Health insurance woes

by John Gessner
Thisweek Newspapers

Faced with a 51 percent rate increase from its insurance carrier, the Burnsville-Eagan-Savage School District is soliciting new bids and searching for ways to contain employee health insurance costs.

Those could include higher co-pays for district employees and their families when they visit doctors or buy drugs.

The district is in the second year of a respite from rate hikes that had averaged 12 percent a year over the previous decade.

Two years ago, facing a double-digit rate hike, the district broke from a buying consortium of school districts to set up its own insurance plan.

The district self-insured smaller claims and bought a high-deductible policy from Medica to cover the bulk of claims, which are larger and more expensive.

The plan worked. Total insurance costs, including the Medica plan and the district-paid claims, rose only 2 percent in 2004-05, to $11.26 million. Costs are projected to rise only 7 percent this year, to $11.73 million.

But Medica gave only a one-year price guarantee, assuring a rate increase of no more than 17 percent in the second year.

Now the carrier is poised to raise its rate by 51 percent after having paid claims to employees that exceeded the premium by some 30 percent.

“I think that the challenges of two years ago are back with us, every bit as daunting,” Superintendent Ben Kanninen told the School Board Jan. 5.

Medica “grossly underestimated the cost of that major medical policy,” said district Business Manager Carter Christie.

Even if the district removed some of the sting by using savings from its self-insurance plan, cost increases for 2006-07 would still be intolerable, officials say.

So the district will solicit proposals from the four major carriers — Medica, Blue Cross Blue Shield, Preferred One and Health Partners. The request for proposals will ask the carriers to factor in a series of higher co-pays and potential savings to be gained through wellness and screening programs. A new package could include the elimination of co-pays for “minute clinic” visits to discourage higher-cost and sometimes unnecessary emergency-room visits.

“We need the support of our employees and the community to understand the problems that we’re dealing with here,” said Board Member Ron Hill.

The district’s insurance consultant recommends using no more than 25 percent of an insurance fund balance to help keep costs down. The balance now stands at about $3 million, thanks to savings from the self-insurance plan that are expected to total nearly $4 million over two years.

Even with the extra money, total insurance costs would rise by 23 percent, to $14.42 million, under the Medica rate hike.

Annual premiums would rise from $4,633 this year to $5,698 in 2006-07 for single employees. Family coverage would rise from $12,375 to $15,222.
The district’s Insurance Committee will prepare the request for proposals and review the bids.
Morrison elected
board chair

Gail Morrison was unanimously elected board chair at the board’s annual organization meeting Jan. 5.

Morrison joined the board in 2000 as an appointee to fill a vacancy. She won election in 2001.

Morrison replaced Todd Johnson, the chair in 2004-05.

“You have led this board with humor, with passion that always comes through, and with insight,” she told Johnson.

In other business, Dan Luth was elected vice chair, Bruce Copp was elected clerk and Vicki Roy was elected treasurer Board salaries were set at $450 a month, with an extra $50 for the chair. Board members haven’t voted themselves a pay raise since 1998.