by Brian
Benefits for teachers and other public employees have been in the news lately. The perception seems to be that they are better than those for workers in the private sector. In Washington State the Auditor’s Office published a Performance Review of K-12 Employee Health Benefits in February of this year. In it they report that 51% of K-12 employees cover themselves only, and pay on average about 5% ($27/month) of their premium cost. Most of them select Premera Plan 1 or 5, rich plans that have lower deductibles and co-pays as well. That does sound pretty extravagant.
But it’s not the whole story. Teachers who cover their families represent about 12% of all employees, and they pay an average of 39% of their premium out-of-pocket, about $500 per month on average.
This discrepancy arises because the state allocates money to districts for the purpose of providing benefits to employees on an FTE basis, not based on any demographic information or actual premium cost. The money is “pooled” and used to purchase benefits for employees in the group. However, there is not enough money to pay the premiums for all employees, so the practice is to make up the shortfall by charging employees who cover dependents out-of –pocket expenses from their salary.
Does that seem fair?
The state law that describes the intent of pooling (RCW 28A.400.200) says:
"… increases in premium rates create particular hardships for employees with families. For many of these employees, the increases translate directly into larger payroll deductions simply to maintain basic benefits.
The legislature also intends that school districts pool state benefit allocations so as to eliminate major differences in out-of-pocket premium expenses for employees who do and do not need coverage for dependents."
So how did the system get so out of whack? There has never been a comprehensive, rational plan at the state level to provide health benefits to K-12 employees. Each district in the state came up with their own plan for pooling benefit dollars, and menu for providers. The auditor’s report estimated that there are over 1,000 separate pools that pay for more than 200 different medical plans offered through 10 different insurance companies.
In 2009-2010 84% of the money for benefits came from state, federal, and local levy funding sources; employees paid about 16% of the total benefit costs. That is comparable to the 15% that other state workers will pay next year. The difference is that all state workers pay the same percentage; for K-12 employees the shortfall is paid almost totally by employees who cover dependents. In fact 88% of the shortfall is charged to those covering dependents (children, spouse, or family), who pay an average of $145 to $500 per month. Employees who cover only themselves pay an average of $27. In addition, in order to keep their out-of-pocket costs as low as possible employees covering dependents also select plans that have lower premiums which also have higher co-pays and deductibles. It’s a double whammy.
Is that fair?
The auditor’s report concludes that restructuring the K-12 benefit system could save as much as $90 million per year, as well as leveling out-of pocket costs for all employees.
It also points out that the current system appears to contradict the legislature’s intent in the RCW.
The Washington Education Association is opposed to any change. President Mary Lindquist sent an email to WEA members encouraging them to call their legislators and tell them to not change the current system. She says any change may cause individual out-of pocket expenses to increase. They would certainly increase for those who have zero out-of-pocket under the current system.
I encourage you to read the auditor’s report yourself. Then ask your local association leaders how benefit dollars are allocated in your district, and how out-of-pocket expenses compare between employees who do and do not cover dependents.
The auditor’s solution may not be the best, but I think it’s time to at least acknowledge the current system is unfair and needs to be changed. WEA’s position to maintain the status quo is a response that pits member against member, and ignores the savage inequities that exist in the way health care benefits are provided for K-12 employees.
Seems like a no-brainer to me.
And speaking of a lack of brains, we wouldn’t even be having this discussion if this country had enough sense to switch to a single-payer health care system.
That’s the real no-brainer!
I’m for the auditor’s restructuring.
It’s true that those who support dependents are hit harder – we have to choose plans with higher copays, higher deductibles, fewer benefits, and we still pay a lot out of pocket. Plus, every year costs go up and coverage goes down.
Meanwhile, the older, obese smoker I used to teach with had the best plan and paid nothing.
I get the resistence to childless teachers – or teachers with grown children – having to subsidize someone else’s children, but right now young, healthy educators are subsidizing the health plans of less healthy, older teachers and no one seems to have a problem with it.
I like the idea of everyone paying a percentage of their plan’s cost. I like the idea of everyone having access to “good” plans.
Hi Brian, thanks so much for posting this. After we talked last month, I read the state auditor’s report. I was really struck by what you quoted, that state law reads, “the legislature also intends that school districts pool state benefit allocations so as to eliminate major disparities in out of pocket premium for employees who do and do not need coverage for dependents.” RCW 28A.400.200
These disparities are HUGE in my district and in many others. I am not sure how far pooling has gone to reduce these disparities. I believe in my district that pooling only happens within each plan (within Premera plan 1, within Premera plan 2, etc.) but I am going to check on this for sure after spring break. If this is indeed how our pooling happens, then pooling certainly would not be going a long way towards meeting the law if most families are choosing Plan 3 while most individuals are choosing the richer plans like plan 1.
That isn’t the way it works. Actually the way it works now families are subsidizing the more expensive premiums of employees who choose the richest plans. Everyone would pay the same percent of the premium for the coverage they choose.
Insurance providers don’t count the number of kids. A one child family costs the same as a ten child family. (I don’t understand that either.)
Yes, same sex couples can claim their partner if they file as domestic partners.
Just to play Devil’s Advocate:
Is it fair to ask those without dependents to pay for the dependents of others? Will the auditors’ plan ask people to pay the same percentage for each person covered or for each family? (That is, will the auditors’ plan charge the same payroll deduction for a one-person family, a four-person family, and a ten-person family?)
Also, does Washington allow same-sex couples to count as spouses for health insurance purposes? If not, is it fair to allow some people to cover their dependents while preventing others from covering their dependents?