News Story

High Costs Force School District to Drop Union-Connected Health Plan

Ravenna union prez: '[MESSA] had no competition before ... now they are forced to compete and it is good'

In their previous contract, teachers in Ravenna Public Schools didn’t pay anything toward the cost of their own health insurance premiums through the Michigan Education Special Services Association, often referred to as the “Cadillac of insurance plans.”

But when Gov. Rick Snyder signed a law that required public employers to pay no more than 80 percent of the annual cost of medical benefits, it started a ripple effect across the state that will save taxpayers millions of dollars.

Ravenna’s teachers union voted to drop MESSA for a less expensive insurance plan. MESSA, for the first time, began offering a higher-deductible, lower-premium plan, specifically citing Gov. Snyder’s new cost-sharing law.

Numerous other school districts, such as Dundee, Southfield and Plainwell, have also reportedly abandoned MESSA, which is affiliated with the state's largest teachers union —the Michigan Education Association — for less expensive insurance plans.

“The rules have changed,” said Dusty Fairfield, the Ravenna Education Association union president. “Your local districts were paying for the good insurance and it never got inside the teachers’ wallets. Now, all of a sudden when it is coming out of your own pocket, finances are a real burden for educators now. It is forcing them to say, ‘Hey wait a minute. I can’t afford a Cadillac plan.’ So we shopped around.”

The cost to districts for health insurance has grown in per-pupil terms by 31 percent since 2004, according to the Center for Educational Performance and Information. Michigan taxpayers pay about $2 billion a year, or about $1,300 per student, to provide health insurance for public school employees. About 80 percent of the districts have MESSA, a third-party administrator affiliated with the MEA, which buys insurance from Blue Cross Blue Shield and resells it to districts.

“I’m a member of the MEA,” Fairfield said, adding that he thinks the state teachers union is important. “That doesn’t mean I agree with every aspect of the MEA. One thing I disagree with is the insurance aspect. We are at a day and age now, if we don’t make things competitive and bring prices down, we are not living in the real world anymore. … In 1960 when the MEA had decided to start dealing with an insurance policy that would be more affordable, it was a great idea. Five decades later, in my opinion, the insurance package got too big for the MEA. Now we are in the insurance business, so to speak.

"MESSA had no competition," he continued. "They had a monopoly on all the teachers and they had a good product. I’m an old football coach. I believe competition is good. Competition is healthy. They are being forced to compete with others and it is good.”

Gary Fralick, director of communications for MESSA, said the group has launched 12 cost-cutting plans and riders since 2004 that have saved members and employers more than 30 percent.

“Like workers everywhere, over the past decade Michigan school employees have been paying an increasing share of the cost of their health coverage,” Fralick said in an email. “MESSA believes that affordable shouldn’t mean sacrificing quality and service. MESSA’s three new HSA-qualified plans are designed to give our members more high-quality options to reduce the cost of their coverage while protecting the financial security and peace of mind they value highly.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.