Benefit Reform Could Save School Districts Hundreds of Million$

MacIver News Service | April 27, 2011

[Milwaukee, Wisc…] School districts in southeastern Wisconsin are paying twice as much for health insurance as private sector companies in Milwaukee, according to a new study by HCTrends. That’s just the beginning of what the group found in its study of school district health insurance expenses in 2010.

“Health plan costs for the region’s teachers are 63 percent higher, on average, than the plans offered at private-sector companies with some union representation, and 80 percent higher than the average single-coverage cost for all private-sector plans,” according to the study.

“This combination of above-average plan costs and below-average employee contributions significantly increases the school district’s health care costs. While the average teachers’ plan costs 80 percent more than the average private-sector plan, the per-employee cost borne by the school district is twice as much as the cost borne by the average employer.”

HCTrends also debunks the public-sector union argument that they have foregone competitive pay increases in exchange for better benefits. The group found that since 2003 teachers’ pay has increased by 33 percent, while wages in the private sector have only increased 26 percent in Wisconsin.

“Teacher health plan costs are no longer comparable to the benefits being offered in the private sector, even at many larger firms with labor representation,” said Dave Jensen, Editorial Director of  HCTrends. “As a result, school districts are paying twice as much as other employers for health care.”

Jensen said public officials can help alleviate their budget crunches by offering competitive, not exorbitant benefits.

“Bringing plan designs and employee contributions in line with the private sector would allow school districts to achieve significant savings even as they continued to offer competitive health benefits,” Jensen said.

Right now, schools in southeastern Wisconsin are paying about $1,400 per student on health insurance for their teachers.

The study also found that Milwaukee Public Schools could save $221 million a year by bringing teacher benefit plans more in line with the public sector. Even if the district were to merely enroll its teachers into the state health plan, it would save $64 million annually.