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K-12 health insurance deal may not rein in costs

Wednesday - 4/11/2012, 9:27pm  ET

By JONATHAN KAMINSKY
Associated Press

OLYMPIA, Wash. (AP) - The Washington state Legislature on Wednesday approved changes to health insurance benefits for K-12 school employees that are intended to improve transparency and help those who pay the most for coverage.

However, critics say it will do little bring down costs.

The measure was one of the policy bills that Republicans and a handful of conservative Senate Democrats insisted upon passing before taking up the budget, which moved out of the Legislature earlier in the day.

Whereas an earlier K-12 health insurance overhaul plan would have consolidated workers' insurance under a single entity run by the state's Health Care Authority, the new rules keep the 295 school districts in charge until at least 2016.

The Health Care Authority estimated the consolidation would have cost $22 million to set up and saved $20 to $25 million annually by reducing the role of insurance brokers.

The department was unable to undertake a broader estimate of costs and savings because the school districts, insurers and the Washington Education Association _ the state's teachers' union _ refused to disclose how money is spent in the current system.

Rick Chisa, spokesman for the Public School Employees of Washington, the state's largest union for school support staff, said the bill that passed includes expensive new requirements _ which he approves of _ but doesn't provide countervailing cost savings.

"The Legislature forced itself into the position where insurance is going to cost the state more," said Chisa. "There's nothing here that helps reliably control costs long-term."

Under the measure, districts will have to start easing the burden of workers now paying a disproportionate share of their covered family members' premiums, with a specific target to be set in 2015.

At present, some families pay upward of $1,300 per month in premiums, whereas some workers who cover only themselves pay no monthly premiums. Under the measure, every covered employee will be required to do so.

John Williams, an expert on K-12 insurance plans with the Health Care Authority, said that the new calculus will have to involve raising premiums for individuals in order to help bring down costs for those with dependents while avoiding excessive new expenses to the state.

"It's a good bill," Williams said. "It establishes the requirement that premiums be rebalanced to bring them closer together."

The bill also compels districts and their benefit providers to hand over information on how the health care dollars _ including roughly $1 billion in annual taxpayer money _ are spent, aggregated information on who is covered and proof of efforts to keep costs in check.

The information is to be provided annually to the state's insurance commissioner starting next year. In 2015, the state will rank districts by performance, reward top districts with grants to reduce workers' copayments and deductibles and use the data to weigh whether to again consider consolidation.

Failure to comply with the new rules would force school districts to place their employees' health insurance in the hands of the state.

Rich Wood, spokesman for the Washington Education Association, which strongly opposed changes to the current system, expressed concern that the bill was passed in the middle of the night with little public oversight. He also said the disclosure requirements appear to be unnecessarily onerous.

"This was negotiated behind closed doors without any input from the people affected by it," he said.

The WEA helps administer the insurance plan used by 60 percent of the roughly 200,000 covered school workers and dependents.

Because the WEA, insurance companies and school districts have for years declined to provide information on how the money in the system is spent, suspicions about the union's financial role have lingered.

Chisa, of the support staff union, has alleged that the WEA makes millions of dollars each year as an insurance plan sponsor. The WEA flatly denies this, and points out that the insurer it partners with, Premera Blue Cross, reports administrative costs running at a relatively modest 6 percent.

Chisa said he is pleased that the bill now headed to the governor's desk will shed light on the current system's administrative costs.

"We're going to be able to know for sure where the money's going, how it's going to be used and whether we're getting our money's worth," he said. "That's a long time in coming."

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Follow Jonathan Kaminsky at http://www.twitter.com/jekaminsky


(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)