant chief deputy auditor for the State of Ohio, as an Upper Arlington City Council member and as Franklin County Treasurer.
Gov. Kasich announced his appointment on Aug. 30. Amended Substitute Senate Bill 133 passed in June 2004 included a provision that enabled the Governor to appoint an investment expert to the State Teachers Retirement Board. The 11 members of the board are compensated only for necessary expenses.
Retirements Approved
The Retirement Board approved 198 active members and 83 inactive members for service retirement benefits.
Other STRS Ohio News
STRS Ohio launches social media channels
In response to members’ growing interest in receiving news about the retirement system through social media, STRS Ohio recently launched its social media pages (Facebook, Twitter, LinkedIn and Google+). STRS Ohio is promoting the new pages through email and on its website, which also offers a social media hub that allows users to see the latest posts right on the STRS Ohio website. STRS Ohio will continually measure the growth of the social media channels and will develop future content accordingly.