School board to examine health care costs

The Kenai Peninsula Borough School District Board of Education will take a look at the district’s rising spending on employee health care through an advisory committee the board created at its Monday meeting.

After the three members of the Health Care Costs Review Committee are appointed from the nine education board members by board president Joe Arness at the next monthly school board meeting on Jan. 16, the committee will have 120 days with a possible extension to carry out the mission of “gathering the available information regarding the expenditures the District incurs with its current health care program, utilizing appropriate professional help to interpret said information, and suggesting potential options the District may have to reduce those expenditures,” according to its charge document.

In its Fiscal Year 2017 Comprehensive Annual Financial Report, the school district records $28.8 million in health care claims and associated administrative fees. The total cost of the previous employee health care plan was $27.27 million, a $6.1 million increase since fiscal year 2013, according to school district officials in a contract arbitration report. In the same report, negotiators from the employee groups Kenai Peninsula Educators Association, which represents teachers, and Kenai Peninsula Education Support Association, which represents other employees, claimed those numbers had been inflated by $1.3 million by including employees who get benefits via grants.

Though the employee health care plan going into effect in 2017 is already set in the contract between the district and its employee associations — which the board approved in its November meeting after an 18-month negotiation — Arness said more information on health care spending could help in future decisions. Exactly how the school board might act on the committee’s findings depends on what the findings are, he said.

“There’s really no preconceptions here,” Arness said. “I’m just really curious about where we spend that money, and what we spend that money on.”

Arness said he was unsure if the board would have the power to unilaterally act on the review committee’s findings, or if the board would have to do so in its negotiations with the employee associations.

When Arness introduced his idea for the health care review committee in an informal proposal at a school board worksession in November, he expressed skepticism about the way health care funds are currently spent.

“I’ll say it right out loud: I think we’re being ripped off by the local medical community, and I would like to see that there are reasonable, realistic things we can do,” Arness said. “I don’t have the answers as to what those are because I don’t have the information.”

The current employee contracts put responsibility for designing health care coverage on an 11-member group called the Health Care Program Committee, made of representatives from the employee associations and district administration. School board member Dan Castimore asked Arness in November how his proposed review committee would differ from the existing Health Care Program Committee.

“The specific goal of this would be saving money, or taking a look at how we’re spending money and if there are savings available,” Arness replied. “The specific goal of the (Health Care Program Committee) is to determine benefits — sort of how you would spend money as opposed to saving it, as I see it.”

Dave Brighton, president of the Kenai Peninsula Education Association said in an interview Monday that saving on health care is also a focus of the program committee.

“It’s disappointing that (the board members) want to form a committee with only board members, when we already have a committee representing all interested parties,” Brighton said. “Teachers and support staff are eager to save the program money, just like administration is.”

An information item in the school board’s November meeting packet listed changes the Health Care Program Committee had made to its 2017 health care plan. One was a deal with Aetna Insurance through which employees can get discounted care from providers in the Aetna network. Other changes include prescription drug benefits estimated to save $27,000 annually, and reduced cost for telephonic medicine services.

School board member Castimore has previously criticized the program committee, saying it is “essentially taking away all the decisions related to health care, and yet (the school board has) to pay for it.” He said in an interview at the November school board meeting that the Health Care Program Committee has little incentive to cut costs, and although district administration representatives sit on the Program Committee, it is difficult for them to act.

The Health Care Program Committee has four members representing the Education Association, three representing the Support Association, one representing the Administrator’s Association and three appointed by the superintendent. It requires a majority of 80 percent to pass decisions. Support Association President Patti Sirois, a member, said this prevents employee association representatives — who make up seven of the group’s nine voting members — from passing decisions without the consent of at least one non-association member. Castimore took an opposite view, saying the 80 percent requirement makes it nearly impossible for district representatives to pass their own measures.

Nonetheless, Castimore was the only school board member at Monday’s meeting to vote against establishing the review committee. He said he didn’t believe it would be productive and compared it to the Kenai Peninsula Borough’s Healthcare Task Force, an advisory group to the Borough assembly on health care issues which had its first meeting in August 2015 and issued its final recommendations in an 11-page report to the assembly in October 2016. Castimore described that group as inefficient and inconclusive.

“We wasted all this time and energy, we got nothing,” Castimore said of the borough’s task force. “That was a much larger effort than what we’re going to do. I don’t want us to do the same thing over.”

Though the district’s health care plan is self-funded — paid for by its employees and the district without contributions from an insurance provider — it is managed by the Spokane, Washington-based insurance agency Rehn and Associates.

Arness said he believed Rehn would be able to provide general, non-personal information about where health care money is being spent, as well as comparisons between the district’s spending and that of similar organizations.

“It always seems to me that there’s all kinds of conversation about how much health care costs, but nobody ever asks, ‘Why does health care cost so much?’” Arness said. “That’s what I want to ask… It’s kind of a wild goose chase. I don’t know where we’ll go, but I want to pursue it a little bit.”


Reach Ben Boettger at

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