Audit on K-12 health benefits runs afoul of unions

Mar 4, 2011

Majority Democrats in the Washington Legislature are working to close a multi-billion dollar budget gap. But they're not likely to implement a change the State Auditor says could save $180 million over the two-year budget cycle, as the idea runs afoul of the powerful teacher's union.

The idea in question is to completely overhaul the health insurance system for public school employees in Washington. Here's what the State Auditor found.

Washington currently spends nearly $800 million a year to provide health coverage to more than 100,000 teachers, principals and staff. Drill down and the audit found there are 10 insurance companies offering 200 different medical plans.

It's a "mess" says Larisa Benson with the Washington State Auditor's office. She recently testified to lawmakers that the state could save $90 million a year by creating one umbrella system for all school employees.

"By the way $90 million is about enough money to hire 1,000 teachers, just to put that in context," says Benson.

Here's what else the audit found. There's a wide disparity in health insurance premiums paid by Washington school employees. Some individuals pay nothing while some families fork over $500 a month.

That's a problem agrees Randy Parr with the Washington Education Association, the state teachers' union. But he says the solution is not to throw out the entire system:

"The WEA is really proud of the plans that we provide to school employees across the state. We find that we provide a cost effective package of benefits."

The WEA, in conjunction with Premera Blue Cross, runs six of the school employee health plans and has for nearly fifty years. Parr says the WEA and Premera deliver health insurance at a much lower overhead cost than Washington's public employee benefit program.

And he doesn't buy the estimated $90 million in savings per year. The Auditor's findings are also getting pushback from the union that represents non-teaching staff.

Doug Nelson with SEIU warned lawmakers if they try force K-12 employees to share pools of premium dollars, it will cause what he called "tremendous internal friction":

"Food service employees who have a pool don't want their money to go to the bus drivers and how do I know that? Because I've tried to put insurance pools together and raised holy hell."

Washington House Democrats say they are taking a go-slow approach in reaction to this audit. But in the State Senate, Democrat Steve Hobbs is pushing the issue. He chairs the Senate's Insurance Committee:

"I think we're all interested in trying to find a solution for the state, a solution for the schools, a solution for them. I mean bottom line is if this can lower costs for teachers for their health care, I think they’ll buy that."

Hobbs is a conservative Democrat who often finds himself at odds with the WEA. In fact, he lost the union's endorsement last year.

This isn't the first time the school employees health system in Washington has come under scrutiny. Two years ago, minority Republicans proposed rolling school employees into the state employees health program. Democrats rejected that idea.