Study: Manchester schools health plan is most generous
The report, presented to the Board of School Committee this week, found that the district spent $28.2 million on claims in 2012, a 7.8 percent increase from the previous year and a 12 percent increase from 2010.
The report comes as a school board subcommittee is locked in negotiations with unions representing district employees, including the teachers union, the Manchester Education Association, over new contracts that would go into effect in the fall. Health care concessions are likely a key components of those talks.
The issue of the district's health costs was quickly seized on by Mayor Ted Gatsas. He proposed concessions last year as a way to save teacher jobs, which the unions rejected.
"This will have a direct effect on reducing class sizes," Gatsas said, referring to the prospect of health care concessions this year. He estimated that if the teachers union agreed to changes similar to those accepted by city employees last year, up to $5.5 million in next year's budget could be freed up to hire more than 80 teachers.
The mayor's proposed school budget did not factor in health care concessions, nor any salary increases.
Anthem executives, who presented the report to the school board on Monday, described the district's health plan as the "most robust" or "richest" plan in the company's book of business, which numbers thousands of employers.
Anthem senior health information consultant Arlene Levy Fishbein said the low employee share for health care contributes to the district's high costs.
"When a member has accountability for their health care dollar, they're likely to watch their dollar a lot more prudently, and then change some of the behaviors that affect cost and utilization," she said.
Under the health plan, the district's contribution rate is 96.5 percent, while members pay 3.5 percent. Co-pays for most doctor visits are $5, and prescription co-pays also start at $5.
The average employer/member split for businesses in the Anthem network is roughly 80 percent to 20 percent, according to Anthem's analysis. The Manchester district's plan, however, is similar to other "municipal/educational customers," which also have member contribution rates under 10 percent. Manchester Education Association President Ben Dick stressed that the district's health plan was not that different from other municipal employers.
"Historically-speaking, public employees have had benefit packages that are better than the private sector because that was a way to entice them to commit to a life as a public employee," Dick said. "This said, that this is a conversation that we've had, that we need to have, I'm not going to argue. We've never shied away from having this conversation."
Negotiations with the teachers union are being overseen by a school board subcommittee chaired by Ward 10 representative John Avard. He declined to discuss the health care issue, citing the confidentiality of the negotiations.
Ward 3 board member Christopher Stewart, who is also on the negotiations subcommittee, declined to discuss the union talks, but he did say the Anthem report underscored a serious problem facing the district.
"As I've said before, the health care costs of this district is a fiscal cancer, and it's getting worse," he said. "From where I'm sitting, we need to get health care costs under control before anything else in the budget."
Because the district is self-insured, it pays claims directly. The $28.2 million total represents claims from July 1, 2011, through June 30, 2012. Claims will likely run even higher in the current fiscal year, due to the large number of laid-off employees who sought treatment early in the year before their coverage ran out. Health care costs have remained over budget for much of the current year.
The relative age of the district's employees is also a cost-driver. Almost half of the plan's members are over 40 years old, and more than a third are over 50, according to the Anthem analysis.
Mayor Gatsas credits health care concessions by city employees with bringing millions of dollars in savings in the current fiscal year. Under an agreement last year with most city unions, the employee share went from 5 percent to 12.5 percent this year, and will go to 15 percent next year. Doctor co-pays were hiked from $5 to $20.
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