Three county schools may have to wait a year or more to take advantage of a state law that is expected to result in savings in teacher health insurance premiums.

Superintendents from Suttons Bay, Leland and Northport have requested information from the Michigan Education Special Services Association (MESSA) which could be used to secure competitive bids for health insurance. Blue Cross and Blue Shield of Michigan is the insurance carrier for all MESSA health plans except for benefits that exceed Blue Cross’ operating authority. MESSA is affiliated with the Michigan Education Association (MEA).

Opening health insurance to a bid process would be welcomed by Suttons Bay, Leland and Northport, which had an accumulative price tag of $1.86 million for the benefits in the 2006-07 school year.

“The cost is staggering,” Suttons Bay Superintendent Mike Murray said.

That school year, health insurance for teachers organized through the (MEA) cost the district about $840,000, or $70,000 per month. The same coverage for Leland’s smaller teaching staff was $621,550 that year, or nearly $52,000 monthly. Northport, which has the smallest staff of the three, has a cost of $405,159 or $33,763 monthly.

The freedom to receive claims information is new for the districts, who looked to the state Legislature for relief as the cost of health benefits consumed a greater portion of their annual budgets, With a government shutdown looming last September, legislators took steps to increase the state income tax and create a sales tax on services. Another component of the budget compromise was an effort to rein in the power held by the MESSA, which administers insurance claims for 45 percent of Michigan teachers and school employees. A lifeline for local school districts, legislators mandated that third-party administrators, such as MESSA, disclose aggregate claims history data that would allow districts to secure competitive bids. To benefit from the policy change, administrators have to adopt a letter of intent declaring their district’s plans to form a pool. All three administrators signed a letter of intent on Nov. 20 and formally requested the information in writing on Nov. 27. However, they have yet to have their request acknowledged or receive a response from the MEA affiliate.

And based on the experience of Benzie County schools, they will have to wait some more.
Benzie Superintendent Dave Micinski wrote MESSA Nov. 8 requesting claims experience data for his school district. His request was denied, leading school administrators to assert that the organization is not complying with the law.

“It’s slowed down the whole bargaining process,” Micinski said.

Gary Fralick, MESSA director of communications and governmental relations, said his organization is in full compliance with the new law.

“We don’t have the information requested,” Fralick said. “We’ve never compiled them as a group, they are part of a larger pool. Our business model is based on community pooling which is designed to spread risk and provide stability to protect districts from huge spikes in premium after a year of bad experience.”

MESSA operates seven of these “pools.”

Suttons Bay Superintendent Murray said the 11th hour compromise hammered out by the legislature falls short of what is needed and included a loophole for MESSA.

“When a school district fails to comply with the state regulations there are penalties,” he said. “There‘s no penalty included in the law if (insurance providers) fail to comply.”

The new state law has changed the way MESSA operates. As of Dec. 1, Fralick said MESSA began compiling information in the form needed for districts to bid out health insurance. The first opportunity for schools to access this information will be March. However, that information will date back only four months and will not be adequate for bidding purposes.

Sen. Michelle McManus (R-Lake Leelanau) is working to secure the information for districts.

“They should have this information when the law becomes effective (60 days after Dec. 27),” she said, adding that the response of MESSA to Benzie County Schools has been similar to that of other districts throughout the state. “There shouldn’t be any hesitation on the part of MESSA … it’s another example of trying to hold on to the advantage they’ve had over the school districts.”

MESSA reported $268.8 million in assets to the Michigan Office of Financial and Insurance Services in its most recent financial report.

McManus encourages affected schools in her district to contact her and said that she would be following up on the issue in caucus.

In the meantime, Leelanau County school administrators are not holding out much hope for relief in the 2008-09 school year for which preliminary budget preparations will begin in March.

“I expect to hear they don’t have it,” Leland Superintendent Mike Hartigan said. “It will be hung up until at least the 2009-2010 school year … There’s only so much money in the pot … MESSA tries to convince folks that nobody provides a product like theirs. But it’s not that much better to justify the cost … We need to make sure to keep this money as close as possible to kids.”