School officials worry about insurance increases
Some school officials worry their rates will jump if they go alone.
By IAN HILL
VINDICATOR STAFF WRITER
When it comes to health insurance, Wayne McClain believes there's strength in numbers.
"You need to have a sizable group to get the best rate quote," said McClain, superintendent of the Trumbull Career and Technical Center.
Other school officials in the Mahoning Valley, however, feel it's best to go it alone.
"It is more effective for us to be self-funded" for health insurance, said Liberty Superintendent Lawrence Prince.
The difference in the opinions of Prince and McClain is a reflection of the different approaches Mahoning Valley schools have when it comes to health insurance for their employees.
The TCTC is one of the 16 members of the Trumbull County insurance consortium, an organization that calls for vocational and mental retardation/developmental disabilities schools, school districts and educational service centers to work together to reduce the cost of health insurance for their employees. There also are insurance consortiums in Mahoning and Columbiana counties.
Thirty-six of the 53 school districts, vocational and MRDD schools and educational service centers in the Mahoning Valley are members of insurance consortiums. The remaining 17 have their own health insurance programs, some of which are "self-funded" plans run by the school district.
It's difficult to determine which approach is cheaper overall, as insurance costs vary by district based in part on the number of employees, number of claims, and types of services offered in insurance plans.
Officials from some smaller districts said they believe they are more likely to pay less for claims if they are in consortiums with several other districts. They said that's because doctors are more likely to compete for the business of a large consortiums than they are for small districts.
"You don't have the buying power that you do in the consortium," said Western Reserve Superintendent Charles Swindler, whose district has about 850 students. Champion Superintendent Pamela Hood added, "anyone who is purchasing health care is going to do better in a large group."
Larger districts with few claims, however, may find it cheaper to be self-funded. Because they don't deal with insurance providers, schools that are self-funded often don't have to pay premiums.
Officials from self-funded districts also said they believe they have more freedom to choose the type of plans they offer.
"I feel we do it better ourselves," said Carolyn Funk, Youngstown city schools treasurer.
Sebring officials noted that they left the Mahoning County consortium several years ago because they felt they could get better rates for their district if they went alone. Treasurer Pete Hill said the district pays its own claims up to a certain amount, and then an insurance company pays the rest. The district also pay a third-party administrator to process claims, he said.
Hill noted that the district shops around to make sure it has the cheapest approach to health care in the district every year.
"From what we're doing now, I don't think there's a better buy out there," said Leetonia Superintendent Tom Inchak, whose district is self-funded. Inchak said his district also shops around every year.
McDonald Superintendent Michael Wasser added that his district is "always shopping." It has yet to find a better deal than the consortium, however, Wasser said.
"It's just a no-brainer for us," he said.
The Trumbull County consortium receives a monthly premium bill from Medical Mutual of Ohio, which handles its claims, said Anthony D'Ambrosia, superintendent of the Trumbull County Educational Service Center. The bill is divided among the schools in the consortium, he said.
D'Ambrosia noted that because of the size of the consortium, the premiums won't dramatically increase if one member files a high number of claims in a year.
"We share the risk, we spread the risk around," he said.
The Trumbull County consortium's member districts can subscribe to a PPO, HMO or traditional health care plan, and the consortium also offers dental, vision and life insurance coverage.
About 80 percent of the schools have a PPO, he said.
Districts in the Mahoning County consortium create their own plans that are tailored to their staff, said Richard Denamen, superintendent of the county educational service center. Each district pays a premium based on its plan, and the premiums are used to pay claims and administrative costs.
Claims are processed by Professional Risk Management of Boardman, which serves as the consortium's administrator. PRM also is the administrator for the Columbiana County consortium.
Every three years the Mahoning County consortium adds up the claims. If a district has a high number of claims over that three-year period, its premiums are increased for the first few months of the following year, Denamen said. Conversely, districts with a low number of claims pay lower or no premiums the first few months of the following year, he said.
"Everybody ends up paying what they owe," Denamen said.
Ron Blasko, PRM president and CEO, said districts in the Columbiana County consortium that have high numbers of claims may have to pay an additional assessment each year, while districts with few claims may receive credit towards their premiums. Each district pays the same premium, he said.
Otherwise the Columbiana County consortium operates in the same manner as the Mahoning County consortium, Blasko said.
Wasser and several other school officials also noted that belonging to the consortium helps limit premium increases. They said they were concerned that if they went alone and had a high number of claims in a year, an insurance provider would dramatically increase their premiums over time.
Champion's Hood said insurance companies tend to initially lower rates to get districts to go it alone.
"At first, it looks like a good deal. After the first few years, rates have a tendency to change. It doesn't prove to be beneficial," Hood said.
The consortiums are run by a board of school officials. The boards are public bodies; their meetings are open to the public and they are audited on a regular basis by the state.