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Archive for Thursday, April 11, 2002

District assesses new health plan

Collective bargaining group endorses switch from Blue Cross to Coventry

April 11, 2002

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Negotiators working on a new contract for Lawrence teachers on Wednesday endorsed a health-insurance plan that would sever ties to Blue Cross and Blue Shield of Kansas.

The collective-bargaining group unanimously agreed the school board should abandon the district's cash-starved "self-insurance" plan maintained by BCBS and contract for employee medical insurance with Coventry Health Care of Bethesda, Md.

"Why Coventry?" said John Bremmerman, an Overland Park insurance consultant with Haake Companies who helped a district committee evaluate a dozen health-care proposals. "The low premium cost as well as the benefit enhancements to employees."

He met with teachers, staff and administrators at district headquarters to outline insurance options for the 2002-2003 school year. The school board could take up the issue as early as April 22.

"I'm supportive of this proposal," said Scott Morgan, a school board member who serves on the negotiations committee.

Under the plan, the district would continue to pay the full premium of all full-time individual employees as well as continue subsidizing family plans. The district has 1,148 individual policies and 396 family policies for a total benefit group of about 2,500 people.

One drawback of the proposed change is that the physician network available to district policyholders through Coventry would be smaller than the current BCBS network, said Barbara Lynch, the district's benefits director.

"We give up some flexibility," she said. "When you go fully insured, you're at the insurance company's mercy as to what their plan is."

Signing up local doctors might be challenging, since Coventry's fee schedule for physician services is about 30 percent less than with BCBS.

Based on Bremmerman's analysis, the district's maximum liability for medical insurance next year would be lowest by hooking up with Coventry.

Renewal of the current BCBS package would have increased the district liability $969,000, while a fully insured program through BCBS would require a district investment of $694,000. The Coventry plan endorsed by negotiators raised the district's maximum liability by $182,000 in the next school year.

Coventry's "Open Access Plan" has better employee benefits than the current self-insured BCBS program.

For example, the deductible for a policyholder under BCBS is $300 for an individual and $900 for family. Coventry's deductible is $250 for an individual and $750 for a family.

Most brand-name prescriptions under Coventry are $20. That's $10 less than currently charged under BCBS for brand-name items.

BCBS offers one vision exam annually with a $25 copay, but Coventry has no limit on exams and a $35 copay. Coventry also discounts frames and lenses up to 60 percent.

In addition, BCBS sets a $1 million maximum lifetime benefit. Coventry has no lifetime benefit cap.

The district has operated a self-insurance medical program since 1981. In recent years, the school board hasn't adopted premium increases to keep pace with rising medical expenses. That drained the district's health care reserve fund, said Kathy Johnson, the district's finance director.

Bremmerman said the self-insurance fund needed an injection of cash perhaps as much as $2.5 million.

"That's a pretty tall order given the current budgetary environment," he said.

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