In 2000, 44 percent of private-sector U.S. workers were covered by employer self-insurance health care plans. Today, that’s 55 percent.
And there’s a simple reason for that: Money. Increasingly, mid- to large-sized firms have found that self-insurance helps control health-care costs.
So, shouldn’t Maine’s school districts — facing hundreds of thousands of dollars in state cuts — consider self-insurance as a way to make up the difference without affecting student education?
Shouldn’t they at least be allowed to explore that option?
Nope. That was answer from Democratic legislative leadership Thursday, as they scrapped a sensible bill to allow school districts to consider health care self-insurance.
Self-insurance isn’t risky and it’s not complicated. An employer designs its own health-care plan and sets aside the money to fund typical claims, then it buys a reinsurance policy to cover any extraordinarily large claims.
The firm usually hires an insurance plan manager to handle the paperwork and administer the details.
Private firms have found several advantages to self-insurance.
First, they can cut out much of the profit extracted by large insurance companies.
Second, costs tend to increase more slowly in self-insurance plans.
Third, employers hold the financial reserves and can maximize interest income.
Finally, plans can be more easily customized to an employer’s work force.
We see no reason those benefits wouldn’t transfer to the state’s school districts, which are often the largest employers in their communities.
However, self-insurance is not one of the options allowed under state law, which means it is not available to school districts.
Since schools make up the largest part of the property tax bills in most communities, and since payroll and benefit expenses make up the lion’s share of school budgets, this issue should be of vital interest to all of the state’s taxpayers.
Supporters of the self-insurance option estimate it could cut $300 million from the state’s school employee health insurance bill. That’s a significant number in a state which is cutting like mad to make up a $360 million deficit.
And it’s not as if self-insurance is a strange or foreign concept. Education Today magazine recently devoted an entire story to the subject.
Republicans, of course, smell the influence of teacher unions upon Democratic legislators in the bill’s demise.
Democratic leadership, meanwhile, says the bill was killed because it was not an emergency, and that the Legislature wants to recess two weeks early to help save money.
If there’s anything that qualifies as an emergency this year, it is the funding crisis among the state’s school districts. And the savings that could be realized by allowing self-insurance could easily dwarf what the Legislature will save by adjourning early.
Either way, it’s a shame the Legislature did not make time to take up this bill.
Taxpayers should demand a full discussion and vote on this bill in the next legislative session.