Debate over teachers' health contract returns
Last week, Rep. Jim Harrison R-North Chittenden, planned to offer an amendment to a school spending bill that would require a study group to figure out how to implement a statewide teacher health care contract. Harrison pulled the measure when Rep. David Sharpe, D-Bristol, chair of the House Education Committee agreed to hold hearings this Wednesday.
Gov. Phil Scott, a Republican, has been pushing the idea as a cost containment measure for education spending. Some Republicans are eyeing S.257, a miscellaneous education bill as a possible vehicle to bring the issue back to the house floor. Last year, the Scott administration and the Vermont School Boards Association said a statewide contract could save more than $26 million. A compromise bill encouraging local districts to save money on health care costs saved about $3 million.
The Education Fund has a $40 million funding gap this year. Scott has said he wants the Legislature to find that amount in school savings.
Sharpe, who chairs the House Education Committee, said he is concerned that cost saving promises made at the end of last session haven't come true.
"Problems are evident," Sharpe said. "At the very least, we can take testimony and figure out a path forward for school employee health care and the second question is whether legislative changes are needed to create that path forward."
Scott and the Legislature, which is held by a Democratic majority, were at odds over the issue at the end of the last legislative session. As part of a compromise, a commission was set up to study whether moving negotiations to the state would save money. In late December, the 9-member panel recommended — with a vote of 6-3 — a statewide teachers contract for health care, but didn't lay out a path for implementation. Read the report here.
Currently, all negotiations for benefits and salary are conducted at the local level. The Vermont NEA, the state teachers union, has adamantly opposed statewide teacher health care negotiations.
Sharpe is concerned about taking away health care negotiations from local districts, and he's skeptical that it will save money. Scott and advocates say it would save millions of dollars.
Here are the outcomes from last year's effort to save money on teacher health care:
- School districts were not able to negotiate the targets specified by the Legislature in Act 85: an 80/20 split on the premium and certain out of pocket costs for school staff.
- Almost every school district relied on Health Reimbursement Accounts where the district gives the employee money but takes back what they don't use at the end of the year. The other option would have been Health Savings Accounts that allow employees to keep the money and may make them think twice about brand name drugs and extra doctor visits.
- The Vermont Education Health Initiative, an insurance pool for teachers, raised the premiums for Fiscal 2019 by 16.3 percent. About 7 percent was attributed to the variation in the outcomes of local bargaining and using Health Reimbursement Accounts instead of Health Savings Accounts. The Vermont Education Health Initiative is using reserves to buy down the hike to 8.2 percent.
- About 80 percent of school districts chose a third party vendor to administer their HRAs that couldn't keep up with demand and pulled out.
- Too many contracts weren't decided until the last three months of the year and it takes 60 days to set up Health Reimbursement Accountss. Teachers didn't have enough time to learn about how to use the new benefit.
Sharpe is concerned that Scott wants to garner $40 million from school budgets through a statewide teacher health care program.
"Where we are right now is a mess," Sharpe said. "There may be some savings to be made, but I think that Blue Cross Blue Shield and Vermont Education Health Initiative and the Vermont School Boards Association may have sold him a bill of goods."
On January 1, nearly 35,000 school employees were transitioned to four new plans, more than 90 percent chose the Gold Consumer Driven Health Plan. Laura Soares, President of VEHI, said that part went smoothly.
But a third party vendor, Future Planning — a group administering HRAs for school districts — has hit major snags leaving teachers without medical services and reimbursements.
"The current challenges that have come up around people not having payments or not understanding how their health care works are not directly the result of VEHI and are not within the control of VEHI," Soares said. The school districts are transitioning to a new vendor: Data Pathways, in the coming weeks.
Mark Hague, also of VEHI and the Vermont NEA, said in retrospect they should have handled things differently, but he is confident in the new company. "We are going to dig out of this hole and I think we have found a vendor who can meet the demands of school districts and school employees."
Part of the problem was that there were more than 100 kinds of Health Reimbursement Accounts being offered, each with specific ways to be administered and it takes 60 days to set up the accounts.
"School Districts structured HRAs in as many different ways as you can imagine around the state," according to Nicole Mace, head of the Vermont School Boards Association and a member of the commission supporting a statewide benefit.
Sharpe wants to look into whether it makes sense for the state to set up terms for the out of pocket costs in the HRAs and HSAs and let local school districts continue to negotiate premium shares. "We will put in place an HRA and HSA, what share, who will be the manager - that is where the problems are right now," he said.
In the next weeks, the committee will review what other states are doing with regard to teacher health care, learn more about income sensitivity for lower paid school staff and try to better understand how different copay requirements influence consumer behavior.
"We will work our way through identifying what the problems are and our potential responses," Sharpe said.
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