1. Impact of municipal health care reform on school district health insurance spending December 9, 2015

2. Background  Health insurance costs grew rapidly between 2008 and 2010  Districts now spending $259 million more than they would have if health insurance spending as a share of total held constant at 2002 levels  Is municipal health reform helping districts control or even lower health insurance costs? Massachusetts Department of Elementary and Secondary Education 2

3. Municipal health reform  Group Insurance Commission (GIC) has significant purchasing power to control costs  2007 reform gave cities and towns the option to join GIC  Initially 23 districts joined  2011 reforms provided more flexibility to make plan design changes or to join GIC  26 additional districts joined GIC and 167 negotiated plan design changes Massachusetts Department of Elementary and Secondary Education 3

4. Our approach  Analyzed active employee health insurance cost per pupil in 2008 and 2014  Relied on data reported to the Executive Office for Administration and Finance on local decisions related to municipal health reform  Number of total enrollees by district is not consistently available to determine a comparative cost per employee Massachusetts Department of Elementary and Secondary Education 4

5. 2002–2010 health insurance increased by 8.8 percent per year on average Massachusetts Department of Elementary and Secondary Education 5

6. Health insurance now consumes 9.4 percent of total operating expenditures, up from 6.3 percent in 2002 Massachusetts Department of Elementary and Secondary Education 6

7. Growth in per pupil costs were lower for districts that joined GIC Massachusetts Department of Elementary and Secondary Education 7

8. Districts that instituted plan design changes saw their spending grow by 21.9 percent compared with 26.2 percent for districts that reported no changes Massachusetts Department of Elementary and Secondary Education 8

9. Smaller districts saw the largest increases, growing by $378 per pupil or 26.7 percent between 2008 and 2014 Massachusetts Department of Elementary and Secondary Education 9

10. District size is a factor in terms of overall cost and a district’s ability to manage variations in claims Massachusetts Department of Elementary and Secondary Education 10

11. GIC districts experienced the lowest rate of change Massachusetts Department of Elementary and Secondary Education 11

12. Case studies  Selected three GIC districts  One withdrew from GIC  Another that is experiencing savings  A third that is guarded about future savings  Experiences vary based on  Claims history  Employer-employee splits  Incentives Massachusetts Department of Elementary and Secondary Education 12

13. Wachusett joined the GIC in 2010 and left in 2013 after initial costs exceeded pre-GIC levels Massachusetts Department of Elementary and Secondary Education 13

14. Moving to GIC helped Monson address a budget shortfall Massachusetts Department of Elementary and Secondary Education 14

15. Arlington’s deductibles and co-pays decreased and the town used incentives to support adoption Massachusetts Department of Elementary and Secondary Education 15

16. Summary findings  Costs more than doubled between 2002 and 2014  Growth has leveled off in recent years  49 districts that joined GIC are experiencing slower growth than other districts, but results vary  Small districts stand out  Watching to see if GIC savings hold into the future Massachusetts Department of Elementary and Secondary Education 16

17. Foundation Budget Review Commission  Recommended increasing the “benefits and fixed charges” rate in foundation budget  Assumption for health insurance costs benchmarked to the GIC  Added in retiree health insurance, not previously part of foundation budget  Recommended a separate inflation factor for this cost center Massachusetts Department of Elementary and Secondary Education 17

18. Questions? http://www.doe.mass.edu/research/reports/2015 /09MHCR-Impact.pdf http://www.doe.mass.edu/research/reports/2015 /09MHCR-ImpactData.xlsx Massachusetts Department of Elementary and Secondary Education 18