Study Shows Advantages of Pooling Health Insurance

Ariel Van Cleave

     A new study shows big savings if school districts across Alaska pool health insurance under a state umbrella. School board members and administrators with the Kenai Peninsula Borough School District are hoping state lawmakers will consider the issue again during this this year’s legislative session.

     Lawmakers introduced the idea of bringing school district employees into the state health care system during last year’s session. There are bills in both chambers: SB 90, which is sponsored by Republican Senator Mike Dunleavy of Wasilla and HB 196. Republican Representative Lynn Gattis is sponsoring that one. She’s also from Wasilla. 

     The intention for these proposals is to lower health care costs for the 53 school districts across the state. In Dunleavy’s sponsor statement, he wrote “This larger insurance pool places the State of Alaska in a position to negotiate a more favorable employee health insurance plan… the state and school districts benefit from the economies of scale.”

     A commissioned study was part of those proposals and the findings are in. The Hay Group looked at the current system and then looked for potential alternatives. 

     The KPBSD school board has the health insurance pooling idea on its “legislative priorities” list. Superintendent Dr. Steve Atwater said health insurance costs under the current system are one of the main drivers for the district’s increased budget.

     “We’re budgeting a 6 percent increase for next year. The district and the school board have taken a position that they are interested in exploring that conversation, seeing where it will go. We are supportive of looking for alternative ways to do health care so that we can save some money. Currently I think we do a pretty good job of containing costs for a self-insured entity,” he said.

     According to the study, the KPBSD spends nearly $23 million on its health insurance system for its roughly 1,200 employees who elect to be covered. The study also finds the combined total health care costs for nearly 16,000 employees in the state are $264 million. 

     The Hay Group study recommends an option that would create a centrally-managed system that would allow for customizable health plan choices for districts. It also could create a uniform cost-sharing situation for districts to follow. According to the documents, there could be a potential savings of anywhere between $22.7 and $33.7 million across the state. Each district would be affected differently, of course. 

      But not everyone is in favor of pooling school district employees. Alaska’s National Education Association chapter has its concerns. According to a fact sheet the organization released, the proposed changes would mean each employee be required to get insurance through their districts. That’s currently not the case. The insurance pool could mean less attractive benefits and coverage, and bargaining for health care would be restricted. NEA-Alaska wrote “the state could modify benefits without input or agreement from school boards and employees.” 

     SB 90 is currently sitting in the Senate Finance Committee and HB 196 was referred to the Labor and Commerce Committee.