Area school districts will soon feel the pressure of ever-increasing health care costs with the implementation of the Affordable Care Act, often referred to as Obamacare, in 2014.
Joe Martin, broker with Springfield-based Gallagher Benefits Services, Inc., said most school districts will see increases due to three fees specifically, and superintendents say it is money that could be used for educating students instead.
“If we’re going to provide health insurance, we have to pay (for) it,” said Hollister Superintendent Tim Taylor. “It’s just less money to spend on existing staff or academic programs or whatever. We only have so much money and if we’re required by law to spend it there, it’s less money to spend here.”
The two primary fees that become effective Jan. 1, 2014, are the transitional reinsurance assessment fee and the health insurer fee.
“Globally, we find that these three fees impact the cost of employer-sponsored health care plans close to 4 percent,” Martin said. “As we assess each of our clients, it appears the additional cost probably will range between 3.5-4 percent of the cost of current insurance premiums.”
The reinsurance “fee is $5.25 per month, per each covered life for the first year,” Martin said. “That’s an annual cost of $63. That cost would be assessed to each employee that is covered and each dependent that is covered.”
Martin said current estimates show that the reinsurance fee will decrease to $42 in 2015 and to $26 the following year. He said the fee will sunset in 2020.
“The next cost that impacts employer-sponsored plans is the health insurer fee,” Martin said. “The estimate ranges from 1-3 percent. We are finding, in the state of Missouri, that most carriers are being assessed somewhere between 2-2.5 percent.”
The third cost policy holders will encounter is the patient-centered outcomes research institute fee. Martin said the cost would be of a smaller impact at $1 annually and increase to $2 the following year.
The concern for many superintendents in the area is providing the best health care possible while juggling the increasing cost without sacrificing the quality of education or operations of the school districts.
Taylor said the bottom line is the increased costs cut into the budget.
Taylor said the increasing costs certainly give way to caution when thinking about adding staff or salary raises for current staff.
The district is looking at an 8 percent increase in premiums next year, a normal increase, he said.
In total, Taylor said the estimated cost increase next year is at $118,000, in addition to the current $993,600 annual health care cost.
“We’re part of a consortium with 15 school districts,” Taylor said. “Through the consortium, we’re able to get a little better price.”
Taylor noted the district hasn’t looked into changing providers just yet.
However, other school districts have had to make changes in policy.
Kirbyville School District Superintendent Carless Osbourn said the district had to put a cap on insurance last year, requiring employees to contribute out-of-pocket monthly.
“I can tell you a lot of superintendents are talking about health care,” Osbourn said. “Every year, not only do the premiums rise, but plans don’t pay as much. It’s a big component of a school budget.”
He then cited that personnel accounts for 80 percent of the district budget.
“It’s not toilet paper and diesel and pencils,” he said. “We do the very best to attract the top candidates and try to rely on that. When you have to start delving into the salary and benefit component, it just breaks your heart.”
The Kirbyville School District usually experiences increases between 10-15 percent, Osbourn said. In the 2007-08 school year, the premium cost per employee was $287. The cost for next year is $462, a 60 percent increase.
“We’ll try to hold the line without reducing,” he said. “When you talk about letting a teacher go, that’s lessening what the students get.”
Reeds Spring Superintendent Mike Mason said part of the difficulty is not knowing what the final requirements will be.
“All these unknown rules and how this is going to happen and then you get a change in presidency, which we’re not that far away from — how does that affect it?”
Mason said the premium is rising from $342 to $373 next year, a 9 percent increase.
Mason estimates the district will incur a $19,800 increase for premiums alone in the next year for the district’s 330 employees.
Mason said he is looking for ways to find the most benefit for least cost.
“I’m always trying to find a way to tighten up,” he said. “This is one of those things I don’t really have control over.”