SCHOOLS FACE DILEMMA OVER RISING INSURANCE COSTS

When area school administrators accepted insurance through a state-sponsored program several years ago, they thought they were making a move that would reduce costs for their employees.

Now, a substantial increase in premiums is causing administrators to scramble as they search for other insurance options.

"At this point, we have no choice but to stay with Missouri Consolidated, but I believe we have to start preparing a long-range plan for the next school year," said Dr. Terry Gibbons, assistant superintendent of Jackson schools, during a recent school board meeting.

Jackson is one of many school districts and other public entities in the region that participates in the Missouri Consolidated Health Care Plan.

Missouri Consolidated was created by state statute in 1992 to be a separate entity that would administer the health-care program for state employees. A five-year contract was signed with health maintenance organizations (HMOs) and point of service (POS) plans throughout the state to provide health coverage to state employees.

In January 1995, public entities like city and county governments and school districts became eligible for the program under the same plan. More than 137,000 people participate in the program statewide.

But what began as a cost-saving plan went astray earlier this year after HMOs and POS plans complained they were losing money by participating in the plan. This summer, providers requested and received permission from lawmakers to alter the 3 percent cap on premium increases they had promised when the plan was sold. Area participants later received notices of premium increases that ranged as high as 25 percent more than previous years.

Cape Girardeau Schools anticipated an increase beginning Jan. 1. "So that is in the budget this year," said Dr. Dan Steska, superintendent of Cape Girardeau School District.

While Cape schools received an increase of about 20 percent, Jackson schools will take a hit of about 25 percent.

Both districts have hired consultants to help them shop for other insurance options. Jackson has had little luck so far.

"We knew there was going to be an increase from Missouri Consolidated, so we decided to go independently and see what as a school district we could do," Gibbons said. "We only had two bids, and neither of them were workable for us."

Gibbons said one of the reasons the district was unable to locate another provider was because Missouri Consolidated would not release the district's claims history from the previous year. The district is working with consulting firm Robert D. O'Bryne & Associates to get access to the information.

"Insurance companies like to know what they're getting into, and we couldn't provide that information," he said.

Steska said his district also wants to know what options are available before the beginning of the year.

"They said they don't have access to those records, but we're continuing to investigate that for bidding purposes," Steska said. "You always try to budget for the worst case scenario, but it" not something you want to have to accept."

Ron Meyer, executive director of Missouri Consolidated, was unavailable for comment. Randy McConnell with the Missouri Department of Insurance said the company may not be obligated to provide claims histories to program participants.

"Not unless it's part of the contract," said McConnell. "That is something that should be covered by their contract."

McConnell said the plan is a private employer that provides health insurance benefits to participants and provides a backup for local governments that could not find appropriate coverage. The decision to remove the cap was made after HMOs said they were "being forced to sign up local governments that had poor claim experience that had poor rates."

"Previously, local government employees were charged exactly what state government employees were charged, regardless of what experience they had," he said. "That will no longer be the case Jan. 1."

Steska and Gibbons said they will continue working with consultants to determine how they can make their districts marketable to insurance companies even if they don't gain access to claims histories. The problem will be finding a provider who offers premiums that employers and employees can afford, they said.

"It's kind of frightening from our standpoint sitting here with the employees we have and not having any competitive networking to use," said Gibbons.