Source: Sherman Publications

Hard cap
LO schools can save $3.5 million a year if health care legislation passes in state

July 20, 2011

Joe St. Henry

Special Writer for The Review

Pending state legislation may help our school district save, rather than bleed, a lot of money.

Lake Orion Community Schools administrators project the district could save up to $3.5 million annually if a statewide hard cap on the amount districts can spend on healthcare insurance per employee, proposed by the Michigan House of Representatives, is approved by the Senate.

The bill, known as HB 4572, was proposed last month by the House in direct response to legislation approved by the Senate in May. The version proposed by the Senate calls for school districts to pay no more than 80 percent of a public employee’s healthcare premiums. (This alternative would still save the Lake Orion district a projected $2.3 million per year.)

As of press time, a compromise had not been reached, so the Senate sent the House version to a conference committee for further work.

Superintendent Marion Ginopolis welcomes the hard cap legislation. Not only would this enable the District to realize the most savings, but also further encourage the solicitation of competitive bids for health care insurance, she said.

“A hard cap would incentivize both the district and our employees to secure similar coverage to what they have now, but at a lower overall price,” Ginopolis said. “We’ve already been approached by insurance brokers who want to present us with options.

“ We aren’t dismissing these discussions,” she stressed.

If the hard cap legislation passes, an employer could spend no more than $5,500 annually for an individual’s coverage, $11,000 for two-person coverage and $15,000 for family coverage. This figure includes medical, dental and vision insurance. (The hard caps would increase each year based on changes to the medical care component of the Consumer Price Index.)

Depending on the insurance plans selected, the actual cost to insure these groups could be higher, with the difference paid by the employee, Ginopolis said. For example, she explained, if a family plan costs Lake Orion Community Schools $21,000 per employee each year, he or she would be responsible for $6,000. The Superintendent said a plan that costs less would reduce an employee’s contribution to healthcare costs.

Not everyone agrees how this legislation will impact teachers and other public employees.

“The hard cap being proposed by some state lawmakers is a one-size-fits-all financial disaster for Michigan families,” said Roger Martin, spokesperson for Citizens for Accountability in Reform. “Over time it will make decent coverage unaffordable for many families.”

One of the coalition’s greatest concerns is that the hard cap does not consider factors that drive up the costs of health care, such as new technology, end-of-life care, chronic and catastrophic illnesses and the poor health of many people, Martin stressed.

The earliest either plan could go into effect would be January 1, enabling the District to obtain half of the projected savings during the remainder of the 2011-12 school year. The District would realize the full savings amount from the legislation in subsequent school years.

In their most recent contract, Lake Orion Education Association members recently agreed to pay 10 percent of their healthcare costs for the 2011-12 school year.