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$454M in health insurance savings possible

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Schools, universities and the state would save $454 million annually if all were on the same health insurance plan, according to a study delivered Wednesday to the State Budget Committee.

It's money that looks pretty attractive to lawmakers who in 2011 will be struggling to come up with enough revenue to fund schools and state services as the sagging economy continues to dry up tax revenues.

But much of those savings would come in the form of higher premiums or deductibles paid by school and university employees, or because the insurance offers less generous benefits than some schools currently provide.

That's a choice school officials say should be up to local school boards, not legislators.

Dennis Costerison, executive director of the Indiana Association of School Business Officials, said that group has always supported giving schools the option of switching to the state government's health insurance program. But, he said, it should be voluntary, not mandated.

Frank Bush, executive director of the Indiana School Boards Association, said that "many school officials have already examined and compared the state plan with their current coverages and found one of two things: Either it was going to cost them more, or they would not have comparable coverages, and they chose to stay with their local plans."

Only five of Indiana's 290 school corporations have opted to join the state plan.

State lawmakers came within hours of mandating that school corporations and universities join the state's health insurance pool in last year's budget negotiations but decided instead to study the issue further.

Wednesday, Todd Swim, a partner with the consulting firm Mercer, which conducted the study, told legislators that the five school districts that have joined the state's plan are projected to save $3,600 per enrolled employee this year.

Those savings could be realized at a statewide level, he said, as the larger pool would be able to negotiate lower costs and as premiums went up. Swim said an additional 10 percent of savings could be realized if more employees chose consumer-driven health insurance, such as the medical savings account plan the state offers.

House Minority Leader Brian Bosma, R-Indianapolis, said that "with health care taking nearly $2 billion of state funds at the university and K-12 level, constituting nearly 21 percent of the K-12 budget, if we could just get more schools and the universities to opt into the state health-care plan . . . we could avert next year's pending budget challenges significantly."

Lawmakers said that rather than mandate the changes, they preferred to find incentives to encourage schools to make the change.

One possibility would be to give schools only enough funds to cover insurance costs under the state's plan -- something Bush and Costerison said would be difficult, as insurance benefits are negotiated in contracts with teachers' unions.

"The more schools that are willing to make that choice, the more dollars will be available to keep teachers in the classroom," Bosma said. "We're going to do everything we can to encourage that in the coming session."

But House Speaker B. Patrick Bauer, D-South Bend, said that although the insurance changes should be debated by lawmakers, he'd rather see it in legislation separate from the budget so that it gets a full hearing.

Bauer expressed concern that this was another example "of everything being dominated and directed from Indianapolis. We used to have local schools. It seems like they're disappearing."

Still, he said, "I'm open to considering public hearings on this and seeing what the pluses and minuses are."

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