One promising idea in a state efficiency study was having school districts join a statewide health insurance plan. But as a new audit found, such a move is complicated and would not save as much money as previously suggested. What’s more, a big share of the potential savings would be cost shifts to schoolteachers, especially in Wichita.
In fact, 40 percent of the projected savings would come from shifting costs to teachers and other district employees. And of the $25 million in net cost shifts statewide, nearly $24 million would come from Wichita school district employees.
That’s not fair.
The Legislature hired a national consulting firm in 2014 to look for ways the state could be more efficient. One of the recommendations was to consolidate the health insurance plans offered by K-12 school districts into a single, statewide pool. This could lower costs by about $80 million a year, the consultants estimated.
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Lawmakers had the Legislative Division of Post Audit examine the issue in more detail. The audit report, released last week, determined that consolidating insurance plans is complex and would take time. Also, there would be winners and losers in forced consolidation.
The audit projected annual net savings of about $63 million in a statewide plan. Of that total, $38 million could come from the administrative efficiency of having a single plan. For USD 259, the projected administrative savings were $2.2 million (though the district doubts it would be that much).
Of the remaining net cost savings, $24 million would come from reduced claim coverage and $1.1 million would come from requiring the employees to pay higher premiums.
Wichita teachers would be especially impacted, because they accepted lower salaries in exchange for better benefits. As a result, the statewide insurance plan would cost them about $3.6 million in reduced claim coverage and $20 million in higher premiums.
In other words, teachers would pay a lot more for worse coverage.
Another issue for Wichita is that it currently self-insures, which could make it more complicated to switch to a state plan. Also, the district has a wellness plan and programs targeting employees with diabetes and high blood pressure, which help lower its health care costs. Such programs would not be allowed in a high-deductible statewide health care plan.
There are alternatives that could help make a statewide plan more fair. For example, the state or school districts could claim the administrative savings but pay teachers more to offset the cost shift.
But it is also worth considering whether forced consolidation is the best policy. Why not allow local school districts to decide whether joining a statewide plan is best for them and their employees?