“I said health care was up 3%. I was off,” insurance consultant Rob Fitzpatrick told the school board. “By 3%. We have no increase in our health costs — zero.”
Health benefits in next year’s 2014-15 school budget are now projected to cost $12,714,000 — just as in this year’s 2013-14 budget.
Mr. Fitzpatrick has worked with the school board over recent years as it negotiated one union after another out of traditional “defined benefit” health plans and into “defined contribution” plans with Health Savings Accounts or HSAs — so the board’s employees are now, in effect, spending their own money on health care.
“The HSA has now done what it’s supposed to do: The consumerism factor has come into effect,” Mr. Fitzpatrick told the board last Wednesday.
“The unions have really embraced the HSAs,” Mr. Fitzpatrick said. “They’re more engaged. They understood it.”
“The employees have been terrific. When there’s a problem: Call us, we’re on top of it.”
The lack of an increase in health costs from this year to next has something to do with school system’s change of insurance carriers last year.
“We made a change last year to Aetna. We had a bumpy roll-out,” Mr. Fitzpatrick said.
There had been, among things, computer glitches that caused some employees to have problems with service — which were corrected but, still, were problems.
The difficulties proved useful in discussions with the company over next year’s rates.
“I projected 3%. Aetna’s number was 3.5%,” Mr. Fitzpatrick said.
“Aetna made a business decision to absorb that 3.5%.”
Board members have long been enthusiastic about the job Mr. Fitzpatrick does, working to lower the schools’ insurance costs.
School Finance Director Paul Hendrickson quantified it.
“In the five years Rob has been with us,” he said, “health care costs have gone up 16%” — an average of 3.2% a year.
The board asked what health insurance rate increases nationwide were.
Last year’s rate increases by major companies were 10.6% for Aetna, 10.8% Cigna, Mr. Fitzpatrick said.
School officials are hoping to continue to hold costs down — although that often gets tougher after sizable savings have already been achieved.
School officials have some hopes for “wellness programs” built into its insurance plans, but Mr. Fitzpatrick said it takes three to five years for wellness efforts to begin paying off in fewer health problems — and reduced costs.
Wednesday, school officials seemed happy to enjoy the fact that health insurance — traditionally an area of relentless increases — would be held flat for this year to next.
“This is a contribution of bargaining, educating, and working with the unions,” Mr. Fitzpatrick said.
“We have to thank them all,” said board member Richard Steinhart.
The board and Superintendent Deborah Low, he said, could use the cost savings to benefit students.
“This is what we use to work with Debbie and improve programs,” Mr. Steinhart said.
“This is a prescription for a national plan,” he said. “We’ve proved it here — it works.”