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Updated: Wednesday, 31 Aug 2011, 6:22 PM CDT
Published : Wednesday, 31 Aug 2011, 9:51 AM CDT
School districts are saving millions of dollars this year by changing health insurance companies.
Months after the massive protests in Madison ended; school districts are starting to take advantage of their new found flexibility specifically when it comes to health care.
In the past, school boards and unions would have to agree on any changes in benefits. But now that public employee unions can no longer bargain on benefits, schools districts are changing their health insurance plans and saving taxpayers millions.
We surveyed districts across the area and found savings across the board, although in most cases employees will pay more out of pocket.
Pulaski switched from the Wisconsin Counties Association to Arise/WPS and went to a higher deductible plan. Total savings: $513,689.
Howard-Suamico saved $1 million by switching to the Wisconsin Counties Association. The district had been with Wisconsin Education Association Trust or WEA Trust, a health insurance company created 40 years ago by the teachers union.
I asked Howard-Suamico Superintendent Damian LaCroix if that change would have been possible without the changes that were made at the state level.
"In our case, that change would have been possible," he replied.
Possible, yes. But LaCroix says the changes in collective bargaining and the cuts in state funding helped facilitate the switch.
"When you're dealing with that deficit then I think that prompts you to look at other things much differently," LaCroix said.
When it comes to health insurance and education, WEA Trust is a dominant force. Sixty-five percent of all districts have at least some of their employees covered by the company. Because WEA Trust covers mostly small and medium size districts that amounts to 35% of school district employees.
Kathryne McGowan is the vice-president of marketing for WEA Trust. She says since the company was created by the teachers union, many people have the wrong idea about WEA Trust.
"There's this perception that somehow, somebody got something if WEA Trust was bargained in. What they got was very good benefits and very good service," McGowan said.
McGowan says the changes in collective bargaining have changed the market. As a result, school districts have changed their priorities.
"In the past we really worked for very low increases or rate of change year over year. Districts are coming to us and saying that's not as important to us now. We will go look every year if we need to. We will take the risk of an above market increase in the next year or two, but give us the best possible price today," she said.
A prime example is in Bonduel. The district stayed with WEA Trust and saved 14% on its insurance.
But Superintendent Peter Behnke says the district significantly changed its plan and drastically raised its deductibles.
Behnke says the district tried to shop around for a better deal on health insurance but couldn't find one.
"We went out to four other firms and received no other bids. They simply didn't want to take a chance if you will on the risk that we had," Behnke said. "So we basically had to stay with WEA Trust."
The Appleton Area School District is also staying with WEA Trust but is saving $3.1 million dollars.
I asked Superintendent Lee Allinger if that was something the district could have achieved without the changes or if the savings were a result of the changes.
"I think it's a combination," Allinger replied. "I think the marketplace has certainly become more competitive with bidding out the health care plan. It's become more competitive. In our case, WEA Trust did not want to lose us as a client and they came in with a very competitive bid that was below the other bids we received."
Governor Scott Walker says the situation in Appleton highlights the value of the changes to collective bargaining.
"We weren't trying to pick somebody or another but we said in some cases it means the Trust will be moved on and some they'll go to some other company and get a break," Walker said. "In other cases, Appleton is a prime example, they used that as leverage to come back and say we're willing stay with you but we need you to dramatically lower the price. Think about it though. If we had not passed our reforms, that never would have happened because if they were capable of doing it now, why couldn't they have done it last year or the year before? The only reason was because of the reforms we passed earlier this year."
"It is a wonderful thing that taxpayers are going to save $3 million," McGowan said. But she added that Appleton was already in line to receive a significant rate reduction this year that would have amounted to $1.5 million.
"They were going to benefit already," she said.
As for the rest of the savings, she says the company chose to take on more short term risk to keep the contract.
Walker says it's clear that competition is helping districts save money.
"They would never have had those sorts of savings had not we made the changes, the kind of reforms
gone into effect and that is good not only this year, but long term," Walker said. "It makes sure that we have school districts and local governments can make those kind of positive changes."
But in Ashwaubenon, where the district saved $1 million by changing health care providers, assistant superintendent Keith Lucius wonders whether the savings will continue.
"Next year health insurance is going to go up again and with our revenue not going up we're not going to be able to do this every year. It's a one time we were able to do this," Lucius said. "We'll continue to bid things out and try and find the best deals but I don't believe we'll be able to do this on an annual basis and have significant savings on our health plan."
So is WEA Trust losing business? Yes and no. Some districts have switched from the trust, exactly how many we don't know yet. A spokesman for WEA Trust would not give us a complete list. But WEA Trust says the vast majority of districts are renewing, some have switched to the company.
The bottom line though is that now that school boards can make decisions without going through unions, there is definitely more competition and more savings for taxpayers.