Dropping Union Health Insurance Saves District $737K

In the three years since Dansville Schools dropped Michigan Education Special Services Association insurance for a different high-deductible plan, it has saved $736,873.87 and its employees haven't had to pay for any health insurance premiums in that time, according to the superintendent.

MESSA is a third-party administrator affiliated with the Michigan Education Association that buys health insurance from Blue Cross Blue Shield of Michigan and resells it to school districts.

Dansville Superintendent Amy Hodgson said the $736,873 was how much more the district would have paid had it kept MESSA. She said the employees do have to make co-pays for things such as office visits. Dansville dropped MESSA in 2011-12.

Because of a 2011 law which has had big savings for taxpayers and districts, schools have the ability to choose an 80/20 option where employees pay 20 percent of the premium cost or the “hard cap,” which restricts the dollar amount a school district can spend on insurance premiums. The hard cap was set at $15,000 for the family plan in 2011 and increases every year at the rate of inflation.

Hodgson said Dansville has a hard cap plan, which allows them to cover the premium costs of their employees.

Since the 2011 bill that required employees to contribute to their own health care costs or put a cap on what schools could spend on it, MESSA has seen its program revenue decline, according to documents filed with the IRS.

MESSA’s program revenues have dropped from $1.25 billion in 2011 to $1.06 billion in 2013, a 15 percent drop.

“School districts are likely dropping MESSA because it's just not a good value,” said Audrey Spalding, education policy director at the Mackinac Center for Public Policy. “The 2011 law limiting health insurance costs has encouraged districts to shop around for better plans. As a result, districts throughout the state are saving money by leaving MESSA.”

Gary Fralick, spokesman for MESSA, did not return a request for comment.