Health Insurance Conundrum for Maine’s Teachers

3 years ago, I was employed by the Maine Education Association as one of 16 UniServ Directors (union rep) in the state. We all had basic bargaining strategies we passed along to local Associations, but an important one was: “Don’t create different levels of benefits for employees within a bargaining unit”.   For example, don’t permit new teachers to be singled out for a lower level of benefits than veteran employees. As health insurance costs rose over the years, School Boards/Committees would often propose to have all teachers hired after a certain date be offered only individual health insurance with no Board/Committee contribution to family costs. Local Associations were strongly encouraged to resist such proposals.

I left the organization in November, 2010. During the next legislative session, LD 1326, An Act to Allow School Administrative Units to Seek Less Expensive Health Insurance Alternatives, was approved by the Maine Legislature and signed on June 21, 2011 by then-new Governor Paul LePage.   A key section of the new law was:

Sec. 3. 20-A MRSA §1001, sub-§14, ¶D  is enacted to read:

… 

D.  In order to facilitate the competitive bidding process in procuring health insurance for a school administrative unit’s employees under this subsection, a school administrative unit may request from the insurer providing health insurance coverage to its employees and retirees loss information [experience]  concerning all of that school administrative unit’s employees and retirees and their dependents covered under the school administrative unit’s policy or contract pursuant to Title 24-A, section 2803-A.

The MEA Benefits Trust (an insurer that provides health insurance through Anthem Blue Cross and Blue Shield to the MEA and its members) spent about a year fighting that provision in court, but ultimately lost and decided against any further legal action in November, 2012.  The Trust would be legally obligated to release experience ratings school system–by-school system when asked to do so.

Move forward to April, 2013: the MEABT announced that the 2013-14 insurance rates would be based on experience (0, 3, 6, 8, 11 or 13% depending on the school system). Huh?  OK, clearly they had to release experience information by law, but use that information themselves to set rates? That was unexpected and contrary to the bargaining advice MEA had been offering for years.

There may well be some perfectly logical explanation as to why MEABT chose to base health insurance premiums on experience information, but I don’t know what it is.  However, what I can do is extrapolate a worst case scenario as what happens a few years down the road:

Pick any two neighboring school systems (System A and System B) of 30 teachers each.

ö         Assume the average teacher salary three years from now is identical and each teacher earns the average: $55,000

ö         Assume each school system pays the full cost of the teacher’s health insurance on the ChoicePlus plan.

ö         Assume each teacher  is paying for the additional cost of family health insurance on the ChoicePlus plan.

ö         Assume that each school system’s experience rating remains the same for the next three years.

  • System A: 0%
  • System B: 13%

Both teachers will be paying a lot for the family’s health insurance ($12,500 annually for Teacher A or $42,500 in annual compensation; $20,000 per year for Teacher B or $35,000 in annual compensation.)  But the teacher in system B will be paying about $8,000 more out-of-pocket for her family’s health insurance than the teacher in system A. That’s $656 per month Teacher B won’t be getting in her paycheck that Teacher A will. See: 2013-14 MEABT Rates2

From the school systems’ perspectives 3 years down the road, School System B will on the hook for an additional $135,000 over System A ($4,500 annually for each of its 30 teachers).

What the policy implications at the state level will be as health insurance changes when the federal Affordable Care Act comes online is an unknown.  Additional health insurance providers may well come into the marketplace over that period, too as the law intends.  But the Essential Programs and Services Funding model for Maine schools just had one more wrench thrown into the works.

One has to think the employment decisions made by teachers will become significantly different over that three-year period if the scenario plays out as I have described it.  These decisions will not be made because one school system offers a better level of benefit than another, but because the teachers’ own insurance trust chose to treat different school systems disparately based the experience ratings they fought so hard against.

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1 Comment

Filed under Collective Bargaining, MEA

One response to “Health Insurance Conundrum for Maine’s Teachers

  1. Pingback: Update on Experience Ratings: LD300 | edumaine

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