More good news
More districts now could drop insurance arm of teachers union
If WEA is competitive, it has nothing to fear, right?
More districts now could drop insurance arm of teachers union
In freeing school boards from bargaining with employees over anything but inflation-capped wage increases, Wisconsin lawmakers might have opened the floodgates for districts seeking to drop coverage by the state's dominant - and highly controversial - health insurance provider for teachers.
WEA Trust, the nonprofit company started 40 years ago by the state's largest teachers union, currently insures employees in about two-thirds of Wisconsin school districts. The company's market dominance has dropped in recent years, although not as much as some school officials who complain about the company's costs would like.
After switching the district's nonunion employees to a different health insurance carrier, Cedarburg School Board President Kevin Kennedy said his school system is likely to look at cost savings by doing the same for its unionized teachers after unsuccessful attempts in previous years.
"It's such a large-ticket item; it's such low-hanging fruit," he said. "You can lay off an aide or increase your student fees, but that doesn't make up such a magnitude of saving as insurance does."
The survival of WEA Trust's health insurance corporation will depend on its ability to compete with other providers that have more pricing flexibility and a greater range of services, said Dale Thoma, managing partner for insurance broker Willis of Wisconsin Inc. Until now, the insurer was negotiated into contracts by adamant union leaders.
"They're going to have to compete in a different, more wide-open arena," he said. "That's what other insurers deal with, and their ability to respond to that and just compete, I guess, will ultimately determine their position in the market."
Because WEA Trust is named as the carrier in so many school district contracts, it has been largely shielded from such competition in the past, said Andy Serio, a group health insurance consultant.
"There literally is no competition if you're named in the collective bargaining agreement, so that would be the most dramatic effect on WEA," he said. "Because clearly, if you're in a collective bargaining agreement, you're in."
At the beginning of this fiscal year, last July 1, the Brown Deer School District began using a different carrier after years with WEA Trust. The district saved $170,000 in just one year - the equivalent of at least two teachers.
But Steve Lyons, director of public affairs for WEA Trust, said the company is named in only one-third of the school district contracts where it provides health insurance. And of those, in about one-third of contracts it is named as the "standard-bearer," meaning that districts can switch to other carriers if they can find substantially similar plans at lower costs, he said.
That shows, he said, that the company did not have an unfair advantage, as some critics have contended, based on the company's ties to the Wisconsin Education Association Council.
"What happens at the local level is, in the past, prior to the budget, is the local school boards would bargain with the local union and they would come to a consensus and often they chose us," Lyons said.
"We're very competitive in pricing and have been and continue to be."
Lyons also said in an e-mail that the insurer returns 93 cents out of every health care premium dollar back to the districts in health care coverage, while "some of our for-profit competitors keep more than 20 cents out of every dollar."
But Emily Koczela, director of finance for the Brown Deer School District and a former Shorewood School Board member, said the company regularly resorts to methods other than competitive pricing to keep its business.
Earlier this year, the Brown Deer district's teachers union filed a complaint with the Wisconsin Employment Relations Commission over the district's decision to switch from WEA Trust. Koczela suspects the move was aimed at protecting the insurance company rather than the employees' benefits, which she said remained the same with the lower-cost carrier.
"They don't know how to compete," she said. "Their way of competing to get my business back is to sue me. That's not how you get business back."
She said she expected the company will encounter a similar reaction from other business managers who have had difficulty in dropping the company in the past, even when they thought they had a contractual right.
"They've provided good service to the teachers, but they haven't provided good service to the people in the business office who sign their contracts," Koczela said.
If WEA is competitive, it has nothing to fear, right?