MANSFIELD — As Mansfield City Schools reckons with a $3.9 million deficit, district officials say they expect to save between $2 and $2.5 million this year on health insurance costs.
Mansfield City Schools self-funds its employee health insurance plan and carries stop-loss insurance to protect the district against catastrophic, unexpected costs.
Supt. Stan Jefferson and school board president Chris Elswick said the district tasked its insurance broker, John Roby with Roby Foster Miller Earick, with taking apart the plan to look for cost savings last year.
Roby said the cost savings came largely by pulling the district out of an insurance consortium run by Gallagher and negotiating components like the network, stop loss insurance and prescription drug benefits separately.
“It’s going to be a significant savings,” Elswick said. “We’ve got to save money anywhere we can.
“I thought they did a really good job thinking outside the box.”
Those changes took effect Jan. 1. The change won’t impact the level of coverage employees receive, according to Brad Strong, president of the Mansfield School Employees Association.
“There were no changes to the plan, just being a better shopper of services,” Strong said.
“It’s huge. If we can save $2 million, that saves jobs. It helps the district. It helps kids.”
Roby told Richland Source the district will stay with its insurance network, but change its prescription drug benefit provider. The district was also able to lower its attachment point for stop-loss insurance.
“The district has been funding almost all the claims, nobody was getting into that high attachment point, which was negotiated by the consortium,” Roby said.
“We have negotiated that down so that the maximum out-of-pocket to the district is capped.”
High insurance costs have long strained the district’s finances, but Roby said there had been resistance from past treasurers to pull out of the Gallagher consortium. The district also claims Gallagher was slow to respond to requests for the contract information needed to negotiate costs.
“The treasurers are typically who we take our direction from in other districts, but in this case, because we’ve had multiple interim treasures, nobody wanted to go against the original blueprint,” Roby said.
“We’re projecting a $2.5 million savings year over year, which will allow the district to put $1 million into a reserve fund, which is something that has been neglected by past treasurers.”
Union pushes cost-saving measures like MERP, SmartShopper
Renegotiating with providers is the primary step the district has taken to lower health-care costs, but it’s not the only one.
Roby and Jefferson said they’ve also partnered with the Mansfield School Employees Association (MSEA) to promote cost-saving measures like SmartShopper and a medical expense reimbursement plan (MERP) option.
District leaders say both of these strategies aim to lower claims, which is the largest driver of insurance costs.
“We saved $2.5 million this year by beating down the marketplace. We won’t get another $2.5 million from beating down the marketplace. Where we have to attack are expenses,” Roby said.
“That’s why it’s so important to partner with the union.”
SmartShopper is an online program that allows insured employees to compare the cost of medical services from different providers. When insurance holders choose a more cost-effective care provider, they receive a cash reward.
Strong called the program “brilliant,” and said he recently received a $150 reward for shopping around for a procedure.
The MERP is a program that provides employees who aren’t on district health insurance to receive a stipend of $6,000 per year to help with health-care costs.
Mansfield City Schools established its MERP two years ago. Roby said it’s not yet saving the district money, but will as more employees opt into the program rather than enroll in district insurance.
“If it doesn’t work, then we’ll just scrap it,” Roby said in December.
Roby said the union is promoting the MERP to all its members, but that Medicare-eligible employees are the primary target for the program.
He also said there was some initial hesitance to the MERP after a former treasurer questioned the legality of the program. Roby Foster Miller Earick hired an attorney specializing in the Employee Retirement Income Security Act (ERISA) to get a second opinion.
“(The ERISA attorney) said, ‘No, that this is completely legal, this is why it is,’ and gave an opinion letter to the district so that we could move forward,” Roby said.
Despite the savings from renegotiating costs and implementing programs like the SmartShopper and MERP, Elswick said insurance benefits will still be discussed in upcoming negotiations with the MSEA.
“That’s probably going to be the main discussion in our negotiations,” Elswick said. “If you look at our expenditures, 85 percent is for employees.”
