MOVIMIENTO DE TIERRAS

If Washington State were to mandate that all K-12 employees be required to participate in a single state- wide health plan, we recommend that the school districts be permitted to phase into the plan not later than upon the expiration of their current collective bargaining agreements. If the plan rates and benefits were attractive enough, some labor and management groups might reopen contract negotiations to permit early transition into the state-wide Plan.

Subject to further legal analysis the State might be able to preempt the collective bargaining process and enact a law that would require all school districts to participate in a state-wide plan by some specific date, without regard to the desires of the bargaining parties. However, for political and practical reasons we recommend that any mandatory participation or similar types of change be phased in, by requiring transition to the state-wide system by the later of: (a) three years after enactment, or (b) the expiration of the collective bargaining agreement in effect as of the effective date of the authorizing statute. A gradual transition will permit a more orderly start-up of the state-wide plan. However, the state-wide savings that could be realized would not be fully achieved until the expiration of all agreements.

Table XI-1 shows the year of expiration of collective bargaining agreements in our survey. By the end of 2014, 99 percent of the agreements will have expired.

Table XI-1

Analysis of End of Bargaining Agreements

Year Agreement

Ends Bargaining Agreements Number of Collective Percentage Cumulative

2010 23 8.1% 2011 136 55.8% 2012 61 77.2% 2013 53 95.8% 2014 9 98.9% 2015 2 99.6% 2016 1 100.0% Total 285

Source: Hay Group survey of K-12 School Employee Benefits.

In some cases, it may not be possible to terminate the existing health plan contract without significant penalties. For example, there may be an experience rating deficit for the plan that the insurer would have recovered through additional charges if the plan had continued past the end of the existing

collective bargaining agreement. Therefore, the law might allow some additional time to shut-down existing arrangements past the end of the collective bargaining agreement in unusual circumstances. If the state-wide plan were to be voluntary, then there would not have to be any participation deadlines, since each school district could choose to participate, or decline to participate on a time schedule that best meets its current health insurance and their current collective bargaining arrangements. A secondary issue in a voluntary arrangement is to what extent, if any, school districts may leave the state- wide plan and later return. Our review of other states with voluntary participation indicates a range of answers from not permitting school districts to opt out, to requiring a minimum exclusion period such as three years, to unlimited ability to leave and return to the state-wide plan.

Implementation Steps

The first step would be to develop legislation implementing the state-wide plan. The legislation should establish the administrative structure necessary to implement the plan and contain other authority necessary to the successful implementation of the plan. If, for instance, participation were mandatory, the legislation would need to include the conditions under which school districts would have to join the plan. We recommend that the legislation be silent on exact specifications of the plan such as deductibles, co-payments, or types of plans that would have to be covered. Health insurance and delivery systems are very dynamic and the best practices today, e.g., negotiation through Pharmacy Benefit Managers (PBMs) for prescription drugs, could well change to a neutral or even detrimental requirement in the future. The Federal Employees Health Benefits Program has successfully met arising challenges for almost a half century because the requirements of the legislation are very broad.

We would strongly recommend that the funding system be reformed as a preparatory step if the State decides to implement a state-wide plan.

We recommend that the state-wide system be administered by either HCA or a new state agency. We do not think that the health plan for state employees should be expanded to include school district employees because of the different funding mechanisms, the inherent differences in the populations, differences in the health care needs of each population, and the differences in customer service needs. After passage of the legislation, the organization responsible for implementation (HCA, or a new state agency) will study how best to implement the legislation on a timely basis. These considerations will include the following:

 How best to contract with school districts to provide the health insurance to their employees.

 The most effective approach for contracting with health-care providers and insurers to deliver the best benefits at the lowest possible cost.

 The organizational changes needed to implement the new state-wide plan including staffing, space, and computer systems.

 How to determine and charge the premiums paid by the school districts’ employees.

 The range of health plan choices to be provided and the design of each of the choices.

The administrating organization would then prepare a timetable for implementation. The timetable should conform to any requirements in the enabling legislation.

The administrating organization would then negotiate agreements with the school districts that would be required to, or chose to, participate in the first year of the plan. These agreements would include the employees to be covered, the options selected by the school district, and the financial arrangements between the organization and the school district. The administrator would determine the date of entry of each school district into the state-wide plan based on provisions in the law and such considerations as collective bargaining and the financial position with current health insurer.

The administrating organization would negotiate coverage with health care providers and insurers throughout the State of Washington and also contract with a national network to provide coverage for employees traveling outside Washington. The goal of the negotiations would be to provide the best health care to individuals at the lowest price with the health care providers and insurers.

The administrating organization would then prepare the description of the plans available to employees in each school district and distribute that information to the individuals in sufficient time to make an educated choice of health plan for the first year.

The administrator would provide a system for the potential enrollees to make a timely decision on choice of health plan. The system would be the data base used to (1) prepare bills for school districts, (2) confirm enrollment for coverage, and (3) confirm eligibility for claims payments.

During the design period, the administrator would have put into place the organization needed to effectively administer the program. A large part of this organization would have to be in place well before the first enrollment date. The organization would have to include at a minimum:

 An enrollment verification and processing division.

 A claims administration division.

 A call center to handle calls from enrollees, school districts, and providers.

 An executive director’s office to manage the system.

If the administration builds on the existing infrastructure in HCA, the start-up costs would be materially lower.