MESSA was created by the MEA in 1960 to administer insurance benefits to members of the teacher union. MESSA is a third party administrator (TPA) of health care insurance, meaning that it only administers benefits underwritten by other companies.

MESSA's community-rated products have been underwritten by Blue Cross and Blue Shield of Michigan (BCBSM) since 1985. Being a TPA allows MESSA the latitude to pay benefits outside the parameters of BCBSM's guidelines. This ultimately means additional costs to school districts through higher premiums for the benefits paid beyond what is considered appropriate by BCBSM.

The TPA approach allows MESSA to take advantage of BCBSM-negotiated provider discounts through the "participating" provider networks of BCBSM. It also gives MESSA the ability to pay additional benefits on behalf of their subscribers to both participating and nonparticipating BCBSM providers by directing payments through the subscribers.

It further allows MESSA subscribers to use the services of physicians not included in the BCBSM network (nonparticipating) without any sanctions on the employees. This provides MESSA with a benefit design that expands the benefits beyond the accepted practices of BCBSM and the ability to circumnavigate the participating provider network of BCBSM.

This last feature makes it difficult for school districts to duplicate MESSA benefits in an alternate health care plan using only BCBSM, resulting in higher premiums for the districts to pay.

In the collective bargaining process, where maintaining benefits is important, school districts cannot look to a standard BCBSM product to measure up to the MESSA program. The district could purchase the services of a TPA to adjudicate the claims outside a BCBSM standard plan. This, however, would probably involve additional costs, not only from a claims perspective, but also from an administrative perspective.

MESSA's main advantage over school districts is its status as the policyholder of the health care plan. This entitles it to make unilateral decisions which benefit its members, while potentially creating negative financial consequences for the benefit payers-the school districts. In these situations, a school district covering its employees through MESSA has no control over its health care plan because MESSA is the policyholder.

MESSA has another advantage: its members are not limited in their choice of physicians. They can go to any physician in the state and still have their benefits paid through MESSA. This provides a very difficult challenge to districts desiring to bring an alternative to the bargaining table.

MESSA's approach to the physician community will understandably result in increased costs to the districts through the premiums charged by MESSA. Employees using the services of a nonparticipating physician are reimbursed at a rate that is much higher than BCBSM will allow, thereby increasing claim costs which in turn increases the premiums charged to school districts.

Another way MESSA maintains a strong grip over school districts is by withholding its claims history data. In order to secure competitive bids from other health care vendors, school districts need to be able to document the type and amount of medical claims made by their employees. By withholding claims history data, MESSA prevents school districts from acquiring legitimate insured health care bids from other vendors to use for comparative purposes. MESSA justifies withholding this data by citing the fundamental insurance principle that states that good insurance risks will leave the pool and only the bad risks will remain.

This position is similar to the one taken by BCBSM-but only when it underwrites smaller groups. It may be that withholding claims history data is an actuarially sound practice for the underwriting of small groups, but withholding it from larger groups serves only to hold them captive to their current plans.

For larger groups which have the numbers to take a credible risk, lack of access to claims history data eliminates the opportunity to pursue alternative plans. MESSA has used this position as a tremendously successful retention tool.