Insurance Update – Pulling the Rug on Your Bargained Benefits
Last night, April 20, while conducting a SPS186 digital Board Meeting from their homes, six of the seven SPS186 School Board members (all but Micah Miller) voted to drastically change your health insurance in just a few brief minutes. They did so by making the following financial changes you are on the hook for:
- Raise the single deductible from $1250 to $1500 ($250 / 20% increase) and the family from $3750 to $4500 ($1250 / 20%% increase)
- Raise the single out of pocket from $3250 to $3900 ($650 /20% increase) and the family from $9750 to $11700 ($1950 / 20% increase)
- Increase the ER copay from $150 to $300 per visit ($50 / 50% increase)
- Increase the office visit from $25 to $30 and specialist copay from $45 to $50
- Increase every prescription cost from $10/$35/$50 to $15/$40/$55 – An increase in prescription cost of 33% or generics, 12.5% for mid grades, and 9% for name brand pharmaceuticals.
They also voted to further minimize your health insurance plan benefits by mandating the following “care management procedures”, specifically designed to save the insurance provider (BCBS) and the school district money (not the individual):
- Prior Authorization – A form of rationing health care in which Blue Cross Blue Shield (or other insurance provider) determines who has access to expensive drugs and services, making sure the only people who get these drugs or services are the people for whom the drug or service is appropriate. While prior authorization requirements can save plans money, they are controversial, as they can often lead to treatment delays and can be an obstacle between patients and the care they need. Particularly for patients with ongoing, complex conditions that require extensive treatment and/or high-cost medications, continual prior authorization requirements can hinder the patient’s progress and place additional administrative burdens on physicians and their staff.
- Step Therapy – A concept claiming to ensure that patients are using the least expensive—but still effective—medications available, rather than going straight to a higher-cost medication. Step therapy is sometimes referred to as a “fail first” protocol, in that the lower-cost medication has to fail to treat a patient’s condition before the insurer will pay for higher-cost drug therapy. Step therapy can also save plans money, but is a controversial approach. At least 18 states have taken action to limit step therapy requirements or implement an exception process that medical providers can use.
- Member Pay the Difference – With this care management procedure, when you fill a prescription through a contracting pharmacy for a covered brand name drug where a generic equivalent is available, you may pay more. You will pay the copay/coinsurance amount plus the difference in cost between the brand drug and its generic equivalent. This may apply even if your doctor writes “do not substitute” on your prescription. This process is a means to shift a portion of the financial burden of prescriptions assigned by medical professionals back onto the patient.
- Balanced Formulary Drug List – A drug list available to Blue Cross and Blue Shield of Illinois (BCBSIL) members. How much you pay out-of-pocket for prescription drugs is determined by whether your medication is on “The List”. These prescription drug lists have different levels of coverage, which are called “tiers”. Generally, if you choose a drug that is a lower tier, your out-of-pocket costs for a prescription drug will be less, but your doctor should consult the Drug List when prescribing drugs for you.
Generally, health plans, payors, and pharmacy benefit managers are the greatest proponents of formularies. Adversaries of this concept include physicians, patients, and consumer groups, both inside and outside managed care practice, who consider formularies a stumbling block on the road to quality care.
If you take the District health insurance , you are one of many and are receiving a bargained benefit. 1,870 District employees also take it in addition to another 1,230 family members that are participants on their parent’s or spouse’ plans. Each individual plan is billed at a cost of approximately $10,095, and for each SEA employee the District pays 95.5% ($9504.00) of that and the member 4.5% ($591). Anyone on an employee+child, employee+spouse, or family plan pays for every dollar assigned to the cost of the additional member(s) placed onto the plan (the District pays no contribution for any family member).
The District is a self-funded insurance plan and has been for a very long time. That essentially means that everyone who takes the District health insurance pays into one large pot and then our collective medical expenses and medical insurance management fees are paid back out of that pot. According to the US Department of Labor, about 23% of all health insurance plans in the US are of this type and continue to rise in popularity. The good thing about being self-insured is that the control of the plan is at the discretion of the overall plan holder… to change premiums, make plan adjustments, and the like. The bad, is that the plan holder often has to make critical financial recommendations based upon people’s medical misfortune, a difficult and thankless task. Thus the creation of the District Health Insurance Committee.
For years, the District has had an Insurance Committee composed of members of each sub entity of the district’s employees (SEA, SEIU/Local 15, Springfield Ball Charter Education Association (SBCEA), Springfield Principals Association (SPAA), and PTSP). It serves to give guidance and make recommendations to the Superintendent and the District Business Manager to then take before the Board of Education. Each group allotted a proportionate amount of seats at the table to its number of employees it has within the District, each getting a vote. SEA has seven votes. SEIU has 4 votes. Ball Charter Education Association has 1 vote. The SPAA has 2 votes. And the PTSPs have 2 as well.
As we shared with you last year, due to a myriad of reasons (rising cost of medical care, skyrocketing prescription costs and multiple members with unfortunate medical circumstances), the fund itself had spent more than was being allocated for the past many years. The plan has been running in deficit since May of 2016. In 2016, the total medical expenses were $16,814,480 and the plan finalized the year roughly $750,000 in the negative. In 2017, there were $18,733,908 in medical expenses and fees, and the plan concluded the year a little over $1.5 million in the hole. In 2018, our collective medical expenses jumped to $22,152,167, and our fund’s deficit skyrocketed to nearly $2.5 million dollars, thus initiating our large scale and emergency discussions around health insurance openly at union meetings and the District and Memorial partnership (Memorial Choice) to consolidate services and encourage people to use consolidated services. And, after an intense debate last year, between unions and District over a “District recommended” 20% premium increase across the board, the Board settled on a reasonable 10% increase for employees who had any version of a family plan (EE/dependent, EE/spouse, Family) and a 16% increase for members on the single plan. Many assumed that the District would make up the difference, however that is not what occurred. In May of 2019, the District elected to establish a $3,000,000 line of credit, to provide temporary additional funds to the plan at a cost of approximately $90,000 in annual accrued interest, adamant that the debt from the Insurance Fund could not be paid or offset with monies shifted from the Operations and Maintenance, Transportation,or the Ed or General Funds.
At the end of that year, in June 2019, our collective SPS186 district employee medical expenses were $21,914,255 (still a fortune, but actually down $237,912 from the previous year and a historic first decline in ages). The amount allotted from employee and district contributions came up short of that total, but hopes were that perhaps the meteoric rise in costs had finally slowed.
Since August of 2019, your internal SEA Insurance Committee has met a half dozen times and four times as part of the District Insurance Committee, sorting and sifting through data. Due to your push for transparency and, the three unions pushed for the District Insurance Committee to put out a Request for Proposal (RFP) for insurance brokerage (or third party administrators). After interviewing three providers, the committee voted to keep our current provider, Troxell Insurance. They were the median priced broker, but seemed to understand our needs best and potentially be able to provide the customer service which we desired as a whole.
Since borrowing the $3 million in May of 2019, the District Chief Financial Officer and Superintendent have been actively seeking to pay back the deficit in the fund and the money borrowed as quickly as possible and have openly advocated for minimization of the plan’s benefits from our very first meeting this year as a committee. Their push has been to raise the deductible on the plan (single from $1250 to $1500 and the family deductible from $3750 to $4500), increase the out of pocket expense (single from $3250 to $3900 and family from $9750 to $11,700), increase the ER copay from $250 to $300), increase the office visit copay to $30 and the office visit specialist copay to $50, increase the drug card expense on generic/preferred brand name/non preferred brand name (from $10/$35/$50 up to $15/$40/$55), and reduce pharmaceutical benefits by implementing health insurance concepts such as prior authorization, member pay the difference and step therapy and balanced formulary.
HOWEVER, your SEA Union representatives on the Insurance Committee, along with SEIU/Local 15 and the Ball Charter Education Association (BCEA), have openly communicated that we believe this is not the best course of action. We see this loss of benefits as a terrible option, especially in the midst of the COVID-19 pandemic. And, although we do not want to see any financial increases for members, we viewed premium increases as the most predictable, budget friendly, sure plan funding and cost effective for the majority of our members. We agreed to a 5% increase in premiums across the board, if no other major insurance benefit reductions were implemented (PPI and non-sedating antihistamines exclusion only). These cost increases would look as such:
- Single – $1.88 per month increase
- EE/Children – $19.50 per month increase
- EE/Spouse – $39.02 per month increase
- Family – $50.04 per month increase
- 2 EE Family – $10.44 per month increase
These tentative increases in premiums would generate roughly $1,095,712 in additional money to the plan per year. Along with continued use of Memorial Choice benefits, the bargained reinstitution of our Employee Assistance Program, and continued education of our members to help use our collective medical benefits wisely, it was our contention that our insurance fund could become solvent again, without changing the medical benefits of one single member or their family member.
And as stated at the beginning of this correspondence, our plan was presented to the BOE at the April 20, 2020 BOE Meeting with a unanimous recommendation from SEIU, BCEA and SEA, along with an extensive list of the reasoning behind our logic (see Union Justification for Premium Increase Rather Than Benefits Minimization). HOWEVER, it was voted down by six of your seven board members (Micah Miller being the lone “YES” vote) and immediately countered with a precalculated vote by six of seven board members to minimize your health benefits as such:
– Raise the single deductible from $1500 to $1750 ($250) and the family $4500 to $5750 ($1250)
– Raise the single out of pocket $3250 to $3900 ($650) and the family $9750 to $11700 ($1950)
– Increase the ER copay from $250 to $300 per visit ($50)
– Increase the office visit to $30 and o specialist copay to $50
– Increase every prescription cost $5 per prescription (all types)
– And add the following minimization of medical benefits: mandated prior authorization , step therapy, member pay the difference, and balanced formulary drug list
Sadly (and shockingly), our union voices were discounted at this vote and the District chose an alternate pathway to fund our health insurance plan… a pathway paved upon avoidance of your potential health concerns, your checking accounts, and your family’s backs. I know that this is very difficult to stomach, especially in the midst of the COVID-19 pandemic. But these are the facts. Please do not hesitate to reach out to your SPS186 Board Members. This link will take you to their email addresses and phone contacts. They need to hear your truth. https://www.sps186.org/about/boe/?p=19986
President – Springfield Education Association
* Additional note. The committee approved a recommendation from the Delta Dental plan of a 3.4% increase in premium and a Delta Vision 0% increase for 2 years. This was approved by the BOE at the April 20, 2020 meeting as well.
** Union Justification for Premium Increase Rather Than Benefits Minimization (these were provided by SEA/BCEA/SEIU to the Board of Education.
- Making people who use the insurance pay more contradicts the historical concept of insurance and spreading out the poor fortune of some over the many. READ ARTICLE PLEASE https://www.npr.org/templates/story/story.php?storyId=114045132
- The health insurance plan is one of the things that has classically lured others to teaching here. A deductible, out of pocket, pharmacy, specialist, etc. increase of this nature in both single and family is leading us away from the “good” plan category and will make hiring or keeping employees even more difficult.
- Minimizing benefits for all is not good in these times and reflects poorly on the District.
- Minimizing the plans is essentially gambling with people’s health. The higher deductible encourages users to postpone health care until they can better afford it. It essentially kicks the can down the road. As members do not seek preventative or initial care and the problem exacerbates the problem causing more cost and eventual higher claims. READ ARTICLE PLEASE https://www.npr.org/sections/health-shots/2019/04/18/713887452/high-deductible-health-policies-linked-to-delayed-diagnosis-and-treatment
- Oversight of medications from the insurance company is not what is best for patients or our members. It is what is best for the bottom line (ie the insurance company).
- For 2019, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,750 for an individual or $13,500 for a family.
- Flex will only allow up to $2400, and a HSA will allow far higher and are structured for High Deductible plans. Our plan is not allowed to offer a HSA thus making most medical costs post tax and more expensive.
- It is a negotiated benefit. Minimizing the plan should never be happening unless formally in the bargaining realm.
- SEA has proposed during bargaining the creation of a dedicated insurance fund. The District has rejected this proposal over the last two bargains.
- It is fiscally responsible to inch the premium up as the price of health care continues to rise. We accept that.
- A change in plan benefits (minimization of benefits) does not guarantee money in. Premium increase does.
- Members can budget for a premium increase, but cannot a higher deductible. The insurance committee has made substantial changes to the plan in the past and the fund did not see the anticipated plan savings expected. is guaranteed to help the plan.
- We are being tasked as an insurance committee to do what is best for the District members. This is what we feel is best for all.