School districts can reduce health care costs and improve benefits at the same time if they want to. It’s all about leadership.
Former Ashtabula Area City Schools Superintendent Mark Potts writes that the district’s experience shows the cost-reduction benefits of being able to shop for public employee health plan coverage as a price-informed consumer.
When I started school in the early 1970s, there were about 7,300 students in the Ashtabula Area City Schools District. By 2018, when I became superintendent, that number had fallen to about 3,500. The district was facing an operating deficit and cost-cutting.
One of our main cost drivers was our employee health care plan, whose expenses increased by double digits year after year. In 2018, the district spent $10.5 million on employee health coverage, a number approaching 50% of our total payroll budget.
We removed the opaque insurance carrier in favor of a third-party administrator (TPA) who worked directly for us. The TPA then pursued direct contracts at upfront prices with health providers, including hospitals, doctors’ offices, imaging centers, labs, and pharmacies — responsive to us, not middle players that drive up plan costs. We also hired “nurse navigators” to help guide members to the best care at the best prices.
Ashtabula City Manager Jim Timonere was on our plan because his wife was a teacher. His positive experience led him to implement this coverage model for the city. Other school districts and public entities around the state are considering such a model, as well.
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