MESSA's Failure to Disclose Claims History to School Districts

One of the most recurring complaints made by school districts is that MESSA fails to disclose crucial information about insurance claims which would help school districts target problem areas and develop cost-containment strategies. Specifically, school districts are disturbed that MESSA will not provide them with data identifying the extent of the claims that have been filed by their employees. Without this information, school districts can neither assess the value of their MESSA purchase nor obtain accurate bids from other insurance administrators.

Michigan law mandates that for-profit insurance administrators operating within the state offer information about claims history to their plan purchasers. However, both MESSA and Blue Cross are not-for-profit and covered by a separate law that does not require them to divulge this information. The claims history, or group experience rating, of each school district lets the district know how many medical claims in total were filed by its employees. If this data were available, school districts could present it to various insurance administrators which would review 'the data, calculate the risk involved, and estimate reflective cost of insuring the district's employees. This would be a tremendous step toward allowing competitive bidding.

Without knowing how many claims have been filed by its employees, school districts cannot possibly obtain accurate quotes from insurance administrators. Moreover, there is no way for a district to know if it is receiving a good value in exchange for the thousands of dollars it pays to MESSA for employee insurance. In a letter to the Troy School District, a private insurance agent emphasized the dilemma of not having group experience ratings:

As you can see, it would be difficult for the school district to obtain quotes since your claim experience is not available. In addition, most companies will only quote a self-funded plan. While a self-funded plan will generally save money, we would be unable to determine the amount saved until at least 24 months of claim experience was collected. If MESSA has provided you with any type of annual renewal report which explains their rate action every year, I may be able to more accurately predict the cost of either a fully insured or self-funded plan.67

If school districts cannot verify that similar coverage is available at a lower cost, they cannot convince voting citizens or their employees that they should explore alternatives to MESSA. In this way, MESSA is able to dominate an enormous share of the market for administration of insurance benefits to public school employees.

At the present time, MESSA has structured group experience ratings so they exist according to geographic regions of the state, rather than actual school districts. In other words, a school district could potentially receive group experience ratings, but only for its region, which is not much help. Nevertheless, MESSA will not disclose these ratings. MESSA owns the exclusive rights to the actuarial records for its members, although Blue Cross maintains the records. According to their operating agreement, Blue Cross may not, use this information without MESSA's consent.68

Like all insurance administrators striving to retain a certain market, MESSA is acting out of self-interest by suppressing this information. If the information were disclosed publicly, other insurance administrators would know the risk associated with insuring a group of public school employees. The other administrators would be able to quote premiums for the district and compete with MESSA for the district's money. In a lawsuit filed by school districts seeking to obtain their claims history (which MESSA won), the judge even stated that, ". . . if an employer were to learn its experience was unusually good, the employer could use that information to obtain lower-cost health insurance elsewhere." But for now, school districts are effectively "locked in" to their purchases of MESSA insurance.