The Washington Education Association says a bill to consolidate the purchase of health insurance for its members would cost taxpayers $45 million while increasing costs, reducing coverage and eliminating choice for beneficiaries. We found the claims half true.
The claim: Radio ads and mailers by the Washington Education Association, the statewide union that covers teachers and other public-school employees, say a bill to consolidate the purchase of health insurance for their members would cost taxpayers $45 million while increasing costs, reducing coverage and eliminating choice for beneficiaries.
What we found: Half true.
The state’s Health Care Authority issued a report last year saying it could save millions of dollars by becoming the sole purchaser of health benefits for more than 200,000 public-school employees and their dependents. Today, 304 districts contract with 300 different insurance plans and 1,000 insurance pools for that coverage.
Senate Bill 6442, which is part of the continuing budget deliberations in Olympia, would put the state in charge of buying benefits for all K-12 employees.
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The WEA says a state takeover would cost taxpayers and employees.
Let’s take the WEA claims one at a time:
• SB 6442 would cost taxpayers $45 million.
True. It would cost $45 million over six years to set up the program. However, the state says it can shave at least 1.5 percent on what it spent on benefits, getting anywhere from $10 million to $20 million a year in savings. The state says it could quickly recoup the startup costs. The WEA says the savings are fiction.
• SB 6442 would increase costs for employees.
Yes and no. School districts buy their own insurance, spending $1 billion in public funds statewide each year to provide health insurance and other benefits for their employees.
Even though each district negotiates with its local union over how that money is spent, employees with families tend to pay a much higher share for their coverage.
Legislators, including the bill’s sponsor, state Sen. Steve Hobbs, D-Lake Stevens, say they want to make the system more equitable.
During the 2010-2011 school year, full-time employees paid an average of 4 percent of their premiums for employee-only coverage. Employees with dependent coverage paid 73 percent, according to the state Health Care Authority.
Under the bill, employees buying dependent coverage would pay 15 percent of the premium for employee-only coverage, while those with family coverage would pay 35 percent of the premium.
Since most employees select single coverage, most would see an increase. Those selecting family coverage will see an even greater decline in their share of costs, according to the state analysis.
• SB 6442 would reduce coverage for employees.
Overall, that’s true.
The plan would eliminate coverage for part-timers after five years.
Also, employees who now pay very little for plans with generous benefits would be charged more, and they may have to settle for a lesser plan.
On the other hand, making family benefits more affordable means that more families could afford insurance. That would expand coverage statewide.
• SB 6442 would reduce the number of insurance choices for employees.
Overall, that’s true, given the number of districts and the number of insurance carriers providing benefits to them.
The teachers’ union, the WEA, offers school districts insurance coverage through Premera Blue Cross. More than half the districts buy it through WEA. The state says it modeled its plan after WEA’s pooled coverage. So the choices for employees should be similar.
• The state plan will cost more overall.
It’s difficult to determine whether the state can achieve the savings it says it can.
Legislators have been trying for decades without much success to get good information on how much private insurers, brokers and school districts spend to administer their plans, said John Williams, who oversees the project for the state Health Care Authority.
Williams’ team crunched the numbers they had — a rather limited set — and concluded that the state could provide comprehensive benefits to K-12 employees for about $10 million to $20 million less than districts are now spending.
That savings would come from reducing broker fees now paid by some districts, Williams said. School districts now pay about 1 to 3 percent of their total K-12 benefits costs to brokers, he said.
The state could get those fees down to 1.5 percent, he said, and wring another half a percent by simplifying administration, including replacing a paper-intensive enrollment system with a computerized one.
The WEA insists the savings is a fiction.
“They are not savings,” said WEA consultant Gary Moore. “They’re going to assess the carriers a charge for each subscriber to pay for administrative costs.”
He also said the state is underestimating the number of people who would join the plan if family coverage became more affordable.
“This is going to cost considerably more than what they’re saying,” Moore said. “If you lower the cost of family coverage, more employees who have opted not to cover their families will say, ‘Hey, that’s a good idea.’ “
The state’s analysis assumed that about 5 percent of employees would add family members to their plan, but Moore said outside analysts indicated the rate could be twice that.
Mark Rose, a broker in Bellevue who worked with the state on the project, said the state’s assumptions don’t add up.
Rose, whose firm contracts with 25 districts, said some of those districts will still have to contract for human resources and other services now included in their brokerage fees.
Susan Kelleher: 206-464-2508 or email@example.com. On Twitter @susankelleher.