School board weighs cost saving versus employee disruption with insurance
BY BRIAN WILSON
With more than a half-million dollars of potential savings on the line, the Medford School Board will have to make some tough choices when it comes to health insurance for staff and teachers.
In August, the district was told the preliminary renewal rate with Security Health Plan would be 9.8%. The district had built up to 10% increase in insurance into the proposed 2019-2020 budget. Concerned the amount was too high, district administrator Pat Sullivan directed Spectrum Benefits Solutions to start the process to get bids from other providers. At the same time, the district’s insurance broker continued to negotiate with Security to see if there were options to reduce the premium increase.
On Tuesday, board members received the result of that work as Cory Toth-LaPointe and Becky Gorst of Spectrum presented the options.
See SCHOOL The first bit of good news board members received was that they were able to negotiate Security’s rate increase down from 9.8% to about 4%. This would still result in a premium increase for the school district and staff of $186,852.
The other bit of good news, and what potentially complicates the decision for the district, is that Aspirus Arise submitted a proposal that matches the district’s current plan structure point for point with a 8.11% decrease compared to the current rate. This would result in the district paying $371,128 less than the current year. As noted by board member Brian Hallgren taking into consideration the increase Security is planning, switching to Aspirus Arise would result in $564,981 in savings to the district.
Unlike many private sector employers, school districts play the lions share of insurance premiums for staff. In Medford, the district covers 80% of the less than 12-month support staff premiums, 90% of 12-month support staff premiums and 89% of the teacher premiums with the remaining portion paid by the employee.
The challenge with the Aspirus Arise plan is that it is considered a narrow-network plan which designates inplan doctors at Aspirus hospitals and with partner institutions throughout much of the eastern and southern portions of the state. For those who wish to stay with medical providers in the Marshfield Clinic or Mayo systems, they would need to “buy up” to a WPS wrap plan that would extend care to providers throughout virtually the entire state. In this scenario, the district would pay its share of the premium for the Arise plan with the employee covering the entire cost of the difference between the plans.
According to Gorst, this is a standard type of plan throughout much of the state. She noted that Aspirus Arise is the most common insurance for people in Taylor County. Buying up to a broader plan is also a common practice and is one used by Taylor County to provide an option for those employees who need that additional flexibility.
The district also received quotes from WEA and Group Health Cooperative (GHC). The WEA proposal was an increase of 6.57% (an increase of $364,224) and the GHC proposal was 8.9% (an increase of $408,002).
The choice for the district is between staying with Security and seeing an increase or switching to Aspirus Arise and seeing a significant decrease in premium cost.
Toth-LaPointe also noted there were options that Security proposed which would allow the district to reduce the premium increase through design changes. One such option was to have people switch to Securityonly plan which would specifically exclude Aspirus providers. “I don’t see it happening, it only covers Marshfield Clinic and Ministry,” Gorst said, citing that Aspirus has the largest block of users on the district’s insurance currently. Other options were to put in a drug co-pay for the district’s lower-deductible plan. Currently after the deductible is met, employees do not pay anything more for covered medications. Under the change they would pay a co-pay which would be a flat fee for standard medications and a percentage of the price of high-cost medications.
Gorst said Aspirus also made some additional business decisions to sweeten the deal for the Medford School District including setting two-years of rate guarantees which would actually reduce the premiums in upcoming years if usage rates were under 80%. “This is a pretty darn aggressive offer,” Gorst said, noting the district has had years under 80% usage and this year was one of the district’s worst with 93% usage.
What makes the decision difficult for the school board is that when it comes to health insurance coverage, things get emotional especially with the risk that people may not be able to stay with existing providers.
Also, a major issue is that students and dependents on their parent’s healthcare would not be able to see medical providers outside of the Aspirus or affiliated networks for anything other than emergency care. This was a major point for staff members who were concerned about their college-aged children having to come back home for routine medical care.
“You would have a hard time finding a provider in Wisconsin out of network,” Gorst said of the WPS wrap plan.
“It will not make you feel warm and fuzzy,” Gorst said, noting that narrow plans with a separate buy up option has become commonplace in the insurance industry as those who want the additional plan coverage pay for it and those who don’t pay a lower rate.
Following the presentation of the plan proposals, board members discussed the options. Board president Dave Fleegel noted that Security’s increase amount was less than what was budgeted suggesting that it would be worthy of consideration to stay with them and not disrupt staff. He said in times when the district has cut, it has done so because it could not afford something. He said that is not the case now. “Tell me how we can’t afford a 4% increase?” he asked.
Board member Cheryl Wibben noted that for most people in the community the employer simply decides what insurance to offer and tells the employees what they will pay and what the plans are. This was countered by others noting the district was not a business.
Board member Mark Temme disagreed. “We are a business on some level, we are a business and we raise money through taxes,” he said. Fleegel said the tax dollars are used to responsibly educate students.
Hallgren said the change to Aspirus is worth looking at because of the amount of money involved. “We can talk about budget, but it is not like we don’t have places to put $560,000,” he said. “We have a responsibility to at least look at it.”
Hallgren emphasized that switching to Aspirus would not result in a decrease in benefits. This was a point some staff members present disagreed with citing personal stories of having long-term providers in the Marshfield system and of the trauma being forced to switch would cause.
“One of the reason you want to come and work in a school district is the benefits,” said Kris Brandner. She said she would be one who would have to pay the additional buy-up in order to continue her family’s care with their current providers.
Retired employee Jeff Albers asked if the district would have even considered going out on bid if Security had returned with the 4% increase they negotiated to. Sullivan said based on their past history, the district would have gone for bids regardless.
Teacher Jenny Shipman said there is a perception that switching to Aspirus Arise is a cut in benefits. She questioned as a smaller network if it would result in additional pressure on a limited number of providers delaying service times.
“There are a lot of unknowns, that is what is scary for employees, it is the unknowns,” she said.
She also questioned if the district switched and saved money if any of that savings would go back to the employees. “When you talk about being responsible to the taxpayers, the taxpayers don’t get that money back, that money is used somewhere else, it goes into a different pot,” she said, noting it could be spent on something that doesn’t directly impact kids.
Shipman suggested the district could bring insurance back into the negotiation process with the teacher’s union. Under Act 10 changes passed in 2011, public employers such as school were severely limited in what they could negotiate in union contracts and more power was given directly to the boards to make decisions.
The district administration will be holding a series of meetings over the next week with district staff members in each building to go over the options and seek input. The board will make a final decision during the October 28 board meeting.
“T here are a lot of unknowns, that is what is scary for employees, it is the unknowns.”
—Teacher Jenny Shipman about the possibility of the district changing health insurance providers.