The Spring Lake Park School District will move from a fully-insured health plan to a self-insured plan in July.
Self-insured, the district won’t pay a set premium each month. Instead, the district will pay for employees’ claims directly.
“Instead of managing our health care, we go to managing our risk,” said Ryan Stromberg, director of human resources and organizational development, addressing the school board May 13.
To minimize the risk of financial loss with unanticipated, substantial medical bills, the district will purchase a stop-loss policy.
School Board Member Marilynn Forsberg described the policy as a high deductible plan for the district. If claims go above a certain threshold – the district’s “deductible” – the stop-loss insurance kicks in.
The district set its stop loss between $100,000 and $150,000, Stromberg said, calling that number “conservative.”
At least 58 school districts are self-insured statewide, according to a survey administered by the Minnesota School Boards Association earlier this year. All self-insured school districts in Minnesota purchase some form of stop-loss insurance, Stromberg said.
Isn’t District 16 too small to be self-insured?
It’s a question Stromberg heard frequently as the district considered making the switch to a self-insured policy over the last few years.
The question is more appropriate when companies have between 100-200 employees on their insurance, according to Stromberg. Spring Lake Park has more than 500 employees on its health plan and more than 800 people when family plans are considered.
A self-insured plan will allow the district to tame “the tidal waves of insurance,” Stromberg said.
In 2010, Spring Lake Park employees saw health insurance premiums spike 15 percent, but two years later they held with a 0 percent increase when HealthPartners offered a rate guarantee for two years, starting in 2012.
For 2014-2015, rates will increase 3.6 percent in District 16.
Current trends show costs rising 4-6 percent annually, Stromberg said. Several years ago, trends were closer to 8-10 percent.
The switch to a self-insured health plan will allow for long-term cost savings, and district employees will feel those savings in time, according to Stromberg. “That’s the whole intent to do this,” he said. “The more and more we can manage our health care, the more and more we can put resources into other places, such as salary. This is a long-term decision.”
Teacher union leadership views the jump to a self-insured plan similarly. Members of the executive board unanimously approved going self-insured April 23. By law, an organization’s largest bargaining unit must approve of the self-insured model before it can be adopted.
“We’re on board,” Union President Jim Stern said. “We’re excited about the possibility of spending less on health care.”
Projected health care costs for 2014-2015 are $4.9 million in the district, according to Stromberg.
The district will continue to work with HealthPartners.
No additional employees will be required to accommodate the change in either the human resources or business departments, Stromberg said.
There will be a change in employee education in an effort to keep claims down.
“That’s going to be key,” Stromberg said. “We’ll just be spending a lot more time inside the organization educating our employees on what it looks like to be healthy and what we can do to prevent some of the major things that hit our health plan.”
Understanding where claims are focused will allow the district to target specific health areas, Stromberg said.
The school board voted to approve the self-insured health plan at its meeting May 13.
The district’s dental insurance plan went self-insured in 2011.
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