School Employees Health Benefit Act

In an effort to provide education employees with quality health care while effectively addressing escalating health care costs, AFT Michigan and the International Union of Operating Engineers, Local 547, worked with various legislators to develop a proposal to significantly improvement the delivery of school employee health care.

Our plan was created in a package of bills is call the "School Employees Health Benefit Act" and includes Senate Bills 895, 896, 897, and 898. All of these bills passed the Senate on December 1 and seem to be stuck on the House Floor. These bills include the following:

State Sponsored Catastrophic Stop Loss Coverage

• A voluntary, state-sponsored program to pool catastrophic claims across participating public education employers.


• The program will be funded through premiums paid by participating public education employers and will offer multiple coverage options.


• The program will save public education employers an estimated 40% of catastrophic premiums through the reduction of commissions, expenses, risk charges, and profit/contribution to reserves.

Comprehensive Health Care Purchased Through Coalition/Regional Pools

• Public education employers would be encouraged to join together to form regional purchasing pools or to participate in local purchasing pools consistent with maintaining existing collective bargaining rights.


• Purchasing pools offer the opportunity for public education employers to leverage the purchasing power of a coalition to obtain improved pricing of administrative services and the savings that accrue from self-funding.

Transparent Health Care Cost Information for Public Education Employer and Employees

• Public education employers will have access to detailed claims information at the hospital and physician level, subject to meeting HIPAA regulations.


• Public education employees will have access to information on the cost of physician and hospital health care services.

Disclosure of Hospital and Physician Performance on Measures of Quality

• Public education employees will be provided information from credible sources on the performance of health care providers on measures of quality.

State-of-the-Art Programs to Improve Member Health

• Public education employers will be encouraged to have state-of-the-art programs, based on national best practices for health promotion and disease management.


• Incentives will be developed in the state-sponsored catastrophic program for public education employers who offer health promotion and disease management programs that reflect national standards.

Efficient Administrative Services that Leverage Industry Standards and Information Technology within a Comprehensive Environment

• A common set of administrative performance standards will be developed using industry standards.


• Administrators of health care plans for public education employees will be benchmarked annually against these standards.


• Greater competition among administrators of public education health care plans will occur as public education employers seek to contract with administrators who meet or exceed the standards.

Talking Points:

• This proposal would save education employers and employees money spent on health care.


• It would maintain collective bargaining rights and the ability to negotiate health care coverage at the local level.


• Participation in this plan would be open to all school districts, public school academies, intermediate school districts, community and junior colleges, and public universities.


• The state would not mandate participation in the local insurance pools, but we are convinced that if school districts exercise the option through collective bargaining, there will be significant health care cost savings.


• This proposal will provide employees and employers with health care claim utilization and cost data which then can be used to make informed decision about health care benefits and costs through the collective bargaining process.


• In total, we estimate school health care savings of 7.2% without reducing employee coverage. These are real dollars that can be used for programs and service to students.

bk:opeiu42aflcio: February 21, 2006