Cairo Association of Teachers - Newsletter



CAT Tracks for February 15, 2005
INSURANCE CORPORATION GROUP II

On the afternoon of February 8th, I attended a meeting at the IEA Marion Office concerning the formation of a health insurance corporation for schools in Southern Illinois.


BACKGROUND: As CAT president, I attend monthly meetings of our IEA Region 2 Council...informational meetings that keep locals informed on the latest "union doin's". One such topic was an exploratory effort by schools in Jackson and Williamson counties to form a health insurance buying co-op in order to combat the dramatic increase in insurance premiums being experienced by their school districts - a problem common to ALL districts, especially small ones - like us.

The IEA took a supportive, leadership role in this effort - arranging meetings and picking up the cost of the consultant. However, this was not to be an "IEA Plan"...the IEA simply recognized that affordable health insurance was a priority concern of its members and was willing to "foot the bill" for the exploration of a solution to a common problem.

Meetings held by this group - now termed Insurance Corporation Group I - were evidently very satisfactory. Districts in Williamson County (along with Carbondale Elementary) jumped the gun and closed the door (at least temporarily) to membership - looking to form such a corporation by the beginning of the next fiscal year.

As stated above, the IEA was in a facilitator role only and was in no position to veto the closing - which was NOT anticipated nor desired by IEA. IEA had hoped that if the group found the concept of a co-op to be attractive, that membership in such a group would be made available to any and all districts in the Deep South.

IEA Region 2 UniServ Director Jim Tammen informed us of these developments and indicated that the IEA was going to launch a second effort for those district "left out" in the initial effort. Not long after, I was contacted as to interest in such an effort by Cairo. In fact, Jim Tammen came to Cairo on January 7th and met with Superintendent Harbin, Marsha Cook (CAESP President) and myself to explain the program - to sound out our interest. At the conclusion of the meeting, we agreed that Cairo would be willing to attend meetings of the group on a noncommittal basis.

Thus my attendance at the meeting in Marion this past Tuesday afternoon.


According to the consultant, there is a "magic number" - 1000 (or higher). For actuarial purposes, a group to be insured needs to consist of at least "1000 lives" in order for the laws of probability to work - for health issues to occur on a predictable basis. Predictability is important if a group is to secure health coverage at competitive rates. Also, a group that consists of 1000 (or more) can gain buying-power leverage - i.e. big-bucks premiums for whichever insurance company gets the bid! THAT is the motivation behind the formation of a co-op in Southern Illinois with its traditionally small (and getting smaller) school districts. Large school districts - that dominate northern Illinois - do not need buying co-ops. Those districts have 1000 employees on their own!

How would the co-op work? THAT would be up to the members of the co-op, so details cannot be provided.

One thing that would NOT happen - immediately - is a rate decrease! Each district would enter the co-op with its current health insurance plan at its current rate. This allows the co-op to build a cash reserve for operation purposes. Then...why join? The idea is that FUTURE rate increases would be stabilized - like 5% (for example) instead of 17%, 25%, 33%...the kind that Cairo has been threatened with - or actually received - in recent years.

Also, the co-op would be a "self-insurance plan"...something that Cairo has stayed away from in the past, when the plan would be JUST Cairo. The self-insurance feature allows the group to save on administrative costs, allowing further premium reductions.

Who would be our health insurance provider? That would be up to the co-op. The governing board - made up of the member districts - would make that decision. (Most of the people in attendance at the meeting indicated that their current carrier is Blue Cross Blue Shield of Illinois. There was no indication that anyone desired to change. So...the carrier might well remain BCBS...although there are no guarantees.)

Is this plan for us? According to our current contract, THAT is up to the members of the CSD #1 health insurance group. This past Tuesday was simply an informational meeting. No commitments - no decisions - have been made.

Dr. Harbin is aware that the District has an insurance committee - consisting of all employer/employee groups - to explore health insurance options. THAT is the group that will continue (or discontinue) this process.

The purpose of this edition of CAT Tracks is to give you a "heads up"...to inform you of what is going on...to allow you - encourage you - to ask questions and voice opinions.

This effort may go nowhere. This effort may result in Cairo joining with other districts for health insurance coverage. We are exploring options...ALWAYS a good idea.