School pool option explored

By Frank Wells

Districts like Montebello, Stockton and others have been able to maintain top-quality health plans and save millions of dollars by migrating to larger shared-risk pools. What if school districts and their employees throughout California joined to create one of the largest pools of all?

That’s exactly the possibility being explored by the California Education Coalition for Health Care Reform (CECHCR), a coalition of public school labor and management groups. A 1.6 million-member “School Pool” could lower costs and improve benefits for public education employees and their families by increasing district leverage in purchasing and negotiating benefits coverage. The Mercer Report, a 2007 study authorized by AB 256, first explored this idea and found that a statewide pool in California could save over $401 million per year. Such a plan has proved successful in a number of other states.

However, the Mercer report also raises potential challenges for implementation in California and how it would impact local chapters:

• To be successful, participation by all education employees would be mandatory.

• If required, the inclusion of retirees could significantly impact the cost savings of the pool.

• In order to achieve reduced administrative costs, a school pool would need to be administered by a single entity, such as CalPERS or a similar institution.

The School Pool isn’t a panacea to the health care crisis. Still, current health care cost increases are unsustainable if allowed to continue. While the typical increase for school districts in 2009 was 6 percent to 14 percent, some districts received rate increases as high as 40 percent for their plans. Those increases have caused employee contributions to soar as high as $1,800 per month and have forced some workers to join the ranks of the uninsured. Much of this cost is spent on administrators for the plans and not on actual health care. In fact, health care administration has grown by nearly 3,000 percent over the last 30 years, while the number of physicians has increased only slightly.

CTA Board member Don Bridge represents CTA in CECHCR and believes the School Pool concept has the potential to be a major improvement over the current scattershot and inefficient system. He says that member education and assurance that benefits would be maintained or improved would be key components in any changeover to the new system.

“Our goal would be to raise everyone up to the best possible assortment of plans and coverage, letting them keep or improve what they have now, while at the same time reducing costs all around,” says Bridge. “While any talk about health benefits is bound to raise questions, when members hear this concept they are generally very supportive.”

• The pool must provide a range of value-based and affordable plans that equal or exceed current offerings.

• Local control must be maintained over matters subject to collective bargaining.

• Plans must incorporate health promotion programs and incentives to improve health status.

• Governance of the pool must include representation of all funding stakeholders.

Look for additional health care news and for feedback opportunities on this issue at cta.org/issues/healthcare.