Push for statewide mandatory health insurance pool aims to bring down skyrocketing costs
As we enter a new bargaining cycle and legislative session, one issue that is sure to dominate these conversations is health care costs.
Health insurance premiums are skyrocketing across the country, often outpacing wage growth. According to the National Council on Teacher Quality*, while the overall cost of living in the United States has increased by 17% since 2018, the cost of health insurance premiums has increased by 45%.
Minnesota educators are feeling the squeeze as well. Public school employees are paying more of their paychecks toward health insurance premiums, and school districts are paying larger portions of their budgets toward health insurance costs. Currently, school districts across the state pay over $1.5 billion dollars in health insurance—not including employee contributions or cost-sharing measures such as high- deductible plans. The cost that educators pay out of pocket for premiums can be more than $9,000 a year for single plans and more than $34,000 a year for family plans.
“Outside of salaries, health insurance is the biggest cost to a school district,” said Dale Anderson, president of the Shakopee Education Association. “All of us feel completely incapable of figuring out how to address this.”
Minnesota implemented the Public Employees Insurance Program (PEIP) to try to provide affordable and accessible health insurance to certain public employees. In theory, PEIP provides school districts, townships or municipalities the chance to bolster their insurance options by pooling with other public employee groups for health insurance.
However, PEIP is only as strong as the number of public employees who participate. Participation in PEIP is optional, and as premiums have gone up throughout the health insurance industry, participation has decreased. Consequently, plans offered through the program have become increasingly unaffordable for educators.
Some districts have turned to a self-funded approach to try and bring down costs. Self-funded districts handle their health insurance themselves, collecting money and hiring a third-party administrator to pay out to a provider.
Shakopee Education Association switched to self- funded around 2011, said Anderson. “It forced us to learn more about insurance and what kinds of things drive insurance costs,” he said. But self-funding presents its own challenges, such as a limited participant pool and increases in costs of protective measures such as stop- loss insurance, which protects members whose costs go over the allotted amount in the plan.
“We have members that are working two or three jobs just to cover living expenses and health insurance.” – Angela Forland, Kingsland Public Schools.
Other districts are too small to move away from PEIP. Angela Forland, a teacher in Kingsland Public Schools, said that her district tried to leave PEIP but because of their size, they couldn’t get a bid on their own. Teachers in Kingsland currently pay $1,000 a month towards health insurance premiums—in addition to a portion paid by the school district.
“Our premiums are so high compared to what the district can afford to contribute per member, we have members that are working two or three jobs just to cover living expenses and health insurance,” Forland said. “We have members who take the family insurance and then they basically don’t get a paycheck, they just work for the insurance.”
This situation is common, especially among smaller districts. Jerry Brooks works two jobs in the Fairmont Area School District. Brooks said he took the second job to help cover health care costs.
“If you’re the sole breadwinner of your family, in many cases it becomes unsustainable to provide for a family on your net paycheck after health insurance,” he said.
“We negotiated one of the largest raises we’ve ever received, and almost all of it is going towards health insurance,” Brooks continued. In Fairmont, where all public school employees pay into the same plan, premiums for family plans run upwards of $1,000 a month.
But whether districts participate in PEIP or self-fund, benefits have gone down even as costs continue to increase. “We recently cut our most expensive plan and switched a couple of our plans to narrow-network to cut costs, but the narrow network requires you to stay within that network,” said Anderson. “It’s essentially changing the quality of the benefit by saying you have to stay within this system.”
Even within districts, different employee groups can have different health insurance policies. In Kingsland, for example, the teachers receive insurance through PEIP, but secretaries, paraprofessionals and administrators have insurance through Southeast Co-op. As a result, Minnesota’s system is incredibly inefficient, which drives up costs.
Kate Schmidt, president of Dakota County United Educators, says spiraling health insurance premiums are a significant retainment issue. “People go into teaching knowing they aren’t going to make a lot of money, but they’ll have a good pension, good insurance and will be taken care of…if we want to retain people in this profession, we can’t take away their pay and their health care.”
Education Minnesota’s proposal: statewide mandatory insurance pool
At the 2024 Representative Convention, members approved an action item that directs the organization to “address the health care crisis by developing, organizing and advocating for the successful passage of a statewide mandatory educator health insurance pool in the 2025 legislative session and beyond, if necessary.” This measure is included in Education Minnesota’s 2025 legislative agenda (for more information see this article).
Benefits of a larger pool include:
- Increased purchasing power.
- Efficiency in management.
- Increased stability, because the risk is spread out over a larger group.
- No need for brokers, which cost districts millions of dollars per year.
- Uses fewer district resources by eliminating the need for district RFPs and other processes.
- More predictability, because a large pool with reserves can smooth out year to year changes.
The proposed statewide pool would include all public school employees. Moving all school employees into one large state-run insurance pool would give the state leverage and management efficiency to reduce costs, maintain strong health insurance coverage and free up district-level resources from navigating health insurance. It would take out millions of dollars of waste and stabilize insurance for school districts of every size and in every region of the state.
Restoring the promise of a good health care plan would mark a big step forward in solving the educator shortage in our state by creating a powerful recruitment and retention tool for employers.
We can move this policy forward if we work together. Check out pg. 8 for a list of ways to get involved in legislative advocacy. You can also reach out to your Education Minnesota field staff, or if you have questions, contact our lobby team by sending an email to lobbyteam@edmn.org.
*National Council on Teacher Quality, Affording to stay healthy: The cost of health insurance for teachers. Jan. 11, 2024.
