EDWARDSVILLE -- The bad news for members of the Northeast Pennsylvania School District Health Trust is that they won't see any reimbursements in their insurance premiums akin to a small refund received by non-member Crestwood School District.
The good news: There's no reimbursement because the trust's program is highly efficient: About 94 percent of premiums paid in are spent on claims.
Crestwood, which does not belong to the trust, recently received an $11,200 refund from its insurance provider thanks to the new health care reform act. Under the law, insurance companies must use a certain percentage of each premium dollar for claims expenses.
If the company spends less than the set percentage – often called a "medical loss ratio," or MLR – on claims, it must refund money to clients. The goal is to reduce the amount of premium payments spent on administration and overhead.
At Tuesday's meeting of the board that oversees the trust, handouts included a letter from Robert Glus, of the actuarial firm Conrad Siegel. Glus explained that Crestwood received a small refund because its insurance provider had an overall MLR below 85 percent, meaning more than 15 percent of each premium dollar goes to administration and overhead.
The trust uses Blue Cross to manage its program, but does not actually get insurance through Blue Cross. The trust is a self-funded insurance program -- it collects and holds money for claims payments -- and is running at a 94 percent MLR, meaning only about 6 percent of each dollar goes to administration and overhead.
Glus also noted the trust's budget has been revised to reflect the fact that Lake-Lehman School District negotiated medical insurance coverage directly from Blue Cross rather than through the trust. Glus said the changes to the budget were negligible because Lake-Lehman is one of the smaller districts in the trust.
Lake-Lehman saw substantial savings this year as result of the Blue Cross deal, and other member districts have questioned why the trust cannot negotiate similar savings for the other members. Glus has told the board he believes Blue Cross gave Lake-Lehman an artificially low premium rate and will lose money on the deal.
After Wednesday's meeting, trust board co-chairman Ralph Scoda said the trust did ask Blue Cross if a similar deal could be worked out for other districts and was told districts would see premiums increase substantially if given the same Blue Cross plan as Lake-Lehman.
Mark Guydish can be reached at 829-7161