Losses loom for the Polk school district's free health care plan

Polk County Public Schools administrators are projecting a nearly $38.1 million shortfall in its health insurance fund by 2024 due to rising healthcare costs and employee claims.

Linda King, director of risk management and employee benefits for Polk Schools, provided the school board with an update Tuesday on the district's health insurance plan. Her update included the fund's financials and potential cost-cutting options for the board to decide later.

Teachers and other benefits-eligible employees do not pay premiums for the employee health plan nor were optional dependent premiums increased, a Jan. 11 PCPS press release stated, adding that "Individual, benefits-eligible PCPS employees will continue to have health insurance coverage at no cost." Premiums are required for dependents of employees and district retirees.

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During union negotiations, the district and the Polk Education Association and AFSCME Local 2227 employee groups agreed to an additional increase to the Self-Funded Health Insurance Plan for 2022.

Fund shortage estimated to top $38 million by 2024

The district started 2022 with a surplus of $7 million and projected $126 million in revenues from premiums, which included a $45 additional district contribution per employee, per month effective July 1, King said.

There were also other revenues of $8.394 million, including rebates and guarantees through the district's contract with Blue Cross and Blue Shield, for a total projected revenue for the fund of $134.4 million in 2022.

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"We're still discussing options for our employee health plan," said Kyle Kennedy, PCPS spokesman. "Following yesterday's presentation we invited Polk County School Board members to submit follow-up questions; staff will develop responses and work with Superintendent (Frederick) Heid to respond to the board."

He added: "At this point we are reviewing financial projections, but they are only projections and are not part of our budget, which is approved once a year and reviewed monthly by staff."

The district's benefits consultant, Janice Bush said, the surplus included a $10 million transfer of funds from COVID monies.

King said the district projects that its incurred claims would be $126.8 million.

"To be honest, the health plan reflects the health of your employees and the group that is enrolled here," she said.

For 2022, the health care fund is anticipated to lose $4.8 million. In 2023, losses would be $14.4 million. Even with losses, the fund should have $2.2 million remaining by Dec. 31. But by the end of the years 2023 and 2024, the fund would be short $12.1 million and $38.1 million respectively.

School Board Member Lori Cunningham wanted to know why the rise in claims were so high. Bush pointed to medical and pharmacy claims that have risen 41% since 2019.

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Bush said many of the district employees have chronic conditions such as diabetes and cardiovascular diseases, which raises the number of claims.

For four years straight, the School Board has increased its monthly contribution, including a $40 health center assessment to the self-funded health plan. No changes have been made to the employee rates or plan design, including deductibles or copayments, since Jan. 1, 2019.

The PEA represents approximately 9,022 employees: 6,980 teachers, 1,517 paraeducators, and 525 educational support staff. The Board had approved the two-year salary agreement, which included the current health plan rates, and the 2021-2022 contracts for the other two groups of workers on Oct. 11, 2021.

Stephanie Yocum, president of PEA, observed the presentation and she said the district often presents a "doom and gloom" situation with regards to the health care plan, but real reform on healthcare costs needs to be done nationally before costs can be controlled.

"There is some work we need to do with our health plan, but overall Polk has a very robust plan with benefits other districts do not offer like our free, extensive employee health clinics," Yocum said. "Rising health costs are not just affecting Polk County Public Schools but every employer in the state and nationwide."

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New cost-cutting options considered

Meanwhile, current strategies to lower the district's cost include telemedicine and wellness programs such as the ABCs of Diabetes with 600 participants, King said. Other preventative programs offer weight loss and dietary coaching, hypertension guidance and smartphone apps, among others.

New strategies could include redesigning the plan or issuing a request for proposals next year to solicit health plan administrative service and innovative health plan solutions.

The panel also saw a comparison of Polk Schools' costs for healthcare benefits with the top 10 school districts in Florida. Polk Schools is not alone in offering the free health care benefit; Duval and Broward counties also offer plans for no cost to employees.

Paul Nutcher can be reached at [email protected].