School District of Superior Struggles to Control Health Care Costs
It’s no secret that health care costs have increased drastically in recent decades. In the 1990’s, many organizations, including the School District of Superior, were able to cover the cost of premiums for employees AND families with no, or very low deductibles. Benefit packages as generous as that are unheard of these days.
The School District of Superior currently has a three year contract with Health Partners that expires on June 30, 2015. With this in mind, new health care bids will be solicited this spring from multiple providers. According to Janna Stevens, District Administrator, they are working with a consultant to gather information on “our level of usage over the last three years.” She went on to say, that “we need to gather data on our ‘experience’ percentage.”
Experience refers to the frequency and degree to which insurance is used. In 2011, the District’s experience percentage was over 130%. An experience rating of 100% means the insurance company is paying out as much as they are charging for their insurance; typically insurance companies prefer experience ratings no higher than 80%. You need not be a mathematician to figure out that a rating of 130% means the insurance company lost money by carrying the District’s policy in 2011.
Stevens stated that due to the District’s “poor experience percentage, the School District was forced to begin offering high and low deductible plans in 2011.”
Obviously, an insurance company is not going to enter into a contract knowing they will lose money. Due to the bad rating in 2011, the School District became a bad risk, and they were advised by Health Partners to begin offering high deductible plans in order to lower the use. Stevens said that “Health Partners recommended this is a proven means to lower the overall experience percentage.”
At the time, the District Administration recommended to the School Board that a variety of options be offered to employees in hopes of better managing health care costs. As a result, the District currently offers both low and high deductible plans for employees to choose from each year.
Both plans have four levels: Employee only, Employee+Spouse, Employee+Child(ren), and Family. In addition, the District contributes to HSA (Health Savings Accounts) or HRA (Health Reimbursement Arrangements). Administrator Stevens told ES that the School District’s goal is to offer the best plans possible.
In the face of low funding from the state of Wisconsin, the School District has managed to increase the portion paid by the District toward the premium each year. Stevens hopes that “since our experience percentage is down from 2011, the bids for the next healthcare contract should be affordable.”
She added that “It would be wonderful to see our employee cost and district costs decreased. I certainly hope we do not have to see another increase in costs for anyone.”
Currently, an employee selecting a high deductible single plan pays $58.32 monthly; an employee selecting a low deductible single plan pays $212.91 monthly. Stevens said that “the HSA and HRA help to offset some costs, but the truth is a high deductible plan is more money out of the employee’s pocket in the long-run.”
After the employee share of the premium, the School District contributes substantially more. As shown in the table below, for a single employee who is paying from $58.32 to $212.91 per month for their health insurance depending on their deductible, the School District contributes an additional $427.69 to the overall premium.
The bidding process will begin in February or March, with the District’s goal of selecting a company in April or May. The table below displays the current plans offered by the District to their employees.
[table id=3 /]
