OLYMPIA, Wash. — A measure intended to streamline and standardize health insurance for Washington’s public school employees has proved to be among the most opaque and divisive issues taken up by the Legislature this year.
The bill would move over 100,000 school employees and their family members from a system where more than 1,000 bargaining units in 295 school districts negotiate the worker’s share of premiums to one where a single state board with both union and management representation does so.
Gov. Chris Gregoire confirmed Friday that the measure is among those in play in the ongoing special session budget negotiations, though she declined to discuss her position on it.
The proposed new system would be run by the state’s Health Care Authority, which oversees the Public Employees Benefits Board, under which upward of 200,000 state employees and their dependents are covered.
Aside from an estimated $22 million needed to set up the program and a potential $20 million to $25 million in annual savings from reducing the role of insurance brokers, no one can reliably say what, if any, savings would result from an overhaul of the $1.3 billion system.
This is largely because insurers, school districts and the Washington Education Association — the state’s powerful teachers’ union — declined last year to disclose to the Health Care Authority details of how the money in the current system is spent.
Premera Blue Cross, which covers 60 percent of those insured under the school districts, says it spends 6 percent of the premiums it collects from the state, school districts and school employees on its administrative overhead, which it notes is well below the industry average.
Without seeing a breakdown of how that money is spent, said John Williams, who oversaw the HCA’s study on the proposed overhaul, “we have no way to validate that that is an accurate figure.”
The HCA was also unable to assess whether there were savings to be found in how Premera and other school employee insurers pay for medical care. As a result, Williams says, the Authority couldn’t estimate how much the proposed new system would cost.
Williams says the HCA asked school districts for aggregated data that would not have revealed any personal medical information.
In a letter to the school districts sent last September, WEA President Mary Lindquist said the union had “significant concerns as to the privacy of this information, its proprietary nature, and how this information could potentially be disclosed to other parties in the future.”
She encouraged like-minded districts to echo these concerns to the HCA.
With the bulk of potential costs and benefits of the proposed new program obscured, the proposal’s more tangible elements have left the state’s two largest school-employee unions bitterly divided.
The WEA, which represents roughly 60,000 school teachers and about 12,000 school support staff, poured $176,000 in January and February into its effort to defeat the measure, taking out radio and newspaper ads attacking the plan’s backers and organizing 10 rallies around the state attended by about 4,000 school employees.
The current system, WEA spokesman Rich Wood says, offers as good or better benefits for most school workers than what state workers now receive under the HCA, even though the state pays $82 more per month toward state workers’ insurance than it does for school employees.
A “state takeover” of school employees’ health insurance, he says, would require workers to pay more for lesser benefits. For starters, he points out, each covered individual would have to pay about five dollars a month in administrative fees.
Most other school employee unions have lined up behind the WEA in opposition to the bill. An exception is the Public School Employees of Washington, representing 26,000 mostly lower-paid school support staff, which has spent about $75,000 on efforts in support of the plan, not counting lobbyist fees. Spokesman Rick Chisa says that the current system is taking on water, that the cash-strapped state is unlikely to shore it up and that his union’s less affluent and largely part-time membership, along with younger teachers covering their families, have been most susceptible to the consequences.
“Teachers are screaming about having their collective bargaining rights taken away from them and don’t even realize they would benefit from” the changes, says Chisa.
Full-time school employees buying insurance only for themselves pay on average about 7 percent of their total monthly premiums, with some paying nothing at all, according to the HCA. By contrast, those covering dependents pay an average of 73 percent of the premiums for their spouses and children.
Under the proposed overhaul, those rates would be capped at 15 percent and 35 percent, respectively.
Noting that the WEA partners with Premera to offer school workers the insurer’s menu of plans, Chisa asserts his rival union is dug in against changes out of self-interest.
“The WEA is so opposed to this because they stand to lose a major financial business venture with Premera,” Chisa says. “If you control 60 percent of a $1.3 billion market, there’s got to be millions of dollars at stake for the WEA.”
Premera and the WEA both deny that the teachers’ union benefits financially from its affiliation with the insurer.
“Insinuations that the WEA profits from its relationship with Premera are false,” says Wood. “There are IRS regulations in terms of how this relationship operates.”
Premera Spokesman Eric Earling says critics may be confusing the WEA with school districts, which receive a 10 percent discount from the insurer for only offering their employees its suite of plans. Of the state’s 295 school districts, 212 offer only Premera plans, helping account for its dominant market share.
“That’s obviously different, however, than a ‘financial relationship’ or whatever some people have implied,” Earling wrote in an email.
Chisa says he is not confused. Premera’s deal with the 212 school districts whose employees it has sole access to, he says, “borders on antitrust.”
The other 40 percent of the market is divided up by competing insurers whose plans are sold to districts through insurance brokers. These brokers claim fees that the HCA estimates to range from 1 percent to 3 percent of the premium. Consolidating the plans, Williams says, would sideline the brokers and save the state up to $25 million per year.
For its part, the WEA has set its sights on lawmakers pushing the overhaul. In a series of full-page newspaper ads taken out last week, the WEA attacked Democratic and Republican state senators pushing the plan, accusing them of receiving generous health benefits for their part-time legislative work while threatening to undo the relatively meager benefits of part-time school workers.
“Instead of a costly increase in state bureaucracy, legislators should be focused on fulfilling their constitutional ‘paramount duty’ to fully fund K-12 public schools,” the ads read.
One target of the WEA’s advertisement offensive was Sen. Steve Hobbs, a moderate Democrat from Lake Stevens who sponsored the overhaul bill.
“It’s stunning how resistant the WEA is to this,” says Hobbs, who is running for Congress. “We had bills dealing with charter schools and teacher evaluations, but the number one thing they fought was this.”