Towns, school districts consider health insurance alliance

Five local school districts, two municipalities and LEARN, the educational services agency for southeastern Connecticut, are considering forming a health insurance cooperative to provide coverage to employees.

"Costs are the driving force," Nat Brown, attorney for LEARN and project manager for the health insurance cooperative, said Monday. "By coming together communities and boards of education can keep price increases down and help stabilize their costs."

Meetings among interested towns and school boards began in 2010, after the state legislature passed a law allowing school districts and towns to collaborate on the purchase of health insurance, said Brown. The group began coalescing this summer, and includes the town and school systems in Waterford and East Lyme, schools in Old Saybrook, Clinton and North Stonington and LEARN.

"We're trying to find a way to get to the lowest price we can for insurance," Dan Steward, Waterford first selectman, said. Annual cost increases to cover the approximately 600 municipal and school district employees covered under the town's plan have been rising 15 percent to 20 percent annually in recent years, he said.

"It's been huge," Steward said. "That's why we're so concerned."

The group is collecting cost estimates for the plan and figuring out the legal and organizational issues to move forward, Brown said. The goal is to have a Board of Directors representing each of the member school districts and towns formed by Jan. 1. The board would govern the workings of the co-op. The initial group of members would have them sign up for the start of the fiscal year that begins July 1, 2013, Brown added. Other districts and towns in the LEARN region, which includes 24 school districts, would be able to join in later years.

"We'd love to have everybody in the region be included," he said.

Under the proposed plan, the cooperative would provide self-funded health insurance benefits, meaning claims and management fees would be paid by the member towns and districts. Coming together in a co-op would allow the members to have a large enough pool of employees to make self-funding practical, according to James Lombardo, superintendent for East Lyme. According to preliminary estimates he developed, the eight members are currently paying about $31 million for fixed costs and claims, and would pay about $27.8 million in the co-op.

"Not only does the consortium save a total in excess of $3 million for the member school districts and municipalities," he wrote a Sept. 12 memo about the plan, "but it also increases the percentage of total costs that go to actual claims for service, rather than fixed costs."

Lombardo, who previously worked for a district in western Pennsylvania that had good experience with a health insurance co-op, said the coop would have the added benefit of being able to provide more wellness programs than current plans. About 600 East Lyme school district employees are covered by the district's insurance plan.

Lombardo said he is hoping to schedule meetings with the town's Board of Finance and Board of Selectmen in the coming weeks to discuss the proposal.

North Stonington Superintendent Peter Nero also had a positive experience with an insurance cooperative in the district where he previously worked in Cranston, R.I.

"It saved us literally millions of dollars," he said.

Coverage for the district's 115 employees would be essentially the same as it currently provides, he added.

j.benson@theday.com

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