Health Insurance Change, Wage Freeze Key to Filling RUSD Budget Gap

Significantly higher deductibles on employee health insurance, combined with a two-year wage freeze, are expected to help the Racine Unified School District overcome anticipated cuts in state education aid.

The RUSD School Board will vote this evening on a tentative contract agreement with its teachers union that includes the new insurance provisions and pay change. The special board meeting starts at 7:30 p.m. at the District’s Administrative Services Center, 2220 Northwestern Ave.

The Racine Education Association (REA), the district’s largest bargaining unit representing about 1,600 teachers, agreed Tuesday evening to a new contract that would replace the labor agreement that expires June 30.

The new contract calls for:

• A salary freeze for 2011-13.
• Adoption of a high-deductible health insurance plan.
• Employee contribution of 5.8 percent of salary to the state pension program, compared with no employee contribution under the current agreement.

The health insurance plan will look considerably different from what is currently offered to teachers and other employees. The present plan has a deductible of as little as $200 for an individual. Starting in July, the new plan’s deductibles climb to $2,000 for individuals and $4,000 for a family for medical services from within a provider network and $3,000 for individuals and $6,000 for a family for services from outside the network.

The high-deductible plan, with new maximums for out-of-pocket expenses, continues in 2012-13.

Health insurance deductibles—typically paid by employees—have been trending up as private and public sector employers look for ways to trim escalating benefits costs. The average deductible was $1,200 in 2010 for an individual using in-network providers, according to the annual National Survey of Employer-Sponsored Health Plans. That was a 9.4 percent increase over the previous year. The average deductible has more than tripled since 2000.

The survey of more than 2,800 employers was conducted by Mercer, a global consulting firm that designs and manages employee benefits.

RUSD expects to save about $18 million if all of its unionized employees adopt the REA agreement.  Negotiations are still open with five other bargaining units that represent educational assistants, custodians, secretaries, clerks, carpenters and a painter.

The RUSD employees who participate in the district’s insurance program currently pay an average of 2 percent of health insurance premiums. While that percentage isn’t expected to change, the district expects to save 13.2 percent under the new plan. That’s because the district’s overall premiums will drop and the higher deductibles will likely discourage those insured from filing as many claims.

RUSD currently pays about $50 million annually on employee health insurance and collects $1 million in employee premium payments.