281 Teacher Health Care Crisis?

From SpeedGibson blog:

Our local news, cable Channel 12, is reporting a health care “crisis” in Independent School District 281, the Robbinsdale district that saw its operating levy referendum fail earlier this month. One teacher said his premium is rising by $600 per month. If true, I’d agree this is at least a personal crisis, especially since the collective bargaining agreement is already done and ratified for this period.

My first thought is that this was the TV equivalent of a typo, that they meant $600 per year, not per month. But the interviews with teachers seemed to confirm this. One said she will effectively have a negative check at the end of this month. The general mood is that many teachers will have to move to another district.

The Minneapolis Star Tribune only mentions that family care premiums have tripled since 2005, and not whether this is total or just the employee portion. And why would moving to another district solve the problem? Robbinsdale has already shopped other HMO’s they said, without success.

This works out to $7,200 a year assuming we’re talking amortized 12 month payroll for the 9 months worked as I believe is the norm. Regardless, this is no doubt a big shock to many family budgets. How could this happen?

When a price rises sharply like this, we generally look to the usual suspects: higher demand, limited supply, and monetary inflation. We further assume there’s little we can do about it, as with gasoline prices, only buy less of it, and this is harder to do with health care.

But other districts and the private sector aren’t seeing increases like this. I suspect the “problem” here may be that the 2005 rates may have been artificially low compared to the rest of the market. Maybe this was part of a incentive package the current HMO used to win the current contract, a one time “loss leader” that has now expired. Maybe this was part of the prior teachers’ contract.

Before sympathy is given or action taken, we need more information. How did District 281’s 2005 rates compare with other districts, and of course, the private sector? And how do the new rates compare now?

Tags: 281, Insurance, Teachers