Update on Experience Ratings: LD300

A letter to the editor in the May 14, 2013 edition of the Portland Press Herald led me to check out a bill introduced by Rep. Henry Beck (D-Waterville ), LD 300.

The bill Summary says: “This bill provides that an insurer providing health insurance covering employees of a school administrative unit is not required to provide loss information concerning those employees if requested by the school administrative unit.”

In other words, the bill would negate the effects of LD 1326 from last session, An Act to Allow School Administrative Units to Seek Less Expensive Health Insurance Alternatives. Oh, ho, I thought – a way out of the conundrum into which the MEA Benefits Trust put its members when it released its 2013-14 premiums based on  experience ratings (aka loss information).

Not so fast.  LD300 has now been carried over to second half of the Maine Legislature’s 126th biennial session. I do not know why.

It appears on the surface that both the Maine Education Association and its health insurance trust, the MEA Benefits Trust, would have benefited from this bill. So, despite Steve Robinson‘s (of the Maine Heritage Policy Center and The MaineWire) blithe Twitter characterization of the MEA as the Maine Democratic Party‘s “union overlords” in another context, the organization may not have had enough influence to get the bill passed.

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If the MEA wanted the bill carried over then I suppose his point may be well-taken. Why the MEA would want to have done so, though, since it fought the original LD1326 so hard, both in the Maine Legislature and in the courts, is unknown.

At this point, then, unless LD 300 passes quickly through the 2nd session and is enacted as emergency legislation, the effects of MEABT choosing to implement its own experience ratings will have been felt by school systems and local Associations across the state for two years.

In a simple example, School Systems A and B, each of which pays the full health insurance premiums for its 50 teachers, could have widely different budget concerns 2 years out. If School System A was assigned an experience rating of 0% for both years, but School System B had 13%, then School System B would pay almost $100,000 more than School System A by the end of 2015 just for its teachers, let alone its support staff and administrators.

MEABT rates 2 yrs

How those costs will impact funding and budgeting decisions at both the state and local levels next year is yet to be seen.

ADDENDUM (5/21/13): It occurred to me that I did not emphasize strongly enough one primary fact in all this: School System A and School System B are paying very different prices for THE SAME product on behalf of their teachers.  Not “similar” products. Not “almost identical” products.  Exactly the same product from the same provider.

It would be as if 2 people walked into Wal-Mart and each picked out the same style, size and quality sweater.  When the first goes to the register, the price rings up as $20.  When the second goes through, the price is $22.60 (13% more).  The second customer storms up to the Customer Service desk and asks, “What the heck?” The Wal-Mart employee can only say, “Some people get charged one price and other people another. It’s company policy.”   Except in the case of the MEABT experience-rated premiums, it’s the customers’ own Trust that is creating the disparity, not some anonymous global retail giant.

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Filed under Collective Bargaining, MEA

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