Can Kansas Save $80M A Year With A Statewide Insurance Pool For Teachers?

Feb 3, 2017

One critical part of Gov. Sam Brownback’s budget-balancing plan is creation of a statewide health insurance pool that Kansas public school teachers would have to join.

The governor’s budget proposal for the next fiscal year counts on $80 million a year in health care savings based on an efficiency study by Alvarez & Marsal consulting firm.

But some legislators, including Republicans, are skeptical.

“There’s a big difference between theory and practicality,” says Rep. Larry Campbell of Olathe, chairman of the K-12 Education Budget Committee.

Campbell doesn’t dismiss the Alvarez & Marsal study outright but says the data seem to be thin on claimed savings for health insurance and pooled purchases like gasoline or IT services.

“As far as we know, they didn’t talk to the largest school district in the state of Kansas [Wichita] when they were coming to their conclusions,” he says.

The plan would require teachers to buy a high-deductible health insurance plan as a way to save taxpayers money. But teachers could face higher health care costs.

Rep. Ed Trimmer of Winfield, the ranking Democrat on the committee, says he worries that might keep teachers from getting medical attention.

“It could incentivize people not to go to the doctor because it’s too costly,” he says. “Then they wait until it’s more catastrophic before they decide to go in, and then they have a high deductible but they have to have the care because it’s acute.”

Some lawmakers’ concerns might be eased next week when Legislative Post Audit reports back on what it discovered about a potential statewide insurance pool and whether saving $80 million a year is possible.

During Thursday’s hearing, Legislative Post Audit officials said they collected two years’ worth of data from 101 school districts for their report.

Educators are most skeptical of the plan. Although Mark Tallman of the Kansas Association of School Boards says he’s open to the idea, he added that “we do have some districts that may do better under a plan like this. The concern is we may have a lot of other districts that might be disadvantaged.”

Lawmakers face two hurdles.

The first is political: The idea came from the governor’s budget, which has not been popular with some Republican and Democrat legislators.

The second is practical: School districts pay health care costs for their employees. So even if $80 million can be saved, there is no mechanism to transfer that money back to the state.

“We’re going to assume there’s going to be $80 million a year in savings and we’re just going to take that away from school districts,” Tallman says.