Cape Girardeau School Board approves employee health insurance package

Thursday, December 9, 2010

Lesson learned for the Cape Girardeau School Board: Contract bidding can bring big savings.

The board on Wednesday approved an employee health insurance package considerably lower than expected, thanks to the board's decision to put the contract out for bid. The winning bid from the existing provider will save the Cape Girardeau School District nearly $250,000, a turn of fortunes from last month when the district was looking at double-digit premium increases.

"It was a really good thing we did bid out because I think it really did improve our situation," superintendent Jim Welker said.

In November, the board was prepared to vote on a contract renewal with Anthem Blue Cross and Blue Shield, which proposed a 10 percent increase to the district's base health insurance plan in 2011. Anthem had reduced its targeted 19.7 percent premium increase by raising deductibles, prescription drug copays and charges for office visits in the district's basic preferred provider organization health insurance plan.

Board member Tony Smee urged the district put the contract out for bid, something it had not done in several years. The board agreed, in part because policy mandates major contracts be bid at least every three years, and the action initiated a whirlwind bidding process over the past month.

Anthem, United HealthCare and Coventry Health Care sent in proposals. Anthem dropped its increase from 10 percent to 3 percent on the base plan, reduced proposed premiums on the lower-deductible "buyup" PPO to 12 percent, and drove down its higher-deductible plan option from a 9 percent increase to a 3 percent decline. While Anthem's plan includes the same higher deductibles, copays and other charges for employees, the district ends up realizing $247,000 in savings based on the district's budget allowance of a 10 percent jump in premiums, according to administrators.

The total annual cost to the district to cover 630 employees will be $3.96 million. United HealthCare's bid did come in lower, with a projected increase of 0.5 percent on the base plan, and a 2.7 percent decrease on the "buyup," at a total annual cost of $3.87 million. But Anthem's network, according to district administrators, runs deeper; the insurer, unlike United HealthCare, is contracted with both Cape Girardeau hospitals and surrounding area doctors.

"I must say I was very wary of this whole [bidding] process and how it would work out, but I want to thank Tony [Smee] for bringing up the whole issue of bidding," said board member Stacy Kinder. "It obviously worked out very well for the district."

Board member Don Call recommended that at least some of the savings go to raises for employees, who have seen pay freezes in recent years. While he said addressing salary issues is important, Welker warned that the district is bracing for severe budget challenges ahead, as Missouri lawmakers confront a state budget shortfall that could run as much as $700 million.


Pertinent address: 301 N. Clark Ave., Cape Girardeau MO

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