This article originally ran in the Feb. 25 issue of the Progress Times.
Mission CISD has been working to combat the deficit in its self-funded health insurance program for the better part of the current school year. Although the total amount fluctuates monthly, it hit a peak in November 2021 when it reached $1.5 million, but it currently sits at about $1.1 million.
“The reason for the deficit is mostly because of high-cost claimants,” Assistant Superintendent for Finance Joel Garcia explained. “High-cost claimants, they’re defined as members with expenses greater than $50,000. So, 54 percent of the medical expenditures to date is attributed to 11 high-cost claimants out of all 2100 employees that are in the plan.”
It is no coincidence that expenditures have increased since the start of the pandemic, Garcia said. Without going into specifics, he explained that some of the top claims were attributed to respiratory — COVID diagnoses and treatments are included in that category. However, there are also some claims unrelated to COVID.
During the 2018-2019 school year, which was the last complete year before the pandemic, MCISD spent about $9.6 million on medical claims, which increased to about $11.6 million in 2020-2021 — the first complete school year in the pandemic. According to Carlisle Insurance Consultant Valeria Ybarra, the district is on pace to spend a projected $13.6 million on medical claims this year if the self-funded health insurance plan continues to run the way it is.
EXPLAINING SELF-FUNDED HEALTH INSURANCE
One of the main differences between a self-funded health insurance plan and a fully-funded health insurance plan is the entity that assumes the risk. In a fully-funded plan, the employer contracts an insurer to assume financial responsibility for all claims and costs. In a self-funded plan, the employer assumes financial responsibility. Generally, a self-funded plan is considered a more affordable option.
There are various moving parts to a self-funded health insurance plan. Ultimately, the employer and the employee each contribute a designated amount, and collectively the parties make the program self-sustaining. Right now, MCISD pays about $450 a month per employee.
Despite the ongoing deficit in Mission CISD’s self-funded plan, the district has made strides to overcome the issue. By the end of February, MCISD will have received a rebate credit and stop-loss reimbursements totaling $484,177.63 and bringing the deficit down to just over half a million dollars. But still, the deficiency will continue to fluctuate depending on various factors such as stop-loss, in-patient facility costs and treatments. Stop-loss is excess insurance — a product employers purchase that protects against extreme losses.
EXPLAINING THE DEFICIT
Assistant Superintendent for Finance Joel Garcia said he noticed the deficit gradually increasing in March 2021. But June is when the amount became significant and went from about half a million dollars to $1.4 million. To bring the district back in the black, administration and the board of trustees decided to transfer monies from the general fund to cover the deficit expenses at the start of the school year. Although the general fund balance is about $80.8 million, Garcia said relying on the fund balance to cover the deficit is not a feasible practice. He said the district tries to avoid dipping into those funds unless absolutely necessary.
“At our district, we lead with a heart, but we understand the situation, and so we need to come up with a solution,” the assistant superintendent of finance said. “The district is working on a multi-prong approach to be able to address this long-term, to ensure sustainability of the self-funded health insurance plan. And so there’s some things that we did immediately, some things that we’re doing continuously and then we’re looking at some long-term actions as well.”
Most immediately, the district made a change to the prescription benefits plan that would save about $206,000. On Feb. 1, the new pharmacy formulary went into effect and should cause minimal disruption to members, Superintendent Dr. Carol Perez said.
There are several pending action items Mission CISD leaders and the insurance consultants are reviewing. Those items include employee and employer contribution, direct contracts with a hospital to negotiate lower prices, identifying behavioral characteristics and impact analysis on emergency rooms and weight loss surgery. But whatever the changes, the goal is for the new plan to be ready for open enrollment in August 2022.
“We are keeping an eye on the claims,” Carlisle Insurance Consultant Valeria Ybarra said to the board of trustees at the Feb. 9 meeting. “We have been meeting three to four times a month just to really get a hold of it because your team has an extreme understanding of how important it is to clean up that deficit.”
Mission CISD has continuous action items that promote behavior modification opportunities, such as a wellness program that encourages physical and mindfulness activities. The district also partners with preferred local hospitals, clinics and pharmacies to provide low to no-cost wellness screenings and affordable medication. This year, MCISD also implemented wellness rooms at each campus and central office to promote exercise and stress release.
The self-funded health insurance deficit is not a problem unique to Mission CISD. Companies and other districts throughout the United States that operate on self-funded plans are experiencing similar challenges because of the pandemic. But Mission CISD’s superintendent said the school district is in much better standing due to its fund balance, the incoming reimbursements and changes to the plan.
“If you compare to what we paid at the beginning of the year, we’re making great strides. And we’re happy to report that many of our big claims, a lot of those employees are doing much better health-wise so, we’re very, very excited,” Perez said. “We know the pandemic had a lot to do with this. If you look at the numbers compared to the middle of January to now, it’s very, very few students and staff now with COVID. So that is making a huge impact. So we will recover. But at the same time, we have a good fund balance to be able to cover it.”