69传媒

Budget & Finance

Why 69传媒鈥攁nd Teachers鈥擬ay Need to Brace for Higher Health Insurance Costs

By Mark Lieberman 鈥 March 21, 2024 5 min read
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Health insurance is expensive, stressful, and confusing to navigate for the common customer. For school districts, it鈥檚 not much different.

Many districts are dealing with skyrocketing costs of providing health insurance to staff, thanks to a wide range of recent developments in health, medicine, and the labor market.

Roughly 3 in 4 district leaders who answered an EdWeek Research Center survey between Jan. 31 and March 4 said health insurance costs had increased since the 2022-23 school year. Slightly less than a quarter saw no change in health care costs for staff, and only 1 percent saw a slight decline.

More than a third of district leaders saw health care costs increase by more than 10 percent, according to the survey, which included responses from 239 district leaders. Seven percent saw costs increase by more than 25 percent.

The Forest school district in rural northwestern Pennsylvania, for instance, saw a modest increase of 2.3 percent in health insurance costs between 2022 and 2023. Staff health insurance this year cost $1.4 million, or roughly 10 percent of the district鈥檚 annual operating budget of $15 million.

But Superintendent Amanda Hetrick has seen preliminary numbers that suggest the next increase for the upcoming school year could be as high as 10 to 12 percent. She鈥檚 not counting on much help from the state to make up the difference for her district, which she describes as 鈥渞ural beyond rural.鈥

鈥淲e鈥檙e one of 500 some districts, and population-wise we are the smallest county in the state,鈥 Hetrick said. 鈥淲e don鈥檛 have a lot of big swing.鈥

The vast majority of school district budgets鈥攂etween 80 and 90 percent鈥攇o towards compensation and benefits for staff. Health insurance is a significant and unpredictable part of that sum.

Here are a few reasons why some districts are sweating the health care bill this year.

The long tail of the pandemic hasn鈥檛 gone away

In the Forest district, many staff members have resumed medical appointments or pursued procedures that they had put off during the height of the COVID-19 pandemic. That means a few years of relatively limited cost increases has given way to steeper increases, Hetrick said.

Hetrick鈥檚 district has also seen an uptick in respiratory viruses during the school year: not just COVID and the flu, but RSV as well. The sicker the staff, the higher the medical bills the district鈥檚 insurance plan has to cover.

Meanwhile, the because hospitals and other medical facilities have invested in salary increases to help address the ongoing pandemic-era shortage of nurses and other skilled medical workers.

Emerging drugs are driving up prescription costs

Doctors can prescribe medications like Ozempic to help diabetes patients manage blood sugar levels. In recent years, bolstered by endorsements from the Food and Drug Administration, many doctors have been prescribing the Ozempic relative Wegovy to help non-diabetic patients lose weight.

These medications are . Some previously reluctant insurance providers have started covering them even for weight loss, though others have backed off as costs have risen.

Some districts are feeling the pinch in their budgets. In Schoharie, N.Y., the school district is exploring the option of switching to a health care provider that sources Ozempic and other weight-loss drugs from Canada and other countries, where the costs for weight-loss drugs are significantly cheaper.

One plan with international shipments would cost the district $40,000 a year on prescriptions for staff, compared with the current cost of $320,000 per year.

鈥淭he costs that districts are incurring because people are using these medications more readily is quite drastic,鈥 said David Blanchard, the district鈥檚 superintendent.

See Also

This image provided by Novo Nordisk in January 2023, shows packaging for the company's Wegovy medication. The popular weight-loss drug, which has helped millions of Americans shed pounds, can now be used to reduce the risk of stroke, heart attacks and other serious cardiovascular problems in patients who are overweight or who have obesity, the U.S. Food and Drug Administration said Friday, March 8, 2024.
The federal Food and Drug Administration in December 2022 approved Wegovy, an obesity treatment, for children as young as 12. Weight-loss drugs have been a popular topic of conversation on social media and teens have been paying attention, feeding into concerns <ins data-user-label="Matt聽Stone" data-time="03/18/2024 9:57:35 AM" data-user-id="00000185-c5a3-d6ff-a38d-d7a32f6d0001" data-target-id="">that </ins>adolescents, particularly girls, have long had about body image.
Novo Nordisk via AP

This isn鈥檛 a universal problem, though. In Iowa, the state health insurance plan for school district employees doesn鈥檛 cover weight-loss medications for non-diabetic patients, said Shashank Aurora, chief financial officer of the Des Moines school district, the largest in the state. As a result, those medications haven鈥檛 cost the district much, he said.

Workers have the upper hand in negotiating better coverage

High health insurance costs often lead to bigger expenses for staffers who are covered. 69传媒 have struggled with staffing in recent years, giving labor unions and other advocates for school staff more leverage in negotiations over benefits.

Teachers in Rochester, Minn., are negotiating with the school district there on a proposed increase to the district鈥檚 contribution to their health insurance costs. Union members say rising premiums are eating into their salaries, .

The Caddo school district in Shreveport, La., recently proposed a 15 percent increase to the portion of health insurance premiums employees have to pay, drawing consternation from many employees. The school board there eventually .

Meanwhile, schools鈥 options for health insurance coverage, and the policies that dictate how they offer it, vary considerably across the country.

In New Jersey, for instance, districts are legally prohibited from increasing property taxes by more than 2 percent in a single year鈥攅xcept to cover a list of qualified expenses, including health insurance. In other states, schools all use the same health insurance provider, or coalitions of districts create their own self-insurance pools.

The New Jersey policy often leads to discussions about the trade-offs between asking voters to approve higher taxes and making sure staff are adequately taken care of, said Christopher Mullins, the business administrator and board secretary for the Monmouth Ocean Educational Services Commission, which provide services to several school districts in the Monmouth County area.

Districts in the state often have to convince property owners to chip in if they want to to cover rising insurance health costs. But pitching tax increases to property owners, Mullins said, is particularly challenging because he and his colleagues don鈥檛 always know the details of how school staff use their health care plans.

鈥淚 don鈥檛 know what my staff are using, I don鈥檛 know what鈥檚 actually driving up costs,鈥 Mullins said. 鈥淭here鈥檚 very little data to build off of.鈥

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