Sierra Vista School District Considers Restructuring Health Insurance Plan
March 3, 2010
SIERRA VISTA — A restructuring of the Sierra Vista school district’s health insurance plan has been part of the administration’s recommendations to balance the budget for next year for several months.
A presentation of what this recommendation will likely look like for employees was the focus of a public work session at Buena High School on Tuesday.
The district recently joined a consortium of schools called the Valley Schools Benefits Trust (VSBET), which has already netted some savings in its premium rates, though its health care plan is still unusually rich, Superintendent Brett Agenbroad said. If the district maintains its current plan with United Healthcare, it faces an 11 percent increase in premium rates next year.
The district currently pays about $5,800 per employee each year, whil e the average among school districts in the VSBET is about $3,600, VSBET Administrator Michael Bradley said. While having such a rich plan is not necessarily a bad thing and can be good for retention, it is far from the industry standard.
By moving to a self-insured plan that includes larger deductibles and co-payments for employees, the district can realize a 21 percent decrease in premium costs, netting a savings of about $835,000, Agenbroad said. Employees would not have to pay anything for the base plan except for a deductible and some other fees in the event they need medical care. They would have the option of buying up to a more premium plan by taking an annual payroll reduction.
Previously the district paid for 100 percent of both its base and premium plans, which is not common practice, said Teresa Pearce, strategic account executive for United Healthcare.
Employees with in-network doctors will not have to find new ones, as the network will not change.
By becoming self-insured the district shifts potential risk and gain away from its health care provider and on to itself, but the VSBET helps insulate them from risk, Bradley said. If the district has to pay much more than anticipated, VSBET would take the immediate hit and work with the district to pay it off through increased rates over several years.
Often, the savings and losses will balance out over time anyway because VSBET does a study of loss ratio over time, Bradely said. They completely cover any losses over $150,000.
Under the plan that will likely be recommended by the administration, the district would be paying $4,100 per employee each year, which is still above the average among school districts in the VSBET, Agenbroad said.
This will be discussed with teachers through the meet and confer process before a recommendati on is made to the governing board.