Health insurance cost a major factor in teacher contract talks

The seemingly ever-rising health-care costs that spur complaints at most companies are also affecting local school districts. As several districts push through negotiations for new contracts with teachers this summer, finding a way to cover the hefty price of health insurance - while keeping employees happy - is a common problem.



According to the Beaver Valley Intermediate Unit, Blackhawk, Riverside and Western Beaver school districts are all in the process of negotiating new contracts. Ellwood City Area in Lawrence County and Moon Area in Allegheny County also are negotiating new contracts.



District administrators and teachers' associations agree that salaries and benefits are always the two biggest concerns when it's time to negotiate a new contract. But with such dramatic increases in health-care costs during the three or four years since most schools signed their last contracts, negotiating benefits has taken on a new importance.



Plus, in most districts, teachers and other professional employees have not had to contribute money to the cost of their health insurance under previous contracts. That cost, however, is becoming harder for districts to handle on their own.



"Health insurance expense is an issue in every facet of society, and it's no different for us," said Blackhawk Superintendent Alan Guandolo.



Guandolo said under the current contract, which will expire Aug. 31, the district covers the entire cost of health insurance. He declined to comment on whether the district will cover all the insurance in a new contract because the district is in the early stages of negotiations. But Guandolo did say health insurance costs jumped 20 percent this past year, an increase he says has been tough for the district to absorb.



John Yarai, a sixth-grade science teacher and president of Blackhawk's teachers' association, said a professional mediator has just been hired to help with the negotiations.



"We've been in negotiations since January, but it's hard to say if the end's in sight - we're just cautiously going about them," Yarai said. "I will say both sides have been very professional."



Riverside Superintendent David Parry said while he is not actively involved in contract negotiations sincethe district has a professional negotiator, Riverside's health- care costs have increased similar to other county schools. Teachers did not contribute to their health-care costs under the last contract, which expired June 30, Parry said.



Ellwood City teachers' contract expired June 30, and Superintendent Frank Aloi said negotiations there began in the middle of the school year. Aloi said health insurance costs are "definitely a concern," as they increased about 15 percent during the past year.



Aloi said the district has also hired a professional negotiator, but said he could not make any other comment about the negotiation status at this point.



Superintendents at both Western Beaver and Moon Area were away on vacation last week, but their secretaries said negotiations are ongoing, with salaries and benefits being the main issues. Moon secretary Nancy Peck said the old contract expired June 30: the intermediate unit said Western Beaver's contract will expire Aug. 21.



Even at schools where contracts don't expire until next year, teachers and administrators are already thinking about balancing the cost of benefits.



Dennis Johnson, superintendent for the Cornell School District, said the district's contract expires next summer, but he expects to begin negotiations for a new contract by January. Johnson said the district may be exploring some form of a co-payment for health care because although the district's health insurance cost dropped about 1 percent last year, it increased 28 percent during the 2003-2004 school year.



Kenneth Voss, superintendent of Ambridge Area School District, said it would be premature to speculate on next year's negotiations, but said that benefits will be an important issue. Health-insurance costs have increased as much as 30 percent in recent years, Voss said.



Mary Catherine Knafelc, president of the teachers' association at Ambridge, said teachers and the district had begun negotiating salaries and benefits earlier this spring, but meetings were stopped after the board members on the negotiating committee did not win nominations in the May primary election.



"It's been a little frustrating- our last meeting was April," Knafelc said.



Knafelc said under the current contract, teachers' health benefits are fully covered by the district, but that teachers do expect they'll have to make some contribution in the new contract.



"We expect we'll have to give something back, but we'll want to minimize that," Knafelc said. "Still, as a taxpayer, I recognize that these (school) boards are being left in a lurch, with rising costs and not as much help from the state."

Fast facts about health and medical insurance

Sunday, July 17, 2005



The percentage of people under age 65 with health-insurance coverage declined in 2003 to a post-1994 low of 82.3 percent.



The segment of the population with employment-based health benefits decreased from 64.4 percent in 1994 to 63 percent in 2003.



Individually purchased health coverage has been at about a 7 percent level since 1994.



Almost 67 percent of workers in managerial and professional occupations had employment-based health benefits, compared with 34.8 percent of workers in service occupations.



Almost 63 percent of all uninsured workers in 2003 were either self-employed or working in private-sector firms with fewer than 100 employees.



Family health premiums paid by employers and workers increased from $7,028 in 2000 to $9,320 in 2004. The average amount paid by workers increased from $1,433 to $1,947.



The number of Americans who had health-care costs that consumed more than one-quarter of their earnings increased from 11.6 million in 2000 to 14.3 million in 2004.

Lawmaker to pressure governors on health insurance coverage

DES MOINES, Iowa (AP) -- A state legislator said he plans to pressure the nation's governors this weekend to broaden their agenda to include offering health coverage to working families struggling to make ends meet.



"I will be talking to the governors to make sure they know how important this issue is," said Rep. Wayne Ford, D-Des Moines. "How can you come to Iowa and not talk about insurance?"



Ford spoke at a news conference on the eve of the annual meeting of the National Governors Association, which opens this weekend in Des Moines. While challenges facing the Medicaid program are a big topic for governors, Ford said the agenda should be broadened to include offering care for the uninsured and underinsured.



The issue is particularly important in Iowa, which ranks third in the nation in the number of insurance companies with headquarters here.



"With its prominent role in these issue, the insurance industry faces challenges with respect to how to address these needs of all Americans," Ford said. "As governors, how are you to be sure, for example, that all of your adult citizens and their children have health insurance? How are you going to deal with the uninsured and underinsured in your state?"



Ford, who is black, runs an inner-city advocacy group called Urban Dreams. Speaking as a representative of the National Black Caucus of State Legislators, he said the issue of offering health care disproportionately impacts minorities and inner-city residents.



"When it comes to minorities, the American Medical Association has documented many disparities with respect to minorities and health care and has asked the insurance industry to become more involved ... ," Ford said.



Ford said he would urge governors attending the meeting to "develop and strengthen a dialogue on insurance needs and health care coverage."



He said the governors meeting comes on the heels of state officials putting in place an IowaCares program, a revamping of the Medicaid program that could add as many as 30,000 people to the health care rolls.



The NGA meeting opens on Saturday and runs through Monday.

Auto insurance rates fall for many across region

By Wayne Tompkins

wtompkins@courier-journal.com

The Courier-Journal





Many Kentucky and Indiana residents are finding their auto insurance premiums have dropped because insurance companies are getting fewer claims.



"I love it," said Lennel McDaniel, 46, a State Farm customer from western Louisville who said his yearly premium recently dropped to about $950 from $1,000. "It's a new thing -- you very seldom see the price of anything going down."



Not every driver is getting lower rates, but customers with good to excellent driving records are likely to see some savings, insurers say.



The trend is nationwide.



Several insurers have announced rate decreases this year -- particularly for their best customers. However, when bad drivers as well as good drivers are factored in, rates are rising -- but at their slowest pace in five years.



"When you get right down to it, we're seeing fewer accidents," said Robert Hartwig, chief economist for the Insurance Information Institute in Washington, D.C.



According to insurance companies, agents and industry analysts, rates also are cooling off because of:



Increased competition among insurers for safe drivers.



Advanced and widespread anti-theft technology.



More sophisticated rate calculations, which allow companies to better pinpoint the best and worst drivers.



A decrease in drunken driving.



Better teaching and tougher licensing of teenage drivers.



Baby boomers aging into their statistically safest driving years.



In Kentucky, the state's two largest auto insurers -- which have a combined 31 percent of the market -- recently announced rate decreases.



State Farm cut rates 3.5 percent, which will reduce premiums by $12 million this year. The first phase, a 1.8 percent drop, occurred this spring and will be followed by a 1.7 percent decrease Oct. 15. Individual drivers' rates will be higher or lower depending on their driving record.



Kentucky Farm Bureau Insurance recently unveiled $40 million in rate reductions for its best customers. In March, the company increased safe driving discounts for customers who have not had a claim or violation such as a speeding ticket in at least three years.



This month, the company launched rate reductions in collision and underinsured-motorist coverage and lowered premiums for drivers in age categories with favorable driving records.



Typically, drivers age 50 to 64 who are not insuring drivers under age 25 get the lowest rates. Teenage boys ages 16 and 17 generally pay the most.



In September, Kentucky Farm Bureau will initiate new discounts for vehicles with good safety ratings, the company said.



Customers are being informed of the lower rates as they get their bills, the companies said.



Pete Hammer, owner of a St. Matthews hardware store, has three cars insured in his name -- and a 16-year-old daughter who will begin driving soon.



Hammer, one of Kentucky Farm Bureau's 700,000 auto-insurance customers, noted that the premium for his three vehicles has dropped from $1,977 a year to $1,610, a savings of $367. He said at first he thought the lower rates on his bill were a mistake. He learned that his driving record made the difference.



When his daughter Kathleen gets her driver's license, Hammer said, his rates will go up -- but the rate reduction is a welcome way to help offset that cost.



Keith Lamkin, a Louisville resident who works for a tool-grinding company, insures both a teen driver and an antique car.



Also a Farm Bureau customer, Lamkin said his rates are down 5 percent to 8 percent, even with his 17-year-old son driving. He said he pays about $500 quarterly to insure a 2004 TrailBlazer XLT, a 1992 Chevy Blazer and a 1965 Chevrolet Super Sport.



"From the statement in the letter that I got from them, it's just because of my record as far as no citations and the driving record I have," Lamkin said.



In a filing with the Kentucky Department of Insurance, the Farm Bureau said its losses for collision damage fell to $61 million last year from $66 million in 2003. Property damage claims from collisions also were down last year, as were comprehensive claims -- the category that includes theft. Total losses from claims fell to $282 million last year from $292 million in 2003, the company said.



The Insurance Information Institute estimates the average auto-insurance premium nationwide rose almost 8 percent in 2003 and 3 percent in 2004. It projects a 1.5 percent increase this year, the smallest nationwide increase in five years.



"We have safer cars, but we have improvements in road safety as well -- anything from rumble strips to better lighting and signage," Hartwig said.



Many people also are taking higher deductibles, he said, meaning they are paying out of pocket for minor incidents.



The National Association of Insurance Commissioners said Indiana drivers paid an average of $742 in 2002, the latest year available, to insure a car. In Kentucky, it's $816. Both states are below the nationwide average of $880.



The association said rising costs for medical care and higher jury awards continue adding to insurance costs.



State Farm said this month that it would lower rates for Hoosiers by 5.7 percent, which follows two 2004 decreases totaling nearly 11 percent, according to a press release.



State Farm Indiana spokesman Joe Johnson said the company's rates are down nearly 18 percent from eight years ago. The most recent rate cut is expected to save Indiana customers $34 million a year, he said.



Another large Indiana insurer, The Progressive Group, has dropped its rates in Indiana 10 percent in the last two years, spokeswoman Leslie Kolleda said.



State Farm says its Kentucky claims are down 16 percent over the last two years. "Mostly what we are seeing is a decrease in claims -- that's basically it," said Brian Maze, a spokesman for State Farm's Kentucky operations. "Drivers are driving more responsibly, No. 1. There are safer vehicles out there as well."

Health Insurance Can Be More Affordable

By EILEEN ALT POWELL

The Associated Press

Thursday, July 14, 2005; 6:36 AM



NEW YORK -- When the Rev. Ronald Standiford learned that his family's health insurance coverage was going to cost more last year, he shopped for a more affordable policy. His solution was a combination of a new insurance plan and a tax-sheltered Health Savings Account.



Standiford, 56, pastor of Redeemer Presbyterian Church in Kingsville, Md., said the new plan has lowered the premiums the church pays for him, his wife and their two teenage daughters. It lets him put away some $2,000 a year in pretax money to cover deductibles _ the money he has to pay doctors or hospitals before the insurance kicks in _ and other out-of-pocket health expenses.





"The premium went down drastically for the church, and the money I put in every year can roll over to the next year," Standiford said. "It's a very good deal for everyone."



More than 1 million Americans have made a similar choice, signing up for high-deductible health insurance policies and associated HSAs since the program was introduced in late 2003, according to the Washington-based industry group America's Health Insurance Plans.



The new plans are a bit complex, but a growing number of insurers offer them.



Under federal law, the policy must have a minimum deductible of $1,000 a year for an individual and $2,000 for a family; maximum out-of-pocket expenses _ for example, copayments required for surgical procedures _ cannot exceed $5,100 for individuals and $10,200 for families.



Policyholders, meanwhile, can set up HSAs that they fund with their own money. Employers also can contribute to their workers' HSAs. HSA contributions, generally set at an amount equal to the policy's deductible, can be used to cover health care costs, and unused money can be carried over at year's end. This differs from company-sponsored Flexible Spending Accounts, health care savings plans in which unused money is forfeited after Dec. 31 of each year.



Christopher Calvert, a senior health consultant with The Segal Co., an actuarial and consulting firm in New York, said some companies are replacing existing catastrophic health coverage plans with the new plans because they see HSAs as a good way for workers to handle the higher deductibles. Others, Calvert said, see them as a way of making workers more mindful of their health care spending decisions.



Calvert believes the new policies should be especially attractive to young singles, people in relatively good health and higher-income people who can afford to cover high out-of-pocket costs.



Gary Lauer, chief executive of eHealthInsurance Services Inc. based in Mountain View, Calif., said the new policies also are attractive to small businesses and the uninsured.



He said that of the new policies purchased through eHealthInsurance, where Standiford found his plan, more than 40 percent were purchased by people with annual incomes below $50,000, almost half were families and more than one-third had been uninsured.



"It's the affordability," he said. "They get a lower-cost premium. And the money they probably would have been spending anyway, they can run through a savings account to buy day-to-day medical services."



Lauer also believes more companies will adopt the plans "because the trend is that more of the burden for health benefits is going to be moved to the employee."



Steve Kroll, executive vice president of Answer Financial Inc. of Encino, Calif., said the main drawback of the high-deductible plans with HSAs is that families need to have the resources to fund the savings accounts.



"Like IRAs (Individual Retirement Accounts), the HSAs are great tools," he said. "But if you don't have money, they don't help you."



On the other hand, people who can afford to fund the HSAs and don't need to draw them down entirely to cover annual medical expenses will be able to let them grow tax-free. In retirement, the excess savings can be used to purchase long-term care insurance and to pay for other qualified medical expenses.



"That means that they're more popular for those approaching retirement age, especially if they don't have company plans available to them," Kroll said.



Still, he said, there are many health insurance alternatives, "so it's important that people assess their individual needs."

Humana introduces health plans for seniors

Humana Inc. announced it is launching two private fee-for-service health plans for seniors in New Mexico.



Called Humana Gold Choice Basic and Humana Gold Choice Standard, the plans allow seniors to see any physician or hospital statewide as long as the provider accepts Humana's payment terms and conditions. The plan is designed for Medicare beneficiaries who want an alternative to high monthly premiums associated with a Medicare supplement or who prefer to choose a provider without network restrictions, says Dr. George F. Smith, regional president of senior products for Humana in New Mexico.



The 2005 benefit package is available to Medicare beneficiaries throughout New Mexico. The plan is a direct result of the Medicare Modernization Act of 2003 that was designed to give the nation's 42 million Medicare beneficiaries access to prescription drug coverage.



Humana (NYSE: HUM), which has about 7 million members nationwide, recently announced plans to double the size of its Medicare geographic reach through its Medicare health plan. The company will increase its Medicare operations from 25 states to 46 in 2006. Humana intends to offer both the stand-alone Medicare Prescription Drug Coverage and Medicare Advantage Health Plan with Prescription Drug Coverage in addition to its current Medicare offerings.

WellPoint will pay up

WellPoint Inc., the nation's largest health insurer, agreed Monday to the biggest in a series of legal settlements that doctors say will reduce insurance hassles and give them more time to care for patients.



The Indianapolis-based company agreed to pay $198 million to settle a lawsuit by doctors who claim they were repeatedly underpaid by the health care giant. The company also agreed to strict payment schedules.



The doctors see it as their largest victory in an ongoing struggle that is changing the way they interact with insurance companies.



If approved by a federal judge in Florida, the agreement would make WellPoint the sixth national insurer to settle a major class-action lawsuit brought by hundreds of thousands of doctors over health insurance claims. The payout by WellPoint is the biggest yet in the litigation.



The health benefits firm would pay $135 million into a settlement fund for physicians, up to $58 million in plaintiffs' legal fees and $5 million to a not-for-profit foundation that promotes better health care.



Physicians said the settlement would reduce haggling with the insurer and arrange for quicker payment of medical claims, giving them more time to see patients and improve care in states such as Indiana where WellPoint is the major health benefits company.



The plaintiffs include 18 state medical societies and professional organizations representing 700,000 physicians. While Indiana physicians weren't a party to the lawsuit and wouldn't share in the monetary settlement, they would benefit from WellPoint's claims-processing changes.



Those changes, which WellPoint agreed to put in place for four years, "will result in significant savings to physicians in overhead costs and time spent contesting claims," said the plaintiffs. Those savings to doctors could add up to $110 million over the four years, plaintiffs said.



Under the settlement, WellPoint also agreed to:



• Pay electronic claims within 15 days and paper claims in 30 days. Previously, claims processing sometimes took months, the doctors alleged.



• Make its reimbursement fee schedule more readily available for doctors.



• Set up a 12-member committee of physicians to advise the company on health care issues.



WellPoint already was making many of the changes on its own, irrespective of the lawsuit, company spokesman James Kappel said.



"We see this agreement as a very important step in further collaborating with physicians," WellPoint President Larry C. Glasscock said in a statement.



Publicly traded WellPoint will take a $103 million, or 10-cents-a-share, charge in the second quarter to reflect costs of the settlement. The rest of the costs will be paid out of cash reserves that WellPoint set aside in anticipation of a settlement, Kappel said.



The agreement "does not imply that any of our operational practices were improper," Kappel said. The company agreed to the deal, he said, because "it was important to us to put this litigation behind us."



Four companies remain as defendants in the class-action case in Florida that consolidated dozens of lawsuits filed by doctors and their trade associations against health insurers across the nation. Some were filed as many as 10 years ago.



They charged the nation's leading health benefit companies with shortchanging doctors by hundreds of millions of dollars over the years by using tactics to reduce payments for medical claims filed on behalf of insured patients.



The out-of-court deal lets WellPoint avoid a high-stakes jury trial, set to start in January. A jury trial would carry the potential for a big damage award at a time when public sentiment runs strongly against insurance companies and their escalating health premiums.



"WellPoint obviously recognized that a costly trial of any of the disputed issues with physicians would not be in the interest of the company," Archie Lamb, a Birmingham, Ala., attorney who is co-lead counsel for the physicians, said in a statement.



Plaintiffs did not include the Indiana State Medical Association, so doctors in Indiana won't be eligible to share in the settlement, Kappel said. But the business practices WellPoint puts in place would benefit doctors and patients in Indiana and all other states where WellPoint operates, he said.



The Indiana medical association previously said it didn't join the litigation because its members were making headway in dealing with claims-reimbursement problems in private talks with WellPoint.



Last year, 758 consumer complaints alleging late payments and other problems were filed against WellPoint with the Indiana Department of Insurance. That was the most of any health insurer in the state, although the number was on par for a company with a market share the size of WellPoint's.



For WellPoint, the agreement resolves the 5-year-old class-action lawsuit in the Southern District of Florida, before Judge Federico Moreno, plus a separate action brought against the Blue Cross Blue Shield Association, of which WellPoint is a member and licensee.



"It makes a lot of sense for WellPoint to settle," said Michael Obuchowski, a portfolio manager with Altanes Investments, New York. "Whenever there is a large class-action lawsuit, there is increased risk in the minds of investors."



Jay Brown, an insurance lawyer with the law firm of Beirne Maynard & Parsons in Houston, said WellPoint probably wanted to avoid trying a case before jurors in a state that allows awards of triple the actual damages if defendants are found to have acted in bad faith.



"And guess who's going to be sitting on the jury? It's going to be people who've had problems with their insurance companies," Brown said. "Those cases are hard to defend."



Dr. Jack Lewin, chief executive of the California Medical Association, which was part of the settlement, called it "a significant step forward for physicians and their patients. We hope it puts leverage on the other health plan defendants to move ahead and resolve this suit."



Remaining defendants are Humana, UnitedHealth Group, PacifiCare Health Systems and Coventry Health Care.



UnitedHealth vowed to keep fighting the doctors in court.



"We have no interest in settling a purported claim when we in fact did nothing wrong," said UnitedHealth spokesman John Penshorn.



Other companies that have settled include Aetna Inc., Cigna Corp., Prudential Financial and Health Net.