So-called multiple employer welfare arrangement plans were made
possible in 1999 by changes in Michigan law. MEWA plans, like cooperative
purchasing agreements, allow school districts to band together to purchase
benefits. MEWA plans must contain a number of provisions intended to protect
school districts and employees from plan insolvency. "The MEWA protections
include requirements for business plans, adequate reserves, excess loss
insurance, robust Insurance Commissioner oversight, financial reporting, and
notice to employees that they are legally liable for medical bills if the pool
Several school districts in western Michigan have reportedly
banded together to form their own insurance group. One of the districts, Reeths-Puffer,
estimated that shopping for administrator health insurance would result in an
18 percent savings annually over MESSA.
Unlike a cooperative purchasing agreement, the school districts
in a MEWA relationship share their claims, each becoming obligated to the other.
This can pose considerable risk, particularly should one district choose at a
later time to withdraw from the MEWA, as it will continue to be liable for
ongoing claims subject to the agreement. In addition, MEWA plan reserve
requirements may be difficult for many districts to meet.
In late 2005, the Michigan Senate passed a package of bills
designed to allow school districts to pool together in order to partially
Supported by the Michigan AFL-CIO and MFT, the bills could save the state of
Michigan $230 million by the third year, according to MFT estimates.
MESSA opposed the self-insured pools, largely because of
perceived inadequate reserves. According to Gary Fralick, MESSA’s director of
communications and government affairs:
"MESSA supports pooling as a business strategy, but it must be accomplished with the current consumer protections built into Michigan law [MEWA]. Schools can pool together today. Eliminating the current
consumer protections will be a financial disaster."
Lynn Parrish: "[D]istrict pooling would be a way to get our ratings, our insurance data, which of course we cannot get from MESSA. But ultimately, statewide insurance. Take it off the bargaining table. Take it away from them."
Frank Garcia: "We are committed to taking every cost-containment measure we can to maintain the exceptional academic programs we provide in Holland Public Schools. Competitive bidding is an everyday activity in the business world, a strategy we believe school districts must look at if they are to remain fiscally viable during these difficult economic times. Several of the surrounding school districts are currently pursuing or participating in other forms of cost containment, such as the West Michigan Trust Pool for health care benefits."