[N]early every teacher contract in Vermont is under negotiation because of a change in the state’s health care plans for educators.
The simultaneous renegotiation gives local school districts an unprecedented opportunity for taxpayers to realize millions of dollars in savings on health care costs, but there is also a danger that the negotiations could lead to even more spending on medical insurance, according to the Vermont Education Healthcare Initiative.
School districts must enroll employees in new medical insurance plans by Nov. 15, 2017.
The Vermont Education Healthcare Initiative covers more than 42,000 school employees, families and retirees. The nonprofit group administers health care plans for educational workers: VEHI collects premiums from districts and pays health care bills for employees.
Laura Soares, the administrator for the Vermont Education Healthcare Initiative, told lawmakers last week that the new plans will save money if local school board members ask employees to pay more toward health care costs.
But in many districts, the teachers’ union is pushing back on those efforts and is insisting that local taxpayers cover 95 percent to 100 percent of the price tag.
If the local districts continue to offer full coverage, teacher health costs statewide will continue to rise, Soares says.
Republican Gov. Phil Scott wants teachers to pay 20 percent of health care premiums starting July 1. That’s a big shift from current practice, in which the state’s more than 250 school boards negotiate with teachers who belong to local affiliate groups of the state teachers’ union.
Jeff Fannon, the executive director of the Vermont-NEA, says health insurance decisions and all employment decisions should be local. “Who cares more about a community’s students than the educators and school board members who live and work there?” Fannon said.
Soares said the governor’s plan has triggered a discussion in local communities that are looking to save money and take care of employees. She believes teachers could end up better off than they are right now. “That is what is at stake and it could have a huge impact on property taxes,” she said.
Fannon says making teachers pay more for health care will ultimately hurt wages.Over the years, many teachers have given up higher pay for better health care benefits, he said. “These negotiations could leave teachers with significantly less compensation.”
Salaries and benefits constitute about 80 percent of school budgets. Statewide, taxpayers cover 86 percent of premiums on average. Health insurance costs taxpayers $217 million a year; teachers pay $35 million of the total.
Teachers currently cover out-of-pocket costs of about $400 a year — co-pays, deductibles and co-insurance — without help from the school district.
VEHI is offering four new plans that have identical benefits and networks. The insurance premiums are lower, but out-of-pocket costs for employees are higher.
Contract negotiations over health care are focused on what share of the premium taxpayers and teachers will pay and how much of the out-of-pocket costs teachers will pick up. Minutes from several negotiations show that teachers in some districts are asking for local taxpayers to pay the additional costs.
VEHI was able to price the premiums lower because they are betting on employees changing the way they use health care to save on out-of-pocket costs. But if school boards decide to pick up out-of-pocket costs premiums will go up, Soares says.
Soares says they hope to usher in more cost efficient behavior. She cites a Blue Cross study that showed when people take on a higher share of out-of-pocket costs they visit their doctor instead of heading to the ER or ask for a generic drug over the brand name.
“Our whole plan design is around people thinking more about the cost of health care and making more thoughtful decisions around how they use their health care,” she said. “If they don’t, if the employer pays those out-of-pocket costs for them our premiums are underpriced and they will go up to cover the cost.”
There are a number of scenarios that show savings, according to Soares.
If 85 percent of teachers chose the platinum plan and shared 14 percent of the premium costs (the average split statewide between what districts and teachers pay), the state would save $28 million and teachers would save nearly $4 million.
The Scott administration’s 80/20 cost share proposal was based on teachers’ current health plans and would have saved the education fund $15 million. When Soares applied this split to the new plans she found the state would save $37 million and teachers would collectively save nearly $10 million.
Union balks at school boards association plan
The Vermont School Boards Association has favored the Gold Consumer Driven Health Care plan that allows teachers to use pre-funded health savings accounts or health reimbursement accounts to pay for routine costs while the deductible protects them from catastrophic costs. If the money runs out, the teacher picks up the rest after the deductible and if any money is left over at the end of the year it goes back to the school district.
VEHI made the Gold CDHC the default plan if teachers don’t have a contract by the start of the new year. Once teachers have a contract they can pick from any one of the four plans. When applying the 80/20 premium split to this plan the state would save $75 million and teachers $17.5 million statewide.
Soares told lawmakers that if school districts pay 95 percent of the new premiums that would equate to what they are paying right now on the old plans. If towns agree to pay that, then they are buying an increase for themselves, she added.
The teachers union opposed the Gold Consumer Driven Health Care plan because it doesn’t provide teachers with enough co-insurance, officials said. In a message to teachers last summer, former NEA head Joel Cook and current president Martha Allen said the Gold Consumer Driven Health Care is part of the Vermont School Board Association’s “aggressive, cost-shifting strategy which will not only hurt teachers … and their families, but creates unnecessary obstacles for local school boards and unions trying to reach settlements.”
Local talks over health care tense
When negotiations for the Marion Cross School in Norwich opened, teachers asked for 98 percent of their health care to be covered. The talks went to impasse in December with the teachers saying they would pay 12 percent of the Gold plan premium if the school district covers 88 percent and, additionally, 90 percent of the total maximum out-of-pocket expenses for services and prescription
The school board has been providing dollar figures to teachers instead of percentages. This will protect taxpayers when and if the premiums go up, according to Nicole Mace, head of VSBA.
“With premium rate increases between 5 percent to 10 percent a year, and continued calls for greater affordability for property taxpayers, a flat dollar contribution approach is designed to provide greater predictability to taxpayers regarding the amount of money spent on employee health care year-over-year,” she said.
When Norwich talks went to impasse the board had offered to pay $6,461 on any premium for a single plan, $12,466 for a two person plan, $12,620 for a parent/child plan and $17,385 for a family. In the second year those numbers decrease slightly. They also offered to split 50/50 out-of-pocket costs with teachers.
In Rutland Northeast the school board has offered teachers $7,800 toward the premium on any of the four plans for a single, $13,800 for parent child, $15,300 for a two-person plan, and $20,500 for a family. If employees choose a plan with a premium that costs more than what the school board will cover then it will be taken out of the teacher’s payroll.
Teachers in Rutland Northeast have asked for the board to cover 95 percent of the premium and give them 100 percent in a health savings account. By the third year of the contract, the board’s contribution to the premiums would drop to 94 percent.
In Addison Northwest, teachers asked for 95 percent of premiums to be paid by the school district and 100 percent put in a health reimbursement arrangement.
Soares said if school boards don’t ask teachers to pay a higher percentage of premiums, health care costs will continue to rise and property taxpayers will not get relief.
“Taxpayers would take on an estimated $68 million of additional liability and will spend far more than $3.7 million in premium savings and far more on health care under the new plans than they are spending now,” Soares said. “If you start paying 95 percent of the premium and 100 percent out-of-pocket cost then where do you go next year? How long will it be before we get to something sustainable?”
In 2014, the open meeting law was changed to make it more difficult for school boards to go into executive session and shut the public out during negotiations.
Less than a handful of contracts have been settled.
Soares said she doesn’t think the average taxpayer is aware that these negotiations are going on in public. “We have a unique window in time, whatever comes out of it sets the new starting point for all future negotiations, so it is a big deal. ”
Correction, Feb. 21, 9:36 a.m.: Under the 80/20 premium split in the Gold CDHC plan, teachers would save $17.5 million statewide.
