School boards across the state are facing significant insurance hikes in 2023-24 and no matter what plan a district chooses – state, private or self insurance – cost increases are almost unavoidable.
Medical costs increased by approximately eight to nine percent in 2022, and numerous insurance providers raised their rates to offset losses, including the State Partnership Plan, which provided state employee health insurance to 160 boards of education and municipalities last year.
The increased medical costs were partly due to employees who deferred their health care during the pandemic and used insurance more than expected in 2022.
“[L]ike all private and public health plans, the last few years have been challenging due to the COVID-19 pandemic. Beginning in December of 2021, the partnership plan experienced a spike in claims due to delayed care from the COVID pandemic and increased hospitalizations specifically from the Omicron variant,” stated a report by the Office of the State Comptroller.
The partnership plan paid out about $659 million in claims from employees in 2022, but collected only $622 million in premiums from school boards and municipalities. To offset losses, the state projected an eight to ten percent rate increase for enrolled groups starting July 1, 2023, according to the report.
Many school districts saw the costs of medical and pharmacy claims far outweigh budgeted premium payments. At the top of the list were New London Public Schools, with costs that exceeded the premiums by 147.4 percent. Next were New Milford Public Schools exceeding premiums by 145.4 percent and North Branford Public Schools by 139 percent.
But even districts that spent below premiums needed to increase their 2023-24 budgets to finance projected rate hikes from the state, like Thompson Public Schools that spent 73.5 percent.
“Here in Thompson, it’s very difficult to pass a budget, and the community isn’t really looking at the fixed costs that we must incur. So, the health care is always a huge driver when we’re preparing the budget,” said Thompson Public Schools Superintendent Melinda Smith.
Smith said the district’s health insurance budget increased 12 percent for the 2023-24 school year, accounting for almost $3 million of the $19 million district budget. She said health insurance was the second-biggest driver behind the seven percent total budget increase – just behind special education costs.
But Smith said she still preferred the state partnership plan over private providers, especially given her experience with Thompson Public Schools’ previous health care plan – a consortium with other small districts.
“We ended up seeing a spike in our health care insurance of 19.25 percent which, obviously, the district couldn’t sustain,” Smith explained.
Smith said the district had been on the state plan for two years now, and had no intention of switching.
“I’ve been here six years. The Connecticut State Partnership plan is the third health care program that we’ve implemented, and so I don’t want to change. I want to stay with the plan. People are satisfied with it,” she said.
But in the Westport Public Schools, Superintendent Thomas Scarice said the district saved by switching from the state plan to private insurance. The district is now in its second year under a high-deductible plan with Aetna, managing an eight percent rate drop in cost over the district’s first year and avoiding the state’s 10 percent projected increase this year.
But even with cost savings from the switch, Westport Public Schools had to increase its 2023-24 health insurance budget by eight percent – an additional $1.4 million – citing increased rates from Aetna.
Scarice said Westport would continue their plan with Aetna in 2023 as the company insured the district a 14 percent increase cap, but said he was hoping to switch to a self-funded plan in the near future, allowing the district to collect premiums directly and pay out the claims itself.
However, according to projections by Lockton, an insurance brokerage, without the 14 percent insured cap from Aetna, a self-insured model could cost Westport an additional $3.2 million this school year.
“[Self-insuring] gives towns and boards a lot more autonomy over where the dollars go and how they’re spent. So, I’m strongly in favor of moving to that at some point,” Scarice explained. “But by the numbers that were projected, this is not the year to do it.”
Madison Public Schools operates under a self-funded health insurance plan, and Superintendent Craig Cooke told CT Examiner that despite health care increases, it would remain. While Madison budgeted for a significant increase in health insurance costs – 9.4 percent, or $751,365 – he said the district’s increase was still lower than those in surrounding towns.
“We feel like what we’re doing is working,” Cooke said.
Still, Cooke acknowledged that the 2023-24 budgeted health insurance increase was higher than previous years, which he attributed to increased employee usage of their insurance plans, as well as a rise in basic health care costs.
“I think the costs themselves – like the cost of the insurance, the doctor’s visits and things like that – have increased. The cost of so many things have increased,” Cooke said.
But Cooke said that through the self-funded plan, the district could lower claims by encouraging employees to keep up with their health and incentivize alternative insurance plans, such as sharing plans with spouses. Additionally, Madison Public School teachers pay for about 24 percent of the insurance premiums to help to offset district expenses, whereas both the Thompson and Westport Public School teachers cover about 19 percent of their premium share.
According to Charlotte Moller, policy director for the Office of the State Comptroller, the state is working to offset losses, partly by using about $40 million in federal COVID relief funds to finance incoming claims. She said that newly-elected state Comptroller Sean Scanlon is focusing on maintaining current groups that are enrolled and attracting a broader demographic to help sustain the plan.
One cost-lowering tool available to state-insured districts is the Health Enhancement Program, which promotes preventive screenings, wellness visits and chronic disease education, said Michelle Giammarinaro, the human resources director of Thompson Public Schools
According to the partnership plan benefits, those enrolled in HEP avoid deductibles and annual out-of-pocket maximums. Smith said 2022 was the first year that the district was required to comply with HEP, and most employees completed the required visits on time.
“I believe the focus of the HEP program and having our employees complete that has really helped us and has kept our losses low,” Giammarinaro said.