Blue Cross and MESSA

"We're not going to put our employees at risk"

An increasing number of school employees and districts continue to abandon union-backed health insurance in an effort to balance budgets and protect jobs, all while maintaining a high caliber of coverage.

Districts that have abandoned costly insurance plans affiliated with the Michigan Education Association have seen a move toward fiscal solvency and full staffing, while many of those that continue to be associated with the more expensive MESSA have experienced lay offs, budget shortfalls and labor strife.

MESSA, the Michian Education Special Services Association, is a third-party administrator affiliated with the MEA, which is the state’s largest school employee union. MESSA acts as a middleman, repackaging insurance plans, most often from Blue Cross/Blue Shield, and then reselling them to school districts. Benefits are bargained for during contract negotiations, and costs in those districts can sometimes be $5,000 to $6,000 more per employee per year than in districts that purchase insurance directly from an insurer.

While some districts find themselves paying up to $16,000 a year per teacher for insurance, a Kaiser Family Foundation survey shows the average cost of insurance for all employees in the United States is about $11,900 a year.

In the Pinckney Community Schools, for example, 97 percent of the district’s 280 teachers voted to abandon the MEA’s MESSA in favor of a Blue Cross Blue Shield Flexible Blue PPO. The change to a less costly, yet comparable coverage, saved the district $800,000, which is enough to ensure staffing levels will remain the same for the 2006-2007 school year.

"As with any change, there is going to be glitches," Linda Moskalik, assistant superintendent for finance in Pinckney, told Michigan Education Report. "It’s something you have to get used to. We sent out a card, and some people thought it was a credit card, so they threw it away."

Despite claims in the union’s summer 2006 magazine that insurance purchased from vendors other than MESSA is somehow inferior, Moskalik told MER Pinckney teachers are well covered.

"One-hundred percent of hospitals and 98 percent of doctors in Michigan take Blue Cross," she said. "It’s accepted at 238 home health care companies, 98 percent of the pharmacies in Michigan and 90 percent around the country. To say it’s going to harm people is ridiculous."

In districts that put a cap on how much they pay for insurance, teachers can pay the difference out of pocket if they wish to keep the more expensive union-affiliated insurance.

"I’ve never heard of an insurance company coming in to try to influence a decision like this," Holland school board member Kevin Clark told The Press at the time. "This type of activity just builds a bigger wall between teachers and the district and makes it more difficult to achieve a mutual agreement."

In the Bay City Public Schools, seven of eight employee bargaining groups abandoned MESSA in favor of the Blue Cross Blue Shield Flexible Blue PPO. The teachers union voted to change from the most expensive version of MESSA, called Super Care I, to Choices II, a PPO.

Douglas Newcombe, Bay City’s director of finance, said even the administrators changed to the Flexible Blue plan.

"We’re not going to ask our employees to do something we’re not willing to do," he said. "And we’re not going to put our employees at risk by choosing an inferior product. We’re committed to having good coverage, but we want to do it at a cost we can afford."

“One-hundred percent of hospitals and 98 percent of doctors in Michigan take Blue Cross,” she said. “It’s accepted at 238 home health care companies, 98 percent of the pharmacies in Michigan and 90 percent around the country. To say it’s going to harm people is ridiculous.” - Linda Moskalik

The decision to change, or not change, health insurance plans can have ripple effects on other aspects of school districts finances. In the Hartland Consolidated Schools, for example, teachers last spring refused to open their contract and renegotiate health insurance. Assistant Superintendent Scott Bacon told The Livingston Daily Press & Argus that had teachers abandoned the costly union plan, some $600,000 could have been saved. The district eventually voted to privatize janitorial services and eliminated 29 custodial jobs to cut $500,000.

The Michigan Legislature attempted to address the problem in 2005 with a package of bills that would have allowed districts to pool together and self-insure employees. Senate Bills 895-898 passed the Michigan Senate in December 2005, but as of yet have not been put to a vote in the Michigan House. The current legislative term ends at the end of this year, and all legislation not passed is wiped from the slate.

Backers of the legislation say public schools could save $150 million the first year, and more than $233 million a year by the fifth year. More than a dozen school districts in West Michigan have formed the West Michigan Insurance Pool, which buys insurance for all non-teachers. The districts say they will save about 10 percent a year on insurance costs for the more than 1,000 employees enrolled in the program.

The bills would require MESSA to release aggregate claims data to school districts, something it does not do now, in order to allow districts to seek competitive bids from other insurers.

The discussion to reform expensive health care costs in public schools was driven, in large part, by a study released in July 2005 by The Hay Group, a Virginia-based consulting group. It estimated health care costs for school employees would top $2.2 billion, and that three-quarters of all school districts in the state have some form of MESSA insurance. The Hay Group estimated the average cost per employee in public schools for health insurance is about $11,362, compared to the average for state employees of $9,212.