The San Benito Independent School District’s self-funded health plan is in the red. Unexpected rise in health care expenditures have the school trustees searching for a solution.
By Molly Mulebriar
The funding allowance over the past 24 months, according to news reports, has exceeded $30 million, or $12 million more than what was anticipated.
In October 2013 the SBISD implemented a new health plan which they call the Managed Care Plan. The district improved benefits and reduced the employee’s cost share by 64%, from $69 to $25 per month.
The reader may wonder upon what basis was it determined to pay less for more? “It is a capital mistake to theorize before one has data” – Sherlock Holms
Since the San Benito health plan was contributory, with the new and lower cost to access the plan more employees who were not on the plan previously found the new plan so attractive they jumped on the improved benefits wagon. The district’s cost increased.
“Officials said the new plan charges employees no co-payments, offers no-cost lab work and imaging while deductibles decreased from $1,000 to $250 for in-patient hospitalization.” – San Benito News, October 2013
Usually when you pay less for more something has to change. Either you were paying too much before, or you are paying less than you should now. Actuaries love solving these riddles.
“How do we know we are doing much better this year than last year? What is this year is last year plus or minus this year’s change. You don’t know something is better if you did not know how to measure what it was before.” Unknown Actuary
Since costs are higher than what was budgeted it is our guess that there was no actuary involved in the formation of the new plan with funding levels to be implemented in October 2013. Actuaries are experts at predicting future health care costs and are seldom off by much.
The district would be wise to engage an actuary for a complete plan review with projected financial requirements. Spending $5,000 for actuarial work may be the best $5,000 the district could spend at this point.