California’s public education community faces an unprecedented financial crisis due to a combination of the most significant budget cuts in the state’s history while health care costs to school districts and their employees are increasing at alarming rates. Districts and employees spend more than $6.7 billion on health insurance premiums alone each year, and these costs have increased by more than 114% over the past 10 years—more than 226% faster than the cost of all other educational expenditures. The status quo is no longer sustainable, and there are no viable solutions being offered by the government at either the state or federal level, by the provider community or health benefits industry. While a federal health care reform bill has been recently signed into law, the bill does not mandate any changes in existing negotiated health care plans. And while districts and unions have made every effort to cut costs, such as participating in voluntary pools, it is simply not enough. Districts and unions are urgently seeking new and innovative ways to reduce costs and improve the health of their employees.
Today we have an enormous opportunity to meet these challenges. The California Education Coalition for Health Care Reform (CECHCR) has studied this issue in depth and is proposing a solution that promises a new direction in health care purchasing for the education community. By harnessing the purchasing power of California public education into a single statewide risk pool covering 1.6 million lives, this pool will become the second largest purchaser of health care in the United States and create great potential for lowering costs and improving the health of our employees. Districts and employees will benefit from increased economic leverage in purchasing and negotiating health care benefits that will result in immediate and near‐term cost savings and longerterm advantages such as fewer administrative burdens, fewer resources needed for labor and management health benefits bargaining, and improvements in patient care, preventative medicine and wellness initiatives services.
This proposed school pool design developed by CECHCR is a result of an extensive investigation and interview process conducted to ensure that the fundamental elements of the design represent the diverse interests and needs of its members and the public education community. CECHCR’s findings are detailed in this Paper. In summary, for the successful implementation of a statewide pool, CECHCR has concluded:
- The pool must be sufficiently large to provide significant economic leverage to drive down costs.
- The pool must provide a range of affordable plans that equal or exceed current offerings.
- Provider networks must be value‐based designs that promote quality outcomes and appropriateness of care.
- Local control must be maintained over which active and retiree benefits are offered and the level of employer and employee contributions, with these issues continuing to remain subject to the collective bargaining process at the local level.
- Plans must incorporate active health promotion programs and incentives to increase health status.
- Governance of the pool must include representation of all funding stakeholders and assure ongoing responsiveness to local education community needs.
- Administration of the pool must be provided by an organization with extensive experience in this area.
- Transition to a statewide pool must be orderly and based on specific criteria.
- The statewide pool and transitional voluntary pools must be held to objective performance criteria.
Saving substantial money for our districts while implementing better coverage and better health outcomes are the goals of this school pool initiative. CECHCR looks forward to a continuing dialogue with CECHCR member organizations and other interested parties in order to improve on our best thinking about pool design and implementation, and to providing leadership in a collaborative effort that works toward achievement of a statewide public education risk pool.