Spurred by sky-rocketing medical costs for their employees,
local school districts are desperately looking at ways to cut
spending by increasing out-of-pocket expenses for employees using
health insurance starting next month.
Hollister – Spurred by sky-rocketing medical costs for their employees, local school districts are desperately looking at ways to cut spending by increasing out-of-pocket expenses for employees using health insurance starting next month.
Districts throughout the county have held a series of meetings to discuss what they can do to reduce the cost of medical insurance for workers, which today averages more than 20 percent of total spending in local school districts.
“Health care costs have been shooting through the roof and it affects all employees,” said Tim Foley, county superintendent of school and treasurer on the Joint Powers Authority (JPA) board.
Over 20 years ago, local school districts created a JPA to pool all of their healthcare needs into one agency that could collectively bargain for lower rates. But despite changes in recent years, including becoming self-insured last year, the JPA is still bleeding money in a world of rising health costs. This year employer premiums increased 20 percent and are expected to rise another 35 percent next year, said Dr. Jean Burns Slater, superintendent of San Benito High School and president of the JPA board.
An increase in usage is primarily the reason why the JPA faces increased costs, which in turn affects the individual school districts. Since last July, there has been a 20 percent increase in out-patient services compared to the previous year and prescription costs have jumped 48 percent within the last year, according to Slater.
In the 2002-03 school year, school employees spent an average of $40.70 a month on prescriptions. But this year, the amount has increased to $60.11 a month, placing a heavier burden on local schools’ budget. In addition, the length of hospital stays has also increased, as have claims totaling over $20,000, said Slater.
“We know what we are currently offering is beyond our means…and this reserve has been significantly depleted,” she said.
Currently, all districts pay premiums into a Joint Powers of Authority reserve which now has about $800,000 left. To off-set the increased costs, the JPA has been dipping into the reserve, which, though convenient, won’t last forever.
The largest reason for the increase in employee use of the healthcare plan, which covers over 900 employees in 12 school districts throughout the county, is its generosity. Under the basic plan, co-pays for office visits are $25 and generic prescriptions cost $10, while labwork and hospital stays are free. The district also offers employees an enhanced plan that costs $220 per month for increased benefits.
“We currently have a very, very nice benefits package and our employees take advantage of it,” said Slater.
In an effort to reduce the ballooning health plan use, the JPA plans to increase co-pay costs. Already, the JPA has moved to increase co-pays and brand name prescriptions by $10, along with increases for mail order prescriptions and visits to a specialized physician.
“We want to create incentives for workers to not use it (medical insurance) casually,” said Foley. “We are hoping people realize that you don’t have to take your child to the doctor everytime they have a cough, but if they are running a fever, to go ahead and do that.”
Meanwhile, letters will be going out to all school employees advising them about the changes to their plan. Another meeting is also scheduled for March 17, where JPA board members will hear information about numerous insurance plans in hopes to coming to a conclusion about which one to select for the following year. Administrators must make a decision by April for a new plan to go into effect July 1, the beginning of the schools fiscal year.
Whatever the JPA board decides, one thing is clear: The current benefits won’t last forever.
“School plans have always been called Cadillac plans, now we are looking at something more like Chevys,” said Foley.
But some teachers, including Steve Kain, lead negotiator for the Hollister Elementary School Teachers’ Association, say that while increasing co-pays will dissuade people from going to the doctors, it will not save money in the long-run.
“Say you have a cold but you don’t go to the doctor and it turns into pneumonia and ends up costing them $50,000,” said Kain. “That’s not cost containment, it’s passing the cost on.”
He also says the JPA is not fiscally solvent and should be dissolved to join a large insurance carrier, like Central Valley Trust that could offer better rates for the district.
“They took a gamble thinking being self-insured would save them money, but it didn’t,” said Kain, who teaches at Marguerite Maze Middle School.
“It’s broken and we need to move on.”
Karina Ioffee covers education and agriculture for the Free Lance. Reach her at (831)637-5566 ext. 335 or [email protected]
