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.
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
"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.
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
“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.
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
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 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.