The board discussed remaining on the state health benefits plan versus attempting to switch to self insurance.
Like many across the nation, the members of Evesham Township School District Board of Education devoted a large portion of their recent meeting to discussing rising health insurance costs.
Board member Sandy Student first raised the issue when it came time to appoint insurance brokerage services to market the district’s health benefits insurance for the 2017–2018 school year.
Student said there was an increase this year of about 8 percent for the state health benefits plan of which the ETSD is a part, and he questioned whether the district might be able to save money through self-insurance outside of the state plan in the future.
“Last year when we spoke to the health broker, they told us that the state plan has no incentive to save money either for the district or the employees. I find that reprehensible,” Student said.
Student said the district’s health insurance costs had increased nearly $5 million since 2008, a cost shared between the district and its employees, and he asked his other board members to talk about the issue intelligently.
“The state health plan, having your employees in it, it doesn’t affect education. It’s a business decision. This is a black-and-white business decision, and our broker is failing us, and I would hope that we would not renew them,” Student said.
However, Superintendent John Scavelli Jr, said any broker the district could choose would be similar in shopping for plans for the district with all available health insurance options.
Scavelli said the issue was not whether the district was part of the state health benefits plan or self-insurance, but rather the district had a high loss ratio. According to Scavelli, the district’s loss ratio is about 95 percent, meaning 95 cents of every dollar the district spends on insurance goes toward claims.
Scavelli said insurance brokers have informed him in the past that they’re looking for a ratio closer to 85 percent to get better bids from other companies. When the district’s broker shopped for last year’s plan, Scavelli said health insurance carriers wouldn’t even bid on the district’s plan.
“We’re with Horizon through the state, but Horizon independently wouldn’t even bid it because they can’t give us a better rate than what we’re getting through the state. If they could, they would,” Scavelli said.
District business administrator John Recchinti echoed Scavelli, and noted that in 2013 the district’s insurance ratio was 88 percent, then 90 percent in 2014 percent and most recently 95 percent in 2015.
“Nobody is going to touch us because there’s not enough margin in there for them to make a profit, so they’re not going to take that chance, so we’re stuck with state health benefits. Unfortunately, that’s the reality right now,” Recchinti said.
Scavelli also noted the district used to be part of a smaller affiliation of schools in South Jersey for health insurance rather than the state, but the state plan eventually became a cheaper option and saved the district about $2 million when it switched.
“We have no allegiance to the state plan. We will go as long as it’s the same plan or better for our employees and our contracted agreements,” he said.
The board ultimately re-appointed Edward J. O’Malley and Gallagher Benefits Services as its broker.
