Public school employees around the state are experiencing
significant changes to health insurance plans, either by their own choice or
board action, as districts fight to contain skyrocketing costs.
Two school districts on opposite sides of the state drew
attention last year after both declared their respective contract talks were at
an impasse and implemented new health insurance measures. Both Holland Public
Schools and St. Clair Shores Lakeview Public Schools dropped the Michigan
Education Special Services Association, a third-party administrator affiliated
with the Michigan Education Association, in favor of less expensive plans for
providing health benefits.
By dealing directly with insurance companies, schools can reduce
costs by thousands of dollars per employee. Lakeview expects to save $500,000 a
year with the switch. A typical MESSA package can top $16,000 a year per
teacher. Many districts, such as Holland, have argued for monthly caps in
contract negotiations that would equal $12,000 to $13,000 a year per employee. A
Kaiser Family Foundation study shows the average cost of health insurance
nationwide is about $10,880 per family.
"A lot of schools are starting to go away from MESSA," says
Holland Superintendent Frank Garcia. "We were one of the first to take a stand
on health care costs."
MESSA is a large part of ongoing contract struggles for Ironwood
Public Schools in the Upper Peninsula. Health insurance expenditures there have
more than doubled in the last five years and now cost taxpayers over $16,000 a
year per teacher. Other districts report 15 percent annual increases.
The Ironwood Daily Globe quoted a brief filed by the Ironwood
school district with the Michigan Employment Relations Commission as stating,
"Statewide, school districts are frustrated with the MEA’s refusal to negotiate
cost containment and are declaring impasse and unilaterally instituting employee
Also frustrating for schools is MESSA’s refusal to disclose
aggregate claims data to individual districts. This hampers school boards two
ways. First, they have trouble seeking competitive bids from other health
insurance providers because there is no claims data history for other bidders to
use in comparison. Secondly, without obtaining other insurance bids, the
district cannot present that information during collective bargaining sessions
with employee unions.
A package of bills in the Legislature could change how schools
handle health care insurance for teachers and other employees by allowing
districts to pool together and self-insure employees. The plan has been
estimated to reduce costs by hundreds of millions of dollars, which schools in
turn could spend on higher teacher salaries, hiring more teachers, buying new
textbooks or investing in infrastructure.
A pilot program for just such an approach is being used in
Ottawa and Kent counties. Known as the West Michigan Health Insurance Pool, it
serves 11 school districts and covers more than 1,000 employees, although none
are teachers. Participating districts have said it will reduce costs by as much
as 10 percent yearly.
The changes are beginning to have a ripple effect statewide, as
teachers voluntarily move away from MESSA in exchange for other benefits.
Teachers in the Pinckney schools, for example, voted 97 percent
in favor of dropping the MEA’s MESSA in order to save jobs. The change will
reduce costs by about $800,000, which the district said would be enough to
maintain current staffing levels for the next school year.
In the Bay City Public Schools, all employee unions except the
teachers agreed to open their contracts this year and switch insurance plans,
moving from MESSA Super Care I to a less costly MESSA PPO. The move reduced
costs by about $190,000. Contracts between the schools and all eight employee
unions are up for negotiation this summer, and officials said they could slash
$4 million of a projected $7.5 million budget deficit if all employees would
abandon MESSA completely in favor of a less expensive plan with equal coverage.
Other districts are settling contracts by giving teachers a
choice between the MESSA plans. Those who chose to keep the more expensive Super
Care I must pay the difference between it and the PPO, which the schools say
they can afford to provide at no cost to employees.
"It comes down to financial stability and survival," Garcia
said. "Our board is committed to the community, to our students and to our
programs. Our two heaviest burdens are retirement costs and health care, but we
still need to maintain a financially viable district."