Employees of the Madison School District will have one fewer health insurance provider to choose from, requiring just over 1,000 employees to find a new primary care doctor.
But the estimated $3 million the district will save from dropping Unity, its highest-cost provider, will help bankroll increased compensation for the district’s roughly 4,000 employees, while covering any additional premium costs the new state budget may require them to pay.
The changes, which Superintendent Jen Cheatham recommended last month in her budget proposal for next school year, were approved in a special board meeting Monday and will take effect July 1. Members will vote on the full budget June 26.
Officials said early action on the insurance portion of the budget plan and some of its compensation provisions was important to ease teacher recruitment and to ensure a smooth transition for employees forced to switch coverage to GHC or Dean, the remaining providers.
“We need to educate (employees), allow time to complete enrollment paperwork, transition care and allow sufficient time for the insurance carrier to process the applications and send out insurance cards,” Deirdre Hargrove-Krieghoff, executive director of human resources, said in briefing documents for board members. “This all would need to happen prior to the ‘go-live’ date (of July 1).”
Healthcare costs have long been a significant budget and governance issue for our $18,000/student K-12 institution.
The board eliminated the third provider to bring health care costs down across the board, and starting July 1, employees will pay 12 percent of their health care premiums.
The vote was 4-1 to eliminate Unity. Nicki Vander Meulen voted against the measure citing the need for more time to make the decision. Board members Anna Moffitt and TJ Mertz recused themselves since their spouses are district employees and covered by the plan.
The HMO restructuring will save MMSD $3 million each year in HMO costs and the increased employee contributions frees up $4.5 million.
Although district employees will pay more out of pocket for their health insurance, MMSD said it will protect take-home pay by reinvesting the money it saves into across-the-board salary increases.
Assistant superintendent of business Mike Barry said most employees will see a pay bump and no employee should lose money as a result of the changes.
MMSD’s budget also calls for a $15 hourly minimum wage for employees who currently make less than that, increasing summer school pay from $16 to $25/hour for MMSD employees, and increasing beginning teacher pay to $41,096. The Madison School Board also approved those budget items at Monday’s meeting.
Related: Most of Aetna’s revenue now comes from government programs; by Bob Herman:
Here’s a nugget that encapsulates the health insurance industry, despite all the noise surrounding the future of the Affordable Care Act: In the first quarter of this year, Aetna collected more premium revenue from government programs (namely Medicare and Medicaid) than it did from commercial insurance for the first time ever.
Why this matters: Most people get their health coverage from their employer, and that historically has been the bread and butter of the insurance industry. But the aging population and expansion of Medicaid managed care means insurers are investing more time and money in the lower-margin (but still lucrative) government programs. Aetna, in particular, has invested heavily in Medicare Advantage.