Health-insurance quandary
School board debates consultant’s role in RFP



GUILDERLAND — The school board here was sharply divided last week after one member raised concerns about a consultant’s role with the district’s health-insurance committee.

The Enterprise received several letters to the editor on the issue this week.

Health-care benefits for district employees cost $8.2 million this year, or 10.8 percent of the district’s $76 million budget.

The cost has about doubled from the $4.1 million the district paid five years ago; in 2000-01, health insurance accounted for 7 percent of a $59 million budget.

Board member Peter Golden, who has since September pushed the district to examine health-insurance costs, created what he called a metaphor last Tuesday to discuss health-care for district employees.

He likened the process to buying a car. The board is not looking to cut benefits for its employees, he said, but rather is looking to get the best deal, much in the way a car-buyer searches for a dealership that will offer the best price.

In November, the school board heard a presentation on the district’s health-care benefits and raised the issue of whether a single insurer might save the district money. A consultant for the district’s health-insurance committee from Rose and Kiernan, Joseph Rogerson, has now prepared a request for proposals for a single insurer.

The RFP went out on Jan. 15, Assistant Superintendent for Business Neil Sanders told The Enterprise this week.

Golden said at last week’s meeting that he was concerned the Rose and Kiernan consultant was preparing the RFP because he had said a single insurer was not the best option for the district and also because it appears to be a conflict of interest.

An independent person should draft the RFP, said Golden.
"I’d like to make a motion," he said.
Board President Gene Danese informed Golden that he couldn’t; board policy is to wait to make motions, listed as "action items" on the agenda, at a meeting subsequent to their introduction.

Sanders, who serves on the district’s health-insurance committee, told The Enterprise this week that, when the district, at the committee’s suggestion, moved to a single insurer for its prescription drug plan, the district already captured the bulk of the savings to be had from moving to a single insurer.
Rogerson "didn’t see the same level of savings from moving the medical portion" to a single insurer, Sanders said.

At last week’s board meeting, Golden asked if commissions had doubled as health-care costs for the district had doubled.

Asked this week how Rogerson was paid, Sanders told The Enterprise this week, "Two ways."

The district offers four plans — two are health-maintenance organizations and two are experience rated.

For the two health- maintenance organizations, Sanders said, commissions are part of the rate, which is set by the state’s Department of Health.
"Whether we have a broker or not, we pay the same premiums," said Sanders.
For the two experience-rated plans, he said, negotiations occur and are "imbedded in the consortium."

In 1996, Guilderland joined the Capital Area Schools Health Consortium, which currently has 15 members.

Also, Sanders said, for the two experience-rated plans, the fee for the consultant is based on enrollment so it doesn’t increase in the same proportions as the premiums.
Asked about the timetable and process for decision-making, Sanders said, "The RFP’s are coming back February 3. The consultant will provide an analysis of the results that the committee will review."

In February, Sanders said, the committee will look at the analysis and then can make a recommendation to the board.

Asked if the board then approves or rejects the committee’s recommendation, Sanders researched what had happened in the past.

Although several board members last Tuesday asserted that the board would approve or disapprove the health-insurance committee’s recommendation, Sanders told The Enterprise this week, "Board approval has not transpired in the past."
He said of the committee, "We have not asked the board to formally approve it."
Sanders went on to say, "The formal action is in budget adoption."

The school board does vote to adopt a district budget, which includes health insurance costs, before the budget goes to public vote.
Asked if the matter would be decided before the district begins its televised budget review, on March 2, with the Citizens’ Budget Advisory Committee, Sanders said, "I don’t know if it will be possible to have it settled by then. One night, we’re scheduled to talk about benefits. Certainly, we can work on it simultaneously with the [citizen review] meetings."

An overview

This fall, Superintendent Gregory Aidala produced a 20-page report, providing an overview of employees’ health-care plans at Guilderland, with comparisons to other local districts.
Guilderland’s benefits are comparable, it said, and are used to "attract and maintain employees of the highest caliber in a very competitive marketplace within Albany County."

Percentage contributions at area school districts range from 67 percent, for new employees only, to 100 percent, with most districts contributing 100 percent, the report said. Guilderland, since the early 1980’s, has paid just 80 percent of health coverage; its employees make up the other 20 percent.

A chart of 12 local school districts shows Guilderland below the middle in terms of percentage of its school budget devoted to health insurance. Seven schools are higher and four are lower.

Unlike most districts, Guilderland does not negotiate health benefits during the collective-bargaining process with labor unions.
"Often, health insurance is a contentious issue and prevents many contracts from settling without protracted and difficult negotiations," the report says. "Also, there can be a disparity in benefits among employees if benefits changes are agreed to with only one bargaining unit at a time."

Instead, Guilderland, for more than 35 years, has had a District Health Insurance Committee, which includes representatives from each of its 12 bargaining units.

Over the past two years, changes made by the committee — for example, increasing co-pays from $10 to $20 — have saved the district about $800,000 annually, the report says.

Guilderland offers health insurance — covering medical, dental, and prescription drug costs — to hourly employees who work at least 20 hours a week and to salaried employees who work half-time or more.

Retirees can continue the district’s group health insurance plan if they have worked for the district for at least 10 years. Most of the bargaining units offer benefits for surviving spouses.

Although workers are eligible for coverage, participation is optional and the district does not offer buy-outs for workers who choose not to use the benefit.

The district currently offers four plans:

— Capital District Physicians Health Plan, a health-maintenance organization, which files for rate increases with the state, is used by 59 percent of Guilderland employees;

— Blue Shield Preferred Provider Organization, an experience-rated plan, meaning that premium rate increases are influenced by the cost of claims incurred, is used by 22 percent;

— Blue Shield Health Plus, another experience-rated plan, is used by 12 percent; and

— MVP (Mohawk Valley Physicians), a health-maintenance organization plan, is used by 7 percent.

Seventy-eight percent of retirees use Blue Shield Preferred Provider Organization; it is the only plan offered with nation-wide coverage.

Board divided
During last Tuesday’s board discussion, Richard Weisz, a lawyer, said that the experience of "most of us in the private sector" says a single vendor can maintain benefits and cost less.
He said, though, he was prepared to defer to the health-insurance committee and was "reluctant to micro-manage."
"To me, how they do it is less important than they’re doing it," said Weisz.

Board member Thomas Nachod, a banker, agreed with Golden, saying he was right on target.

Giving an example from his banking experience, Nachod said that requests for proposals can be written to exclude certain bidders or favor others.
"The concern is any good RFP can be bid by many people," said Nachod. "I don’t see any harm in trying to be certain we’re independent...What have we got to lose" It’s a big chunk of money as Peter said."
"In the end," said Danese, "the board can accept or reject, but I think we ought to stay with the established process."

Board member John Dornbush asked who else besides the Rose and Kiernan consultant working with the committee would know enough to write the RFP.
"You could contract with a consultant," said Aidala. "Timing being the issue, we went with our present consultant...This was not an additional fee for the district. Let’s not preclude what the answer will be."
Board member Catherine Barber echoed Weisz’s thoughts about "not micro-managing" because ultimately the board can approve or disapprove, she said.

Board member Colleen O’Connell mentioned local law firms that have moved to a single insurer to save money.
"If the RFP comes back and does not make sense," she said, "I would have to question the validity of it."
"Let’s see what happens," said Aidala, "then we’ll continue that dialogue."
"You keep saying, ‘Let’s wait and see,’" interjected Golden. He went on to refer to a Rose and Kiernan report that a single health-insurer wouldn’t work for the district.
The board responded by asking, "How do you know for sure"" said Aidala. "The only way to know for sure is to go out for an RFP...to get very specific numbers as opposed to estimates."
"The RFP would be looked at by you guys"" asked Vice President Linda Bakst of the district administrators.

Sanders shook his head, no.
"That’s the point," said Nachod.
"Then the consultant will analyze the bids and report to the health-insurance committee"" asked Bakst.
"Yes," said Sanders.