For Immediate Release, January 25, 2011
Local Taxpayers in Wisconsin Could Save Millions
[Madison, Wisc…] A competitive health care marketplace can yield cost savings for school districts across Wisconsin if school board members don't have a greater loyalty to a particular insurance company than they do to their taxpayers, a new study contends.
An analysis by the John K. MacIver Institute for Public Policy also found that districts who bother to shop around often leave WEA Trust, although it still remains the most popular provider for Wisconsin school districts.
‘Our study’s findings underscore how important it is for every district to shop around for the best health care bargain at every opportunity,” said MacIver Institute President Brett Healy. “Moreover it shows that taxpayer interests are not served by long-term labor agreements which prevent districts from engaging in the vibrant marketplace for health care coverage.”
The study, conducted by the MacIver Institute’s Education Policy Analyst Christian D’Andrea, looked at data provided by the Wisconsin Association of School Boards.
Over the past six years, the average monthly premium cost to districts has risen by over 40 percent.
These inflated prices are a major drain on local school budgets. However, the study indicates they don’t have to be so costly. Data provided by the Wisconsin Association of School Boards (WASB) showed that several districts across the state have been successful at keeping their health care expenses lower and have posted significant savings against the statewide average through careful consumerism. As fiscal responsibility has become more and more important, customer loyalty is beginning to take a backseat to financial savings.
Estimates suggest that if every school district in the state changed their carrier at least once over a six year period, the aggregate annual savings would be over $10.8 million. As more school districts actively shop for better bargains, that figure stands to grow well into the future.
D’Andrea found that six trends emerged when examining the costs and providers amongst Wisconsin’s districts when it came to educator health insurance. They ranged from districts choosing new private vendors over the old guard of WEA Trust to schools saving money by relying on the state employee health care program. However, these trends all pointed to one overarching current – that conscientious school districts can trim costs by shopping around.
While the average teacher health care plan’s price rose over 40 percent for individuals and over 41 percent for families, districts that migrated from WEA Trust to a different carrier saw their costs go up by approximately 25 for individual plans and 29 percent families, respectively.
“These results favor an open market and competitive bidding, with districts taking advantage of emerging carriers and locking into short-term contracts to ensure the best possible rates,” said Healy. “Any district that either doesn’t shop around or agrees to contracts longer than a couple of years may be doing so to the detriment of their taxpayers.”
The MacIver study examined WASB’s data and showcases the good and bad of Wisconsin’s teacher health insurance programs between 2004 and 2010. It found that districts that actively pursued less expensive health care often got it. As a result, more and more private vendors have emerged to service this market, and this has further rewarded frugal school boards.
WASB did not commission the study, approve of the methodology or see the results prior to publication.