Teachers Deserve Good Benefits; Schools Deserve To Know What They Cost

Since voters approved Proposal A in 1994, Michigan schools can no longer count on double-digit increases in their budgets. That means that getting a handle on costs is more important than ever, but schools are being hampered in that task by the health insurance affiliate of the Michigan Education Association (MEA), the state’s largest union of janitors, cafeteria workers, bus drivers, and teachers.

Health insurance is typically the second-largest item in the annual budgets of school districts, just behind salaries and wages. On July 1, 1998, the average rates charged by the MEA-affiliated Michigan Education Special Services Association (MESSA) will increase about 6 percent, directly affecting the bottom line for 60 percent of Michigan’s K-12 school districts.

These rates hide the projected 13 percent increase in actual health plan costs, because MESSA has applied nearly $40 million of surplus reserves from past years’ excess premium charges to reduce the size of the 1998 hike. Double-digit increases are already forecast for 1999. Since next year’s hike will be on top of this year’s 13-percent cost increase, school officials, teachers, and other employees need to consider health plan alternatives now, and not wait until next year’s increase is announced. Similar benefits for substantially lower premiums are available, but don’t expect the MEA to help districts identify and take advantage of them.

For schools to become smart buyers, data and information about the cost and quality of health care benefit plans and services must be analyzed. School officials cannot responsibly bargain labor agreements without knowing the most basic details of MESSA’s health plan and the claims history of the employees covered. The unfortunate truth is that MESSA and the MEA know the details, but the public schools do not because the union resists requests for the information. That’s why accountability must be the first order of business for school districts using MESSA and who want to bring their health care costs under control. I speak from firsthand knowledge on this issue because from December 1987 until March 1990, I was MESSA’s executive director.

MESSA refuses to provide the most fundamental claims history for individual school districts. For example, what is the use of MESSA benefits within a particular school district? Is the use of health care services higher or lower than comparable school districts? This is information that other insurance providers make available to their customers, but MESSA refuses to do so, which makes it difficult for districts later to comparison shop for a better deal with anyone else.

MESSA doesn’t actually underwrite the insurance itself but instead, it contracts with Blue Cross/Blue Shield of Michigan (BCBSM), which raises these questions school districts can’t get MESSA to answer: How much is BCBSM paying for local hospital and physician services compared to other areas of the state? What is the increased cost to school districts because MESSA pays services of providers that do not participate with BCBSM? Would special disease management programs in a school district improve the overall health status of the employees, and reduce employee sick leave? And how much is the school district paying to both MESSA and BCBSM for the administration of the plan?

If MESSA and the MEA, or any health plan administrator, will not give public schools and covered employees the data needed to make informed decisions and negotiate responsibly, public school officials must look to alternative plan administrators. Employers and health coalitions throughout Michigan are finding many alternative health plans that improve access and quality while reducing the overall cost. Public schools in Michigan have made the change from MESSA to other plan administrators with similar benefits, and have experienced premium decreases ranging from 6 percent to as much as 28 percent. MESSA’s excessive charges, as shown in a 1993 report from the Mackinac Center for Public Policy, are an indirect source of funding for the political activities of the MEA—hardly a justifiable health care expense that Michigan school districts should have to pay.

MESSA, the $500-million-per-year health plan administrator wholly owned and operated by the MEA, must become more accountable and responsible to its union members, the public schools that pay the benefit plan premiums, and the taxpayers who fund those schools. It is incumbent upon locally elected school boards and administrators to look for alternatives that will bring greater value for the millions of dollars school districts spend on health care benefits and services. Only then will school officials know the value of their decisions, and only then will teachers and all school employees know if MESSA and the MEA are representing their interests.

Teachers deserve good benefits but at the same time, school districts deserve to know what those benefits cost and how to provide them more efficiently.