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Kentucky Self-Insurance Plan Rapped

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Kentucky teachers are pressing the governor and lawmakers to scrap a new state self-insurance health program that will raise their maximum out-of-pocket costs by $2,500 a year.

"The level of frustration has been continuing to grow," said David Allen, president of the Kentucky Education Association.

Last week, school districts in five counties cancelled classes to allow teachers to gather for a "day of protest" in Hazard, in southeastern Kentucky. Mr. Allen said additional protests would be held in coming weeks.

But Doug Alexander, a spokesman for Gov. Wallace Wilkinson, said that budget constraints all but ensure that the new "Kentucky Kare" program, which begins Nov. 1., will not be abandoned.

"The problem of health care is a national problem," Mr. Alexander said. "It's not unique to Kentucky. The option was no health insurance or self-insurance."

The controversy began last year when Blue Cross and Blue Shield of Kentucky decided not to renew its contract with the state to provide health insurance for some 114,000 teachers and state employees. The firm claimed that it was losing money under the agreement.

Under the Blue Cross/Blue Shield program, the state paid the company $77 for each participant every month. Employees paid a $100 to $200 deductible and a 10 percent co-payment; the cap on their out-of-pocket expenses was $1,000.

The state invited other insurance firms to submit bids that assumed a higher state payment--$89 per employee per month--and comparable benefits. But no companies submitted bids, forcing the state to adopt the self-insurance program.

Under Kentucky Kare, employees will be responsible for a $400 to $800 deductible, 20 percent co-payment, and maximum out-of-pocket expenses of $3,500. Employees also can add their dependents to their policies for a monthly cost of $124 each.

According to Mr. Alexander, Kentucky is following a national trend among states toward self-insurance.

"Everyone is faced with the problem of rising costs of health care,'' he said. "States are going one by one to self-insurance because insurance companies simply are not willing to provide coverage at a cost the states can afford to pay."

Mr. Alexander defended the Kentucky Kare program, saying that it provides participants with better benefits than those offered to teachers in surrounding states. He also said that the state is urging hospitals to reduce their costs in order to lower employees' expenses.

Although the Governor plans to call lawmakers into special session in January, the insurance plan will not be on the agenda, according to Mr. Alexander. Rather, he said, lawmakers will be asked only to reconsider a school-reform package proposed byMr. Wilkinson that they rejected during this year's regular session.

Nevertheless, Mr. Allen of the kea said union members planned to meet with all 132 state lawmakers to convince them to drop the program. He said teachers had already met with about 70 percent of the legislators and "their response has been very, very positive."

The union leader contended that Mr. Wilkinson's stance on the program is but the latest example of his insensitivity to teachers' needs.

He cited as examples the Governor's refusals to support a tax increase to help fund reform efforts and to underwrite a program providing $300 stipends to teachers who do well in evaluations. And this year the Governor supported a 2 percent pay increase for teachers rather than the 5 percent raise sought by the union, Mr. Allen noted.

Mr. Alexander rejected such charges, saying the Governor supports teachers and schools but believes that taxpayers will not pay more for education unless the state can prove that past efforts have been a success. "The point the Governor has made is that we need to restructure our schools before we ask the people to invest more money," Mr. Alexander said . "We have, within the constraints of our estimates of revenue, maintained or exceeded the commitment to education in the last budget. What this issue comes down to is, 'Is there enough to do all the things all of us want to do?"'

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