North County Times
Over the next two weeks, employees in the Temecula school district will choose a new health insurance plan that could, for the first time, make most employees pay for insurance.
Two years ago, the district changed its insurance, taking on more risk. It kept rates the same, but increased co-payments and added deductibles for some procedures among other changes to control costs.
Last year, the school district was able to cover its medical claims and keep a reserve. This year, several things, including some high-risk pregnancies, caused claims to outstrip premiums. The district is facing an estimated $3.7 million deficit and its reserve fund, which had at one time about $1.6 million this school year, is now about dry, Assistant Superintendent Jeff Okun said.
The rising costs are not just affecting Temecula. Health care costs are rising nationwide in the public and private sectors.
“The issue of health insurance is universal,” said Laura Jeffries, legislative advocate for the Association of California School Administrators, a Sacramento-based nonprofit organization representing 16,500 school administrators. “Districts up and down the state are grappling with how to deal with the increasing cost of health insurance, workers comp, and unemployment insurance.”
Employees are increasingly picking up a larger share of the costs.
“The days of 100 percent coverage are over,” she said.
Two years ago, the Temecula Valley Unified School District, with support from both unions, changed its health insurance. It had been in what is called a self-funded pool made up of several districts. In a pool, if one district’s costs increase dramatically, that amount is shared by the participants. Rates for the district were going up, but making changes to the plan didn’t help, Okun said. When it came time for renewal, rates weren’t decreasing.
So the district changed to what is called a self-funded trust. This means the district is responsible for paying its own bills and assumes the full risk. The district also offers employees Kaiser Permanente, a fully funded plan, which means the insurance carrier assumes the full risk and passes on increased costs in the form of higher rates the next year.
All district employees pay the same rate for insurance regardless of the number of people on their plan. Most employees pay nothing for their health plan except when they use it. About 90 employees have Kaiser, for which they pay $18 a month each.
Since changing to a self-insurance trust, rates stayed the same for two years, Okun said, while other districts saw increases of 13 percent and 14 percent.
Rates “should have gone up, but we kept them the same and employees didn’t have to pay anything,” Okun said.
A committee of teachers, staff, administrators and union representatives, has been looking at changes. The committee has recommended to stay with the self-funded trust and both unions are considering whether they want a plan with the same premium for members no matter how many family members are covered —- the plan the district has now —- or one with a tiered rate, whose premium depends on the number of people covered in a household.
Employees also will have a choice among three plans. The options are a $1,000 deductible with a $40 monthly payroll deduction or a $500 deductible with $135 monthly payroll deduction. Employees can also choose Kaiser, where rates will rise to 14 percent, which means about a $106 monthly payroll deduction.
“It’s a big thing, because (most) employees haven’t had to pay it before,” Okun said.
The amount that employees pay out of pocket could change depending on benefits negotiations. It’s doubtful, Okun said, that any resolutions will come before July 1, the start of the next fiscal year. Monthly payroll deductions would kick in then.
District officials have proposed to put off dealing with the estimated $3.7 million deficit until January, Okun said. To pay off that amount, employees would have to pay $189 a month each. It will be paid off through an added monthly employee payment, through negotiations, or by building a reserve if fewer claims come in, Okun said.
Shouldering a bigger burden
Health care costs are going up for Temecula next year. They are going up in Murrieta and Menifee school districts and across the state. Employee contributions will continue to escalate because school districts can’t pass costs on to consumers like private companies can, insurance experts said.
According to an Associated Press article published last month, “In 1997-1998 fiscal year, health care benefits for teachers cost $2.1 billion. By 2001, the cost had risen about 50 percent to $3.2 billion.”
Costs are rising in the private sector as well. According to a survey by the Henry J. Kaiser Family Foundation and the Health Research & Educational Trust, health insurance premiums in the private sector statewide outpaced those nationally in 2003. In California, premiums grew by 15.8 percent while nationally they grew by 13.9 percent. The amount workers are paying for premiums rose “substantially” in 2003 and will likely continue to rise, the study states.
“More and more districts and employers in general will have to pass on costs to employees” especially in school districts which have no product, said Martin Brady, executive director of the Sacramento-based Schools Insurance Authority.
In the Menifee Union School District, the average monthly payroll deduction is about $93. The district contributes $7,400 a year for full-time employees, Assistant Superintendent Dan Wood said.
In Temecula, the district contributes $573.98 per full-time employee each month, or $6,887 a year.
In Murrieta, health care costs will increase next year 4 percent to 7 percent, Assistant Superintendent Buck DeWeese said.
“That’s a lot better than the 14 (percent) to 16 percent we’ve experienced the last few years,” he said.
The district’s contributions have increased from $6,000 per full-time employee last year to $8,275 next school year. Payroll deductions depend on the plan an employee chooses and in some cases are nothing.
Seven years ago, the cap covered everything.
“The costs of health care in the industry have just skyrocketed and we’re trying to keep up,” DeWeese said.
What districts can do to slow cost increases, DeWeese said, is explain to employees that health plans are like checking accounts —- they have a finite amount of money —- and encourage them to go to a doctor only when necessary. The district also can shop around for plans with better rates, something Murrieta does each year.
“We can also campaign and write letters to our government saying this health industry is out of control. You ought to help us,” DeWeese said, adding that Murrieta is not doing any organized lobbying.
Jerry Flanagan, consumer advocate for the Santa Monica-based Foundation for Taxpayer and Consumer Rights, works with employers to help address the root causes of health care increases.
“The unfortunate easy answer of rising health care costs is to have the employee pass on the rising costs to teachers,” Flanagan said.
There is a stronger political will for new legislation to cap high health care and prescription drug costs, he said.
“We’d really like to see school districts in California support legislation” including Senate Bill 1349, which addresses premiums and Assembly Bill 1958, which proposes ways to control drug costs, he said.
Hoping for a quick resolution
Last month, Jim Thomas, president of the Temecula Valley Educators Association, said teachers were willing to strike if negotiations broke down. During a budget workshop in April, district officials said if no changes were made to the health plan, employees would face a $321 monthly payroll deduction.
“No way were we going to land there,” Thomas said.
A $300 loss a month would drive teachers from the district, Thomas said.
“It’s not a question of (whether) teachers are going to stay here no matter what, because it’s a great district to stay in,” Thomas said. “It’s a question of whether you can afford your house, afford your payments.”
The union put in a formal demand to negotiate the matter, in response to a statement board member Barbara Tooker made at the budget workshop, he said. Tooker, he said, couldn’t support a salary increase and was glad a benefits cap was in place. The board didn’t talk about the difficulties teachers might face if they had high monthly payments, nor did they discuss the increases employees have already put in place.
Board members dispute that characterization.
“I’ve never had a callous attitude about raises or about benefits or about anything that has to do with touching people’s lives,” Tooker said. “As a trustee, there is a broader responsibility.”
One of the laws Tooker said she must uphold is “thou shalt balance the budget.”
Trustees said they couldn’t comment on whether they support benefits or salary increases next year because these issues must be decided in negotiations.
On Wednesday, Thomas expressed greater faith in the school board, saying he believes both sides will come to an agreement before the end of the month, which also marks the fiscal year’s end.
He said informational picketing and walking out would happen only if negotiations broke down, and he expressed doubt that would happen. Striking happens after a long process of negotiations come to an impasse and a union vote.
Still, he said, he was disappointed the district hasn’t offered increased salaries or benefits, despite extra funds TVUSD expects to receive from the state.
The district does expect to get more money from a revised state budget, Okun said, but its expenses have gone up, too. The district expects to adopt its budget June 15.
Having to pay for insurance would hit classified staff the hardest as they make less on average than teachers and administrators, said Sherry Etherington, secretary of the California School Employees Association in Temecula.
Teachers’ salaries ranged from $37,380 to $76,451 last year, according to district documents. Classified salaries ranged from $16,944 to $53,268 and administrative salaries ranged from $38,897 for a secretary to $104,156 for a high school principal at the highest step.
While classified union members haven’t decided which health plan to endorse —- they will vote by the end of school in two weeks —- they are worried about any deduction. Not all members have health insurance paid in full by the district. Some classified staff work part-time and pay a percentage of their district health insurance out of pocket. Paying even more would hurt, Etherington said.
“There is a great concern about it,” Etherington said.