Small insurers gaining school customers

DETROIT — More public schools and municipalities are switching to smaller health insurance companies to save money on employee health care, according to The Detroit News. Meanwhile, the historically dominant Michigan Education Special Services Association has seen membership decline, a spokesman told The News.

Thousands of new enrollees have been reported in recent years by Health Alliance Plan, HealthPlus of Michigan and Priority Health due to new school and municipal customers, The News reported. Officials say their health management plans and lower administrative fees allow for lower rates, The News reported.

Some of the change is attributed to a 2007 law that requires public employers to solicit bids for health insurance, The News reported, although the employers are not required to accept the lowest bid. A larger reason is pending reductions in state school aid and declining revenue from property taxes that have forced schools and cities to find ways to reduce spending, The News reported.

Flint Community Schools switched its teachers' health insurance from MESSA to HealthPlus and projects a savings of $3.66 million this year, spokesman Bob Campbell told The News. That move caught the eye of other districts across the state, a HealthPlus spokeswoman told The News.

Blue Cross Blue Shield of Michigan, the state’s largest insurer, told The News that its public-sector membership remains stable, while MESSA spokesman Gary Fralick said that its membership has dropped from about 100,000 in 2004 to 73,400 today, The News reported. Fralick that was due to a combination of schools choosing other carriers, privatization of some school services, and school employee retirements, The News reported.  Some districts have switched out of MESSA and then back to it, Fralick noted, The News said.

The Detroit News, “Cutbacks benefit small insurers,” April 28, 2011

Mackinac Center for Public Policy, “‘Controlling’ School Health Insurance Costs, Local Style,” April 4, 2011