Another of the reforms in the Senate’s proposed 2012 supplemental is SSB 6442, which would establish a consolidated purchasing system for public school employee health benefits. (It was passed by the Senate Ways and Means Committee Feb. 23.)

Currently, as the state auditor reported in February 2011,the state provides funds to public schools for their employees’ health benefits.  There are

more than 1,000 separate benefits-funding pools that pay for more than 200 different medical plans offered through 10 different insurance companies.

There are also

uneven out-of-pocket costs for different groups of K-12 employees. About 27 percent of employees, who insure just themselves, pay no premiums at all, while those who buy family coverage pay average monthly premiums of $500.

The report noted that “Public school employee-health benefits totaled about $1.21 billion during the 2009-10 school year.”  It identified some changes that could save up to $180 million per biennium:

• Streamline the system by simplifying the pooling process. Create fewer and larger funding pools to create stability, save money through reduced administrative costs and greatly increase transparency.
• Standardize coverage levels for more affordable, quality medical benefits. Provide affordable, quality care by creating standard benefit levels or “tiers.” Public school employees could choose from these benefit tiers.
• Restructure the health benefits system. Completely restructure the public-school employee health-benefits system. Create a separate, statewide, self-funded program with its own governing board.

The 2011-13 operating budget included a provision (sec. 213) that required the Health Care Authority (HCA) to “develop a plan to implement a consolidated health benefits’ system for K-12 employees for the 2013-14 school year.”  HCA delivered its report to the legislature in December.

SSB 6442 finds that the current system “results in inefficiencies due to duplication of effort, fragmentation of pools, and reduced market leverage for purchasing such benefits” and “there is a lack of transparency on how funds appropriated for school employee benefits are used.”

The bill would create the School Employees’ Benefits Board (SEBB) which would “design and approve insurance benefit plans for school employees” while

• Assuring “equitable access to quality and affordable health benefits for all eligible employees and their eligible dependents by reducing variation in premium expenses for employees who do and do not need coverage for dependents”
• Improving transparency
• Assuring “cost-effectiveness through pooling of small groups, leveraged purchasing, administrative simplification, and efficient utilization of resources to minimize duplication”
• Ensuring “accountability to the taxpayers through timely use of a competitive bidding process”
• Retaining “local collective bargaining for benefits not otherwise addressed through the school employees’ benefits board”

Beginning Jan. 1, 2014 (or, if not feasible, one year later), all school districts would begin participation in the SEBB program. (But schools would be able to opt out of SEBB if they self-insure, for example.)  Also, SEBB must offer “a high deductible health plan option with a health savings account.”

In the Thrive Washington paper, Containing State Health Care Spending While Improving Outcomes, we recommended that school employee health purchasing either be merged with the Public Employees’ Benefits Board or that school districts be required to purchase health care as a group.  We also recommended that all public employees have the option of a health savings account/high-deductible health plan.