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School boards wary of state health insurance

HARRISBURG - The spiraling cost of health care is a constant lament of Pennsylvania school boards whenever they draw up their annual budgets.

HARRISBURG - The spiraling cost of health care is a constant lament of Pennsylvania school boards whenever they draw up their annual budgets.

Their consternation, however, wasn't enough to overcome their skepticism during the 2007-08 legislative session about a proposal that Gov. Rendell said could reduce those expenses - and rein in property-tax increases.

With great fanfare, Rendell in September 2007 advocated legislation to create a special benefits board to look into establishing a statewide health-insurance plan for all of the state's school districts. A handful of other states have adopted similar approaches.

A bill was introduced in the House, but it stalled in committee and died when the General Assembly's session concluded last month.

A statewide plan would help control school employee health-benefit costs by spreading the risk more widely, managing benefits better, and lowering school administrative costs, Rendell said. In a trade-off, employee unions would give up the right to bargain for better health-insurance benefits during contract negotiations.

Rendell has said school districts spend about $1.5 billion annually on medical and prescription-drug insurance, or $1 out of every $6 in school property taxes collected. A 2004 legislative study said school districts could save up to $585 million a year, and more in later years, under a statewide insurance plan.

Many districts now buy individual group policies, while some districts have formed regional insurance-buying consortiums and others buy separate policies for professional and service employees.

House Democrats, who control the flow of legislation in that chamber, didn't advance the measure because of resistance from their home school districts, said Bob Caton, a caucus spokesman.

"Members heard from their districts that they were already participating in a regional group insurance program and were afraid their costs would increase and benefits lessen," Caton said.

Rendell spokesman Chuck Ardo called that argument a "stalling tactic."

"From a business perspective, the opposite makes far more sense: If we aggregate our purchasing power, we can buy more for less money," he said. "The truth is that we won't know for sure until we get the data, and that's why the bill makes it possible to determine whether it's feasible to run a statewide system and - if it is - launch it."

Although Rendell has said the state would pay up to half of the year-to-year increase in health-insurance premiums, the bill imposes certain limits, said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.

"When you look at the details, the state's share is capped," Himes said. "So, if in a year there gets to be extraordinary rate increases, then school districts are left holding the financial bag."

The Pennsylvania School Boards Association saw problems with the benefits board's composition, lobbyist Tim Allwein said.

The House bill initially called for a 12-member board, drawing four members each from unionized school employees and school boards; the other members would have been the budget secretary, education secretary, secretary of administration, and insurance commissioner.

But later versions of the bill expanded the board's membership to 20 and gave school employees 10 seats; the other half would have gone to school board members, state officials and lawmakers.

"If you essentially have a plan where you've got employees calling the shots regarding their benefits, you're not going to get a plan that saves the most money," Allwein said.

The Pennsylvania State Education Association, the state's largest teachers union, supported the legislation. Association president James Testerman said his group did not push for expanding union membership on the board.

Testerman also disputed PSBA's contention that the union would hold sway over the board. Testerman noted that the state also has a role as a school employer, and the board would include legislative members.

Additionally, any decision to implement either a statewide plan or an alternative plan to reduce health-care costs would require at least 15 votes under the bill.

"Even if all of labor sticks together, they still need to go and find five other votes," Testerman said.

Ardo said the administration expects to renew its push in the upcoming legislative session that begins in January.