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The Pennsylvania Association of Rural and Small Schools (PARSS)
lauds the efforts of the Governor and selected members of the General
Assembly in attempting to establish a program that would “suppress increases
in health care costs – and the property taxes that pay for the school
employee benefits – by spreading risk more widely, managing benefits better
and lowering administrative costs”. In our analysis of HB 1841, however, we
have a number of significant concerns, and have identified three that we
feel are of greatest importance to our member districts.
First, PARSS is concerned that this bill, if enacted, could
financially penalize districts that are effectively operating employee
health care programs at a level which may be determined to be below the
recognized standard. This issue is linked to an insurance industry
term/concept known as “rich plan”. In general “rich” plans for employee
health care are those that have many or all of the following features: small
or no co-pays, low deductibles, benefit payments that may exceed usual and
customary fees, unconventional benefits coverage, and higher than usual
aggregate maximums. In addition these plans require small or no employee
contributions for “premium payments”, and extend coverage, at low or no
cost, to part-time employees who, in some cases, may only work ½ time, as
well as to retirees who leave the district prior to age 65, and sometimes
coverage extends beyond that age.
Rural and small schools typically have health care plans that
are not as benefit “rich” as those of their urban and suburban
counterparts. If the standard benefits package (based upon a plan that
provides a level of health care benefits consistent with those now provided
to most school employees), is substantially higher than that which is
currently in place in our members’ districts, an increase in cost is
guaranteed. Further, the law of averaging works against rural and small
schools with less “rich”, lower cost health care plans. Even if
regionalization can be fairly established, any averaging that takes place
within a given region means (using simple mathematics) that all those above
the average will pay less, and all those below the average will pay more.
Unless the regional pooling procedures put forth in this bill are altered, a
sizeable number of rural and small schools will be paying more to subsidize
the urban and suburban districts located within the declared region.
Even though HB1841 provides reimbursement from the State to
be based upon the district’s market value/personal income aide ratio (most
of PARSS’ districts have higher than average aid ratios), it is most
probable that the requirement to adjust the benefit plans upward to comply
with a “richer” plan, will still put our districts in a deficit financial
position with respect to health care costs.
Second, PARSS believes that this legislation must recognize
the existence of the many health care consortia currently operating in all
regions across the State. Many of our members are also members of these
consortia,. In several cases, the consortia comprise entire intermediate
units made up solely of PARSS members. In the recent past these members
have enjoyed substantial savings in health care costs for employees by doing
the very thing the Governor wants to have happen in his proposal to create a
Statewide Health Care Plan. Through well-managed consortia, increases in
health care costs were suppressed, risks were spread more widely, benefits
were managed better, and administrative costs were lowered. While PARSS
supports any effort that “would take healthcare benefits off the bargaining
table”, it also wants a requirement that any governing board, called upon to
administer the proposed Pennsylvania Employee Benefits Trust Fund, will make
use of the expertise presently being demonstrated by the administrators and
managers of school district health care consortia.
Lastly, we believe that this proposed legislation must give
more precision and depth to the Commonwealth’s obligation to pay its share
of the total costs of the program. That the State would pay up to half of
the year to year increase in health insurance premiums is praiseworthy, but
then to cap the State’s contribution, as HB1841 does, simply runs contrary
to maintaining the State’s fiscal responsibility relative to yet to be
determined increases which are wholly driven by third party providers over
whom school districts have no control. Said another way, PARSS could not
support legislation that does not cap one of the three responsible party’s
costs and leave any additional increases to be paid by the other two -- in
this case the school district and employees. The State’s obligation to pay
for increases to the cost of the plan, should be devoid of any cap and in
the form of new money each and every year the plan is in operation.
We also would like to indicate that PARSS strongly supports
the position of the Pennsylvania Association of School Business Officials
which recommends that the implementation of any Statewide Health Care be
carried out over a five to eight year time frame. It is critical that the
ramifications of mandating a single health insurance plan for all districts
be thoroughly evaluated with hard data. |
