April 14, 2013

School districts scramble to adjust to new health insurance rates

For the first time, MEA Benefits Trust is providing different health insurance rates based on school districts' claims history

By Susan McMillan smcmillan@centralmaine.com
Staff Writer

AUGUSTA — Officials in Regional School Unit 11 already were anticipating bad news about health insurance rates.


As they develop budgets for next year, school districts are working with widely different increases in health insurance premiums. This is the first year the Maine Education Association Benefits Trust has based each district's insurance rate on its claims history rather than providing the same rate to everyone.

RSU 11 (Gardiner, Pittston, Randolph, West Gardiner): 13 percent increase

Fayette Schools: 8 percent increase

RSU 2 (Dresden, Farmingdale, Hallowell, Monmouth, Richmond): 8 percent increase

RSU 38 (Manchester, Mount Vernon, Readfield, Wayne): 8 percent increase

Augusta Schools: 3 percent increase

RSU 12 (Alna, Chelsea, Palermo, Somerville, Westport Island, Whitefield, Windsor, Wiscasset): 3 percent increase

Winthrop Schools: 0 percent increase

While developing the district's budget for 2013-14, they inserted a placeholder figure — a 10 percent increase in premiums, compared to the 4 percent increase they'd received this year.

Late last month, the real number arrived: a 13 percent increase that Superintendent Pat Hopkins said will cost the Gardiner-based district $73,000 more than they'd projected, requiring cuts elsewhere in an already difficult budget.

A few miles away in Winthrop Public Schools, the news was very different.

"We are thrilled, because we had a 0 percent increase," Superintendent Gary Rosenthal said. "That's another piece that is going to help us put some money back into programs and staff."

Winthrop school officials had projected a 3 percent increase, which would have cost $40,000.

RSU 11 and Winthrop are at the two extremes of the major budget adjustments school districts are experiencing as a result of a change in policy by the Maine Education Association Benefits Trust, which administers health insurance for most of the school districts in Maine.

For the first time, MEA Benefits Trust is providing different health insurance rates based on each district's claims history, which some school officials say undermines the chief advantage of the benefits trust: a pool of more than 65,000 insured individuals that smooths out premium fluctuations.

"It really throws away the benefit of a community rate," said Virgel Hammonds, superintendent of Hallowell-based RSU 2. "Now we have a motivation to look at other options."

RSU 2 received an 8 percent increase, which will cost about $60,000 more than the 6 percent increase they anticipated.

The board of MEA Benefits Trust hopes the policy change actually will help the organization hold on to school districts, especially ones with fewer claims. Executive Director Christine Burke said the organization's leaders wanted to continue offering everyone the same premiums, but their hand was forced by a 2011 law intended to make the school insurance market more competitive.

MEA Benefits Trust last fall dropped its lawsuit challenging a bill which requires the trust's insurer, Anthem Blue Cross Blue Shield, to release claims histories to school districts so they can seek quotes from other insurers.

The trust's leaders are concerned that insurance brokers will seek to pick off districts that pay more in premiums than the insured consume in health care. Those districts help subsidize others with higher health care costs, which Burke said keeps premiums moderate for the statewide pool.

"If I lose the districts that I call the high performers, if they jump off the seesaw, what happens (is) it smacks down on the end that all the low performers are on," Burke said. "It makes everyone's costs go up because there's no subsidy from anyone."

That could send the whole plan into a "death spiral," she said.

MEA Benefit Trust's answer was to charge the high performers less in the hope that they'll stay.

Every school district in the trust received a health insurance rate based on the most recent 12 months of insurance claims. Trust officials put upper and lower limits on the rates to maintain some of the stability and equity that are benefits of the large pool.

About one-third of districts were assigned increases of 0, 3 or 6 percent; about a third got an 8 percent increase; and the remaining third will pay increases of 11 or 13 percent.

School districts with fewer than 50 insured people, which includes the Fayette School Department in the Augusta area, all were told they must pay 8 percent more. That also would have been the statewide rate if MEA Benefits Trust had not changed its policy.

(Continued on page 2)

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