Skyrocketing healthcare costs hit Alabama teachers, and some aren't happy about it

MONTGOMERY, Ala. — Major changes are coming to the Public Education Employees’ Health Insurance Plan (PEEHIP), and some teachers are very unhappy about it.

Beginning October 1st, copays for some specialists will increase $5, education employees who smoke can expect to see their tobacco use surcharge nearly double from $28 a month to $50, and fees for spouses will increase by $25 a year before capping in 2018 at $75.

PEEHIP is facing a $140 million shortfall in 2016, which administrators are blaming on an increase in the cost of healthcare. “The bottom line is that health insurance costs are skyrocketing everywhere,” said Retirement Systems of Alabama Deputy Director Don Yancey. “It’s not just in Alabama. Other states are faced with this same problem.”

“I don’t think anyone would try and sit there with a straight face and tell you that health insurance is cheaper than it was eight years ago,” Yancey remarked after PEEHIP’s board voted Thursday.

The plan’s administrators will shore up the remainder of the difference by dipping into the state’s retiree health care trust fund, created in 2007 by the Alabama Legislature to save money for the state’s future obligations to retired teachers.

The largest fee increase, which would have helped avoid a raid of the trust fund, was voted down by PEEHIP’s board. Alabama Education Association (AEA) spokeswoman Amy Marlowe called the fee increase’s defeat a “major victory,” adding that “[teachers] just absolutely could not afford any type of increase in premium for the health insurance program,” after eight years without a pay increase.

Currently, education employees pay a $15 monthly premium for individual coverage, or $177 for family coverage. The proposed increase would have upped the employee’s contribution by $10 for an individual, and $20 for a family.

The average Alabamian who is not part of the PEEHIP program spends $193 a month buying the most basic coverage on the ObamaCare market, and $371 for a “Platinum” plan. Family plans cost even more.

In fact, some Alabama lawmakers look to the increased costs of ObamaCare as an explanation for why PEEHIP is becoming more expensive as well.

“ObamaCare is driving up the cost of healthcare for citizens and employers in Alabama, and the State of Alabama employs a lot of people, including teachers,” House Education Budget Chairman Bill Poole told Yellowhammer last year. “It is going to put a lot of strain and stress on the state’s budgets to try to pay for these added costs.”

Poole said these increased costs to PEEHIP are not only effecting how much teachers will pay out of pocket, but may be precluding teachers from receiving raises and cost of living increases as well.

Because the majority of the funds making up the shortfall are coming from the trust fund, the program’s administrators worry this decision isn’t the longterm fix PEEHIP needs.

“This is a major problem that we’re faced with and it’s going to be ongoing,” Yancey said. “Essentially we’re going to have to face this every year to try to figure out how to come up with enough money to keep the program every year, which is a very, very good health insurance program.”