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Kingsport schools eye self-insured health coverage

February 14th, 2013 8:59 pm by Rick Wagner

KINGSPORT — The city’s school system may consider going to a self-insured health insurance program, although so far no details or timeline have been discussed by the school board.


The move would be a way to increase benefits and save money for the employees and school system, as well as allow school system employees access to a free employee medical clinic city leaders are considering, officials said.


But in a twist for a school system in which the teachers have chosen not to negotiate or collaborate on pay or benefits, by Tennessee law teachers would have to approve the change in a vote.


Superintendent Lyle Ailshie told the Board of Education about the teacher vote requirement last week. Ailshie explained that City Attorney Mike Billingsley a few months ago approached him about the concept, and Ailshie had Mark Morgan of Sherrill Morgan & Associates Inc. give a presentation to the Board of Education Feb. 7.


“The state plan is not nearly as attractive as it was,” said Morgan, a financial consultant for the city. The state plan, like those in the private sector, has increased the cost to employers and employees and in some case reduced benefits. He said teachers likely would be inclined to support decreased premiums and/or increased benefits.


In a nutshell, he said that administering a self-insured program — which would be operated by a traditional health insurance company hired solely for its management services — would allow the school system to take the money an insurer would use as profit over time and accrue it as an asset for the school system. Any catastrophic claims still would be covered by reinsurance.


Morgan said some of that accrued money would be needed in case the system ever went back to traditional insurance to pay out claims made right before the future changeover, but some of it would be available to help offset the cost of a free employee clinic.


The city is self-insured instead of using the state health insurance plan, while the school system remains on the state plan.


The city’s average annual benefit paid out per employee is $10,776 compared to $11,018 for the school system. Morgan said that going self-insured would move the school system average down but not as low as the city’s average because of demographic differences between the groups.


Morgan said that the insurance plan from the employee’s point of view would work like any other insurance plan, with the goal being to maintain or more likely increase benefits.


He said advantages for the school system include flexibility, fewer regulations, operating as a nonprofit entity and the ability to collaborate with other entities, including the possibility of a joint city-school system on-site physician facility. Employees could use that facility at no charge to them to access basic health care and save time and money, Morgan said.


The city and school system, in turn, would save money by funding the lower-cost employee clinic that could handle physicals, blood work and such things, although emergency care and more serious matters still would go through the traditional health care system.


City Manager John Campbell has expressed interest in the clinic concept.


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