Madison’s teachers union said Friday it will not agree to reopen its contract with the School District to renegotiate health-care benefits, dashing hopes the district could find cheaper coverage.
A joint committee of district and union representatives has been studying rising health- care costs, but both sides had to agree to reopen the 2005-07 contract to take any action. Either way, officials say taxpayers would not have seen savings, at least not in the short term.
John Matthews, executive director of Madison Teachers Inc., said a strong majority of union members like the coverage they have and don’t want to jeopardize it, even though any savings would have gone to higher salaries.
“Members of MTI have elected to have a higher quality insurance rather than higher wages, and that’s their choice,” he said.
By Doug Erickson, Wisconsin State Journal, February 18, 2006
The district is contractually obligated to give teachers a 3.98 percent total package increase in salaries and benefits in 2006- 07. It’s largely the union’s decision how it spends that pot of money.
While cheaper health insurance would have shifted more of the increase to salaries, the bottom line for taxpayers would not have changed.
Down the road, district officials say cheaper insurance might give them more spending flexibility, but they note that a state law called the qualified economic offer, or QEO, requires that districts provide annual total package increases of at least 3.8 percent to avoid union arbitration.
“I think the misperception out there is that there’s going to be this huge windfall of savings to the district, which isn’t going to happen,” said Bob Nadler, the district’s human resources director. “Most of what we save is going to go back into salaries.”
Still, district officials sought to reopen the contract, saying higher wages would make it easier to retain and recruit high-quality employees, particularly much-sought-after minority teachers.
Superintendent Art Rainwater said Friday he was disappointed by the union’s decision. While cheaper insurance is not a panacea for budget problems, “certainly, over the long haul, there could be savings to the district,” he said.
The Madison School District spends $39.7 million annually on health insurance for about 4,000 eligible employees, according to chief negotiator Bob Butler.
Of MTI-represented members who enroll in health-care plans, slightly more than half choose a health maintenance organization (HMO) offered by Group Health Cooperative. The rest choose a preferred provider organization (PPO) offered by Wisconsin Physicians Service (WPS).
PPO enrollees have freedom to go outside the regular physician network for care and need no referrals to see specialists, although they pay higher co- pays to do so. The PPO option is more expensive per enrollee for the district.
HMO enrollees have fewer out-of-pocket expenses but generally must stay within a provider network. The district hopes more teachers will move toward HMO coverage, and that has been happening.
However, Matthews said that in a survey of members, 74 percent of teachers who responded ranked as “most important” the right to self- referral and the ability to select their physicians and clinics.
Critics contend Matthews has a conflict of interest because he’s a paid member of the WPS board of directors. Matthews pointed to the survey results Friday. “The members speak for the union, not me.”
According to the state Office of the Insurance Commissioner, Matthews was paid $13,000 as a WPS director in 2004, the most recent year on file.
Matthews stressed that in the last 25 years union members have assumed more of the financial burden to keep WPS coverage, agreeing to a deductible and co-pays for prescriptions.
The union’s unwillingness to reopen the contract was expected by critics. Don Severson, founder of the watchdog group Active Citizens for Education, said he never expected the joint committee to amount to much.
“This whole exercise was a cosmetic, public relations approach to make it appear as if the district is trying to do something,” he said.
Severson said many community members think Madison teachers have a “Cadillac” health-care plan. That doesn’t necessarily mean teachers must sacrifice benefits to save money, but the union should at least be willing to bid contracts competitively, he said.
Matthews said he has yet to find an insurance carrier able to provide the same services as WPS at a cheaper price. Although the joint committee evaluated proposals from two carriers besides WPS and GHC, the two additional carriers submitted incomplete information, making a comparative analysis impossible, he said.
District officials say they think savings are possible, although only if teachers agree to give up some of the flexibility and coverage they now enjoy.
School Board member Ruth Robarts faulted the joint committee for seeking proposals from only two additional insurance companies.
“The district has done really nothing to seriously examine objectively and comprehensively the choices that might be out there,” she said.