AUGUSTA — Officials in Regional School Unit 11 already were anticipating bad news about health insurance rates.
While developing the district’s budget for 2013-14, they inserted a placeholder figure — a 10 percent increase in premiums, compared to the 4 percent increase they’d received this year.
Late last month, the real number arrived: a 13 percent increase that Superintendent Pat Hopkins said will cost the Gardiner-based district $73,000 more than they’d projected, requiring cuts elsewhere in an already difficult budget.
A few miles away in Winthrop Public Schools, the news was very different.
“We are thrilled, because we had a 0 percent increase,” Superintendent Gary Rosenthal said. “That’s another piece that is going to help us put some money back into programs and staff.”
Winthrop school officials had projected a 3 percent increase, which would have cost $40,000.
RSU 11 and Winthrop are at the two extremes of the major budget adjustments school districts are experiencing as a result of a change in policy by the Maine Education Association Benefits Trust, which administers health insurance for most of the school districts in Maine.
For the first time, MEA Benefits Trust is providing different health insurance rates based on each district’s claims history, which some school officials say undermines the chief advantage of the benefits trust: a pool of more than 65,000 insured individuals that smooths out premium fluctuations.
“It really throws away the benefit of a community rate,” said Virgel Hammonds, superintendent of Hallowell-based RSU 2. “Now we have a motivation to look at other options.”
RSU 2 received an 8 percent increase, which will cost about $60,000 more than the 6 percent increase they anticipated.
The board of MEA Benefits Trust hopes the policy change actually will help the organization hold on to school districts, especially ones with fewer claims. Executive Director Christine Burke said the organization’s leaders wanted to continue offering everyone the same premiums, but their hand was forced by a 2011 law intended to make the school insurance market more competitive.
MEA Benefits Trust last fall dropped its lawsuit challenging a bill which requires the trust’s insurer, Anthem Blue Cross Blue Shield, to release claims histories to school districts so they can seek quotes from other insurers.
The trust’s leaders are concerned that insurance brokers will seek to pick off districts that pay more in premiums than the insured consume in health care. Those districts help subsidize others with higher health care costs, which Burke said keeps premiums moderate for the statewide pool.
“If I lose the districts that I call the high performers, if they jump off the seesaw, what happens (is) it smacks down on the end that all the low performers are on,” Burke said. “It makes everyone’s costs go up because there’s no subsidy from anyone.”
That could send the whole plan into a “death spiral,” she said.
MEA Benefit Trust’s answer was to charge the high performers less in the hope that they’ll stay.
Every school district in the trust received a health insurance rate based on the most recent 12 months of insurance claims. Trust officials put upper and lower limits on the rates to maintain some of the stability and equity that are benefits of the large pool.
About one-third of districts were assigned increases of 0, 3 or 6 percent; about a third got an 8 percent increase; and the remaining third will pay increases of 11 or 13 percent.
School districts with fewer than 50 insured people, which includes the Fayette School Department in the Augusta area, all were told they must pay 8 percent more. That also would have been the statewide rate if MEA Benefits Trust had not changed its policy.
The statewide rate increase was 4 percent for this school year, 6.5 percent for 2011-12 and 4 percent for 2010-11.
Burke acknowledged that a 13 percent increase is difficult for districts to bear, but she said they would be hard-pressed to find a better rate elsewhere. If MEA Benefits Trust had not set an upper limit and had based rates solely on claims experience, some of them would have seen their premiums rise 70 percent, she said.
“When we talk to districts, we’re saying we’re still protecting you and we’re still acknowledging the good performers; we’re just making sure that the plan lasts at the end of the day,” Burke said.
MEA Benefits Trust also started offering two lower-cost plans last year and has wellness programs intended to keep health care costs low.
With a high number of claims in RSU 11 in the last year, Hopkins sees the advantage of belonging to a large insurance pool, but she worries about planning.
“The major concern that I have is that the data being used is done on an annual basis,” Hopkins said. “So when you have a school district that has an especially difficult year, you could pay the higher rate. Doing the analysis for just one year creates great fluctuation that makes it difficult for us to budget.”
Augusta schools business manager Kathy Casparius said it was good news that her district will be billed 3 percent more, rather than 10 percent as anticipated, but she wants more information from MEA Benefits Trust.
“We’re just curious what causes us to be at 3 percent and someone else to be at 8 percent,” she said. “What kinds of things might we proactively do to reduce our rate in coming years?”
It would not take much to go from high-performing to low-performing in a year. Injuries from a car crash, a late-stage cancer or a difficult childbirth can have affect a school district’s health insurance premiums significantly.
“It could bite you at any time,” Rosenthal said. “I can say I like it only because I got a 0 percent increase, but if I’m on the 13 percent end, I’d say, ‘Where is that pooling of resources and how does having 70,000 people help me to take pressure off?’ We’re in a good position this year, but our position could change.”
Rosenthal said Winthrop might be able to get a good rate from another insurer, but the contract probably would last only a year or two, after which anything could happen. He also said that employees and retirees in the district like the coverage they receive from Anthem.
It could be difficult for districts to leave MEA Benefits Trust because it’s specified as the insurance provider in many union contracts, so a change would have to be negotiated.
That’s the case for teachers in RSU 2, but Hammonds said it could be feasible to negotiate a change because employees who contribute to their health insurance also have to pay more when premiums rise.
Susan McMillan — 621-5645