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November 16, 2012

Maine Voices: MEA's role as monopoly health insurance agent over ... for now

By REP. JON McKANE

The cost of health insurance for teachers in Maine is high.

Statewide, this education line item amounts to almost $400 million per year and accounts for more than 14 percent of the cost of educating Maine students.

Most of it is paid through property taxes.

One of the reasons the cost is so high -- and so much higher than in the private sector -- is that until recently school boards in Maine had no alternative but to use the Maine Education Association (the MEA is the teachers union) to provide Anthem Blue Cross and Blue Shield health insurance to educators.

This mutually beneficial relationship between this powerful labor union and Maine's largest insurer created a lucrative monopoly.

Ninety-nine percent of the public schools in Maine use their insurance program.

There is no incentive to reduce costs. The more the insurance costs, the more the MEA earns as Anthem's "agent."

School districts have long wanted to explore lower cost options for health insurance.

The problem was that the MEA and Anthem had no obligation to release a school district's health insurance claims data and refused to do so.

This claims data was necessary for schools to solicit a competitive bid, and the MEA held on to it tightly, protecting this cash cow.

The teachers union's fee for "contract administration," which ultimately comes from taxpayers, amounts to hundreds of thousands of dollars a year.

The MEA has also been able to build up a very sizable trust fund from property tax dollars which now amounts to more than $80 million.

The fund was established as a way to buy rates down for higher cost districts, although that never seemed to happen.

And the fund continues to grow.

Finally, after years of trying, this union monopoly of school heath insurance has been broken.

Anthem and the MEA are now required by law to provide all of the health insurance claims data for a school district if asked.

This requirement is the result of L.D. 1326, which was passed by the Republican-led 125th legislature last year.

The teacher's union fought the law bitterly and hired some of the highest paid lobbyists in Augusta to kill this bill as they had done every other time such a bill had been brought forward.

They were not successful in killing it.

But even after the law was passed and signed by the governor, the union filed an injunction to delay the implementation.

Finally, all appeals and injunctions have been dismissed or dropped.

The union has lost its monopoly grip on this business.

This unfair situation has existed for years and it was no secret, but it wasn't until the labor unions and their Democrats lost their stranglehold grip on Augusta that schools could be set free to look elsewhere for this expensive part of education.

Seventy-five school districts have already filed for claims data and are now in the process of seeking competitive bids.

More are interested.

Another option now available is for districts to band together and self-insure.

These different options are projected to save school districts at least 15 percent of their health insurance costs.

This will mean a direct savings to property tax payers.

The cost of education in Maine is already high enough.

School budgets are stretched to the breaking point.

Teachers are being laid off while working families -- many can't even afford their own health insurance -- can no longer afford to pay the property taxes necessary to keep their homes.

This change that cuts the union-middleman out of the equation and allows schools to save on health insurance could not have come soon enough.

But this opportunity may only be temporary.

School districts should file for their claims data now before the union-led 126th Legislature repeals the right to do so.

Rep. Jon McKane, R-Newcastle, has served six years on the Legislature’s Insurance and Financial Services Committee.





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