Health insurance is complicated. Health insurance for Washington school districts is exponentially complicated.
The state’s 295 districts offer more than 300 different health insurance plans, subdivided into more than 1,000 different insurance pools. Senate Bill 6442 would divide this problem by 295, creating a single School Employees Benefit Board that would design a package of insurance plans, then put the plans out to bid.
Washington spends $1.2 billion for school employee health insurance.
A report prepared last year for the state Auditor’s Office estimated potential savings to the state of as much as $90 million a year once the system has moved past the implementation stage. That’s enough money to hire 1,000 teachers: hardly enough to move the state toward the classroom sizes authorized a decade ago, but a few in every district would certainly help with programs such as special education.
Besides the cost savings, the bill also aims to bring more equity and transparency into the system.
Classified school employees such as custodians and food-service workers are not well-served by the present system because many do not work full time. Also, workers with families pay 42 percent of the cost of their insurance out-of-pocket. Individuals pay 9 percent.
The very number of districts and policies suggests why there might be financial transparency issues. The fact some players declined to provide information reinforces the perception that obfuscation works for them.
The biggest opponents are the teachers unions and insurance providers, notably Premera. Plans offered by Premera through the Washington Education Association have captured 55 percent of the market.
The WEA says state plans will add costs, not cut them. It notes the $768 per month the state pays toward educator plans is below the $850 dedicated to plans for state employees, full-time or not. That certainly is an issue worth taking up, but separately.
The WEA supports a much more modest plan that would reduce the insurance pools to a maximum two per district, but that bill has been dormant while SB 6442, with bipartisan support, has moved forward.
Some of the renewed enthusiasm for statewide plans – this is not the first time around for this debate – comes from Oregon’s experience with insurance consolidation.
Reforms adopted there in 2007 reduced the number of insurance plans sold in the state from 88 to nine. Annual savings estimated at $40 million per year when the changes were made had instead reached more than $45 million for the 2010-’11 school year. Oregon has less than one-half the 109,000 school employees Washington has.
There will be substantial start-up costs for the state, almost $45 million over the first six years. SB 6442 also exposes districts to some risk if Olympia slackens its insurance contributions in the future.
But the opportunity to streamline health insurance management, and simplify benefits packages that can be put out to competitive bid, is a risk worth taking for Washington.
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