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Health insurance raises contract issues photo by Bob Pennell Dorine Bracken Teachers say district should have known spike was coming By Damian Mann A $1 million spike in health insurance costs has put Medford School District officials and the teachers� union at odds over who�s going to foot the bill. "Medical costs have grown astronomically," said district finance director Galen Anderson. "We just can�t afford it anymore." But teachers aren�t happy about the prospect of absorbing the increase, nor about reopening their contract for negotiations. "It�s like a cut in pay," said Donalyn Cambas, a Spanish teacher at North Medford High School. "I am very, very upset. I felt like it was a done deal." District paid $7.3 million last year for health care Although the Medford School District contracts with an insurance company, it still pays most of its employee health benefits out of its general fund. This arrangement, standard with most districts, means that Medford schools paid $7,347,246 out of pocket in 1999-2000 for the health care of its 1,300 employees, including about 200 retirees. Insurance companies like the district�s carrier, Regence BlueCross BlueShield, manage the claims, establish fees for procedures and cover the district for claims if they exceed $100,000. "It�s almost a self-insured plan," said Galen Anderson, district business director. But with costs and use of the insurance escalating, and the loss of a less-expensive HMO, Anderson said, the district will be forced to dig deeper into its coffers to cover an expected $1 million more in benefits. "Everything has gone into overdrive," he said. "We need to get a lower utilization of the plan." The expected increase in costs to employees should be a maximum of $1,100 under the current proposal, Anderson said. If an employee decided to place money in a special tax-free fund, that amount could be reduced to $660. The district has until April to find a different carrier, but only three companies have come forth so far: Regence (the current provider), Oregon Education Association Choice Welfare Benefit Trust and Oregon School Boards Association BlueCross BlueShield. Rollin Hogge, agent of record for the district, said he is searching for other plans to bring before the district board. Although it is still too early to predict what sort of coverage employees will receive, Anderson predicted the district will find a benefit package that still provides plenty of coverage. "When you move away from something familiar to something unfamiliar, there is always a certain amount of apprehension," he said. The new plan could cost employees up to $1,100 per person, if they were stricken by a major illness or accident. Kirstie Christopherson, a tech arts teacher at North Medford, said the school district should have been better prepared. "The district knew that the cost of insurance was increasing," she said. "Now they are trying to slip this in the back door." Health coverage for the district�s 1,300 employees would jump to more than $8 million because of the increase, pushing it past 10 percent of the $77 million budget for Medford schools. Insurance woes befell the district last year when the region�s largest carrier, Regence BlueCross BlueShield of Oregon, announced it would drop its HMO coverage countywide. Regence still offers traditional medical coverage, but at a higher cost than the HMO plan. Whatever the ultimate choice, both sides agree that the medical coverage may not be as complete and that district employees could be forced to pay more, particularly for prescription drugs, which amount to an estimated 35 to 40 percent of claims. Orville Leao, president of the teachers� union known as the Medford Education Association, told his members in a January newsletter, "The MEA agrees that changes are necessary, but not to the extent proposed by the district." He proposes school officials find a way to reduce costs and to continue searching for a different insurance provider. "We are not eager to open the contract on this matter so that we can accept less than what we have been promised," Leao said. Leao maintains the employees opted for a fully funded health insurance package in their 1999 settlement "rather than improvements to the salary schedule." Anderson disputed this claim, although he did say there was discussion about finding a different insurance carrier at the time of the negotiations. "The reality is the agreement guaranteed a 3 percent increase (in salaries)." Since the consumer price index has risen less than 3 percent a year, Anderson said, teachers have come out slightly ahead. Both sides have agreed to discuss the insurance situation to find a solution before the end of the school year when teachers go on vacation. "It�s a serious matter, obviously," said Anderson. "We�ve got to have something in place by early part of April. All the employees must be re-enrolled in the new program by then." District employees can expect higher deductibles through whatever plan is chosen, anticipates Anderson. "There is always the potential that there is going to be a cap on the amount of insurance. The difference would have to be picked up by the employees." Teachers like Cambas worry exactly how much they would have to pay. Currently her family uses $587 a month worth of prescription drugs, but worries how much her contribution would have to be under a new plan. "It�s just like a big shock. We�ve gone from the extreme of being totally the best to totally the worst." On the other extreme is Christopherson, who said she rarely needs the insurance, but believes the district promised a high level of benefits during contract negotiations. "That�s what we bargained for instead of cash," she said. "We said if they maintained the district insurance at the same level we won�t push for a raise." Increased demand for medical benefits in recent years can be blamed partially on stresses on teachers through such things as state testing and increased paperwork," Christopherson said. "When you change the workload, you are going to have an effect." She said the district should consider as many options as possible. "We are not brand loyal." Dorine Bracken, a mathematics teacher at North Medford High School, said her daughter has been given several options in dealing with a benign pituitary tumor, including surgery or just waiting. "We were thinking that we were not going to let a finance decision pressure us too soon." Bracken said she is nevertheless sympathetic to the district. "They didn�t know this was coming." But with the prospect of paying a 20-percent deductible on surgery under a new plan, Bracken said she and her daughter are facing new pressures to make a decision. Some set cap on payments Jackson County school districts, like others throughout Oregon, are facing increased pressures to maintain health insurance coverage with escalating costs. Many school districts in the area have already approved caps that set a limit on how much the district will pay. Most have chosen insurance plans through organizations like the Oregon School Boards Association and Oregon Education Association. The OSBA recently predicted that insurance caps and the loss of HMOs will become a bargaining issue with unions and district this year throughout Oregon. Ron Wilson, OSBA director of human resource development, said, "Just about everybody will experience a 19 to 25 percent increase (since last year)." As a result, districts are being forced to consider other health plans that require higher deductibles and lower benefits. Medford is apparently the only district in Jackson County that received its HMO coverage from Regence BlueCross BlueShield, which decided it could no longer afford to operate an HMO in Southern Oregon. But other school districts in the area have found different ways to meet their employees� health insurance needs. Ashland School District business manager Loren Luman said the district not only has a cap on insurance but offers three choices of coverage. He hasn�t heard yet whether there will be an increase this year. Phoenix-Talent School District business manager Doug Spani said his district, which operates under a cap plan, offers insurance through the two statewide organizations. He said rates went up 12 percent from last year to this year. 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