New Albany News

FRRC members say district could save on insurance costs


The New Albany-Plain Local School District's financial review and reporting committee disagreed Sept. 16 on the district's projected insurance costs while reviewing the five-year forecast.

The forecast includes a 7.1-percent increase in insurance costs in fiscal year 2014 based on negotiated union contracts and a 9-percent estimated increase in fiscal years 2015 to 2017, according to Treasurer Rebecca Jenkins' assumptions for the forecast.

Committee member Phil Derrow, owner and chief executive officer of Ohio Transmission Corp., a company with nearly 500 employees, said the insurance costs are increasing too fast and need to be controlled.

Derrow said the school district spends two to three times more per employee per month on total insurance plan expenses than his company does.

He said additional money directed to insurance costs is money not "being used to attract, reward and retain the very best team of teachers, staff, and administrators possible for our community."

The district's insurance plan is a preferred provider organization. With a PPO, individuals can go to any physician in the network without being referred by a primary-care physician.

Derrow said the district's PPO includes a co-pay plan, in which individuals pay a portion of their costs and the rest of the expenses are covered.

"PPO's are a use-or-lose it, third-party funding source for health-care services," Derrow said. "There's a reason fully insured PPO plans like the district's drive spending, because the consumer of services and the provider of services, neither party has an incentive to monitor costs."

Derrow said he is not criticizing any of the district's employees. He said they are "acting rationally," given the insurance incentives offered to them.

Derrow said his company uses a health-savings account. Employees put money in an HSA account and what they don't use in a year, they retain.

"If you switch to an HSA. the data shows -- and our experience validated what the research shows -- that when it's their own money at stake, people immediately make changes in their behavior that have no evidence of an adverse effect on their health outcomes," he said.

Committee member William Neville said the district needs to consider benefits as part of the employees' compensation package, to ensure the district stays competitive and attracts and retains the most qualified teachers and staff.

"Looking at the bottom line numbers may not be sufficient for what we need to be spending to be competitive," Neville said.

Derrow said the district should determine what type of coverage will help attract and retain employees and keep employees healthy and content in the workplace.

"Any dollar spent over that is wasted," he said.

Derrow said he understands that the unions must agree to insurance coverage and suggested the district now start considering a different insurance plan.

The district is in contract negotiations with the Plain Local Education Association and the Ohio Association of Public School Employees (OAPSE) Local 303 for contracts that expire June 30, 2014.

Joe Armpriester, a committee member and vice president of the Plain Local Education Association, said the teachers will agree with changes if it accomplishes the district's goals and saves money. He said any changes would have to be voted on the by union membership.

Neville said there isn't enough time to reconsider health insurance costs during negotiations. The district may have to wait a few more years to completely revamp its insurance programs, he said.

School board member Mark Ryan said the committee might need more data on insurance plans and rates before making an informed decision.

Committee members Brian Steel and Kevin Stahl said they'd like to see more numbers or data before making a decision.