Medford schools continues to look at self insurance

The Medford School District is continuing to inch toward switching from traditional health insurance to a self insurance model.

For the second month in a row, board members on Monday night heard from insurance representatives about the potential benefits, and risks of going to a self-insurance model. Also at the meeting were representatives of Enerquip, to share their experience with switching to a self-insurance model.

“No decisions have been made,” said district administrator Pat Sullivan, noting that since it was brought up at last month’s meeting he has been approached by a number of staff concerned about the potential switch. He said he believed it was the district’s responsibility to look into options which could save money.

“We are a long way from making decisions,” he said. The district’s current health insurance contract with Security Health Plan runs out at the end of the year and will be up for renewal in the fall. The board will need to decide between now and the end of the year what health insurance for district employees will look like going forward.

In traditional insurance, the district contracts with a provider such as Security Health for a set premium amount. The insurance company collects all the money and pays out claims to healthcare providers based on rates the insurance company negotiated with those providers. Often the plans include specific medical providers or clinics with incentives to use those rather than ones out of network.

Under self insurance, rather than paying premiums into a separate company, the district would keep that money in its own accounts and would contract with a third party administrator (TPA) to handle claims. The TPA would review and authorize the company to pay out claims to the individual healthcare providers. This model would also give additional flexibility for the district to incentivize going to lower-cost providers such as by offering no copays for those office visits versus a higher copay for going to a more expensive healthcare provider or system.

Cory Toth-LaPointe, of Spectrum, the district’s insurance brokers, gave the example of choosing to go to an independent imaging clinic in Wausau for an MRI at about $850 versus going through Aspirus at a cost of about $3,000 for the same MRI. Annual premiums for the Medford School District total about $7 million. The district’s health insurance currently covers 341 employees and provides coverage to 1,056 total members including spouses and families.

Each year, the district is rated on usage of the insurance as a percentage of premium paid. Through claims paid through May 31, Medford School District was at 74% in loss ratio, meaning that for every dollar spent in premiums, the insurance company paid out about 74 cents in claims. In 2022, the district was 93.96% at the end of the year with the district at 105% in 2021 and 121.8% in 2020. In addition to overall claims, the district has three high-cost members with one of those with over $150,000 through the first three months of the year.

“When we look at self funding we want to look at if there is a viable benefit to moving to self funding,” Tothe-LaPointe said.

As a layer of protection for a company to protect from very large claims, she explained there is stop loss insurance which goes through a specialized company which would give the district a rate to purchase the stop loss insurance which would kick in after a specified dollar amount was spent. Tothe-LaPointe said she has contacts with two businesses that offer TPA services to get what the administration cost would be and with National Medical Excess for a stop loss quote. She said she expected to have quotes to bring to the board at the August meeting.

Essentially Tothe-LaPointe said the district would become its own medical plan, and would have the ability to set its own benefit plan. She gave the example of choosing to cover unlimited chiropractic care. She explained the stop loss could be triggered by the individual at, for example, $250,000 in claims, or at an aggregate of something like $5 million in total claims. The administrative fee paid to the TPA would be on top of any of the claims payouts.

Kate Brahmer and Jeannie Deml shared with the board the example of how Enerquip implemented a self insurance plan. According to Deml, Enerquip was seeing their insurance cost increasing by hundreds of thousands of dollars. She said the business was paying out more in benefits for employees, but at the same time the employees weren’t seeing the benefits. She said it was getting to the point where the company could not do it any longer and needed to make a change.

“By us controlling costs it has allowed us to be generous to our employees,” Deml said.

Brahmer moved into the role of working with employees on Enerquip’s self-insurance. She explained they operate on a prepay model with the employees bringing in their claims and being reimbursed within seven days.

“It was tough at first,” Brahmer said of the switch. She said she struggled with education and dealing with unhappy people. She noted that since implementing it, most have come around to it and appreciating the savings. For example, in 2019 prior to switching, participants in the company’s employee family plan would pay $150 every two weeks for premium. A family plan currently costs Enerquip employees $75 every two weeks.

“I don’t see how you could get people on board in a quantity large enough to make it viable,” said board member John Zuleger, questioning if there would be enough buy-in with people seeking out value-providers rather than going to healthcare systems for care.

Sullivan disagreed and noted that five years ago it might have been the case with people unwilling to go to a value provider such as Taylored Family Care, but said that the clinic is established and many people are using it for their primary care. He said new staff wouldn’t have been to anywhere else in the community to have opinions about where to go for care.

Board member Don Everhard suggested there would need to be some incentives or significant savings to get people to change how they are doing things.

Brahmer said one of Enerquip’s turning points was when people realized they aren’t just saving money by going to independent clinics, but that there is a value in having a medical provider not bound by strict timelines in seeing patients or who will charge you for multiple visits for asking healthcare questions. Brahmer noted that with staffing shortages and other changes, that people are excited to be able to get into a provider that they can see right away.

Board president Dave Fleegel said he would like to see a way to aggressively incentivize that first experience to get employees to make the change.

Zuleger responded by giving the example of someone who doesn’t like carrots and won’t like carrots regardless of what you do to them.

“At some point, people need to start taking accountability for what this is costing,” Brahmer said.

“There will be winners and losers no matter what we choose,” said board member Steve Deml, noting that not everyone will benefit from a switch to a self-insured model.

No decision was reached at Monday’s meeting and Tothe-LaPointe will be bringing additional information back at the August school board meeting.

In other business, board members: Received a staffing update. Sullivan said they are searching for a teacher to teach Spanish at the high school and middle school level. They are also looking for a middle school language arts teacher as well as three to four aides across the district. “We are a lot better off than a lot of districts” Sullivan said, noting there are many districts in tougher situations with staffing.

  Received an update from Mandy Haenel for the aquatic and fitness centers. She reported that 379 youth took part in the summer swim lessons with another 50 taking part in Swim Klub. She shared plans to expand offerings at the pool throughout the year including aqua aerobics, the ability for groups to rent out the pool, and for youth and adult swim lessons other times during the year.

  Formally adopted the Wisconsin state standards for the academic standards for the coming school year. State law requires the district to adopt standards every year.