In a year when state lawmakers are scrambling to fill a $4.6 billion hole in the state's two-year budget, Auditor Brian Sonntag has concluded that streamlining health benefits for K-12 teachers could save $180 million.
Creation of a statewide health benefits program is definitely an idea worth pursuing.
Sonntag’s performance audit was conducted by the Hay Group, a consulting firm from Arlington, Va. They concluded that Washington’s health benefits program for school employees is both complex and confusing. They identified more than 1,000 pools of money that pay for more than 200 plans offered through 10 insurance companies.
The consultants said those wide-ranging plans among state’s 295 school districts and nine educational services districts offer greatly different levels of benefits. The audit concludes that the health benefits system needs to be standardized to make it more fair and cost effective.
It’s a solid recommendation.
Total spending for health benefits for all 122,000 teachers and classified employees in 2009-2010 was $1.21 billion, with state taxpayers picking up $780 million, or 64 percent, of the cost. When federal and other sources are included, taxpayers are picking up 72 percent of the cost.
The audit found that more than half of the school employees — 55 percent — are enrolled in one of the health plans offered by the Washington Education Association, the state’s largest teachers’ union.
Consultants said that employee contributions for single coverage are generally lower than comparable plans for other public employees. In fact 52 percent of single employees are not required to contribute toward the cost of their health coverage.
By contrast, the audit found that most employees with family coverage are paying higher premiums than other covered employees. Some teachers with family coverage pay $500 a month. But the plans offered to school employees are generally more generous than other covered employees receive, according to auditors.
The consultants looked at the health benefits systems in 23 other states and found that 21 of them have a state health benefits program. Six states have mandatory requirements forcing school employees to participate in the statewide plan.
The auditor’s report recommends streamlining the system by creating larger pools of money to save administrative costs and make the system less complicated and more transparent.
The second reform recommendation is to standardize coverage options for all public school employees and let the employees decide which tier of coverage to buy.
Auditors said if state lawmakers choose, they could completely restructure school employee health insurance under a new statewide system with its own governing board.
A key question in that scenario is whether a statewide health benefit system would be voluntary or mandatory. The auditors spelled out three options: totally voluntary; totally mandatory or voluntary for current employees and mandatory for future employees. Auditors assigned potential savings to each category that ranged from $21 million to several hundred million.
Public employees offered a mixed response to the auditor’s report.
“We sure hope there’s a better way to provide more affordable health insurance to school employees,” said Rick Chisa, spokesman for Public School Employees of Washington, a union representing school support staff. He said the union’s 26,000 members would like to see more fairness.
David Phelps, spokesman for the powerful Washington Education Association, said teachers would also be in favor of a better health insurance system. “If there are changes that need to be made that can lead to cost savings without compromising benefits, we will support them,” Phelps said.
But he cautioned, “We will vigorously oppose any efforts to enact reforms that have not been thoroughly considered and reviewed to ensure that there are no unintended consequences.”
The Washington Education Association is an influential lobbying organization in Olympia — especially among Democrats, who enjoy majorities in both the state House and Senate. Whether the reforms spelled out in Sonntag’s performance audit pass or fail will depend on the level of support from the teachers’ union.
Right or wrong, that’s the political reality.