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Ketchikan’s borough assembly to tackle health insurance deficit

Ketchikan’s Borough Assembly is scheduled to tackle the growing shortfall in a key health insurance fund in a work session Monday.

Since 2019, Ketchikan’s school district has paid out more in insurance claims than it has received in premiums. As of the end of last month, the school district owed the city $4 million for unpaid health expenses.

Ketchikan’s city and school district does not have a traditional insurance provider. They are self-insured, meaning the city takes in monthly employee premiums and pays out the costs of things like doctor visits and hospital stays. A type of backup insurance, known as reinsurance, protects it against runaway expenses.

As it stands, Ketchikan’s district pays out claims for school district employees and bills the school district for reimbursement. But in a memo to Ketchikan’s Borough Assembly, the city’s finance director says the district hasn’t paid enough to cover the cost, leaving the city to pick up the difference.

“According to a long-standing MOA between the city and the district, both entities are required to transfer the monthly premiums (employee and employer) to the respective funds sufficient to cover claims as they accrue. This did not occur and the chronic and growing deficit in the school district fund is the result of this underfunding,” wrote Charlanne Thomas, Finance Director.

On several occasions, the school district and county have each tried to support the fund with injections of cash.

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

City finance officials have increased pressure on the school district to address the issue in recent months. Starting next year, the parish plans to send bills from its insurance administrator directly to the district instead of paying them and asking for reimbursement.

“This is intended to remove the city from the ‘invoicing and payment’ cycle in hopes of requiring the District to make full payments directly to the vendor,” Thomas wrote.

This month, the district says it has not yet received a plan from the district to address the shortage.

Ketchikan’s Town Meeting is scheduled to discuss what comes next in a work session planned for Monday.

Two possible approaches proposed by the finance director involve the district repaying the city for the $4 million in outstanding health care expenses from its budget — either all at once or on a payment plan.

Another option is to provide another cash infusion for the program. But city officials say they can only provide up to about $800,000 until it starts counting against state education funding. This is the result of the so-called “cap”, the upper limit of the local funding that Ketchikan’s district can provide to the local school district under state law. If the parish chooses to pay off part of the school district’s debt, city officials recommend charging the district directly for future health care costs.

Ketchikan’s Borough Assembly will meet in the White Cliff Building on Monday at 5:30 p.m. The meeting is broadcast on local cable channels and the congregation’s website, and opportunities for public comment are available at the beginning of the meeting.

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