The first issue school districts should address is health benefit design. Health benefits should be in line with those of other major area employers. Michigan’s public school employees unions have over time, however, pressed for health benefits that are lavish even by top corporate standards, and many public school districts have acquiesced to these demands. Because these benefits are out of line with Michigan’s competitive health insurance marketplace, few insurance administrators, except one of the MEA’s own affiliates, the Michigan Education Special Services Association (MESSA), can offer those benefits.
Health benefits should have a managed care element that connects cost with utilization of benefits. The vast majority of health maintenance organizations, preferred provider organizations, and point of service plans have some co–insurance rates, co–pays, and/or deductibles that bring some market incentives into health care utilization. If an employee knows that it will cost him or her $50 deductible to go to a relatively expensive emergency room but only $30 to see their regular physician for a common non–emergency ailment, that employee may opt for the cheaper alternative. A well–designed benefit structure can help contain costs, even in the absence of other cost–saving measures.
Health benefits should include provisions for shielding employees against catastrophic losses due to illness and provide coverage for uninsured dependents. It should also require a coordination of benefits if the spouse is working and has health insurance.