School chief touts health cooperative

POTSDAM — The superintendent of Potsdam Central School District said the district can save $498,228 next year by joining a health cooperative in Western New York.

But the union president representing 120 teachers counters there is no proof the new plan will save money, and he says it may erode the quality of care.

Superintendent Patrick H. Brady informed the Board of Education in a written report that informal health committee talks aimed at exploring potential savings from joining the Erie 1 Health Benefits Plan Trust in West Seneca ended when the Potsdam Teacher's Association pulled out.

The Erie 1 trust was created in 2003 by the Board of Cooperative Educational Services in Erie County and four labor organizations, Mr. Brady said. The health cooperative is a self-funded plan governed by the state Insurance Department and controlled by a board of 10 trustees. The group offers two networks of providers, one covering eight Western New York counties and the other offering nationwide coverage for employees and eligible retirees, according to Mr. Brady.

Mr. Brady said by joining Erie 1, the Potsdam school district could shave close to a half a million dollars in insurance premiums in the coming year. In 2009-10, the district will pay $4,332,482 for health insurance. Joining the Erie 1 Health Benefits Plan Trust would reduce that cost to $3,834,254.

Teachers at Potsdam Central are insured by St. Lawrence-Lewis Insurances, Gouverneur.

Anthony A. Vaccaro, Potsdam Teachers Association president, said teachers are not interested in the Erie 1 plan for a number of reasons, including concern there is not an adequate network of health providers associated with the group in this region.

"One major issue that needed to be addressed was not," Mr. Vaccaro said. "They wanted us to make a commitment to the plan before providing us with a network of physicians. The product was incomplete."

Mr. Vaccaro also said changing insurance carriers now would effectively end current cost-saving measures negotiated during the last round of contract talks, when teachers agreed to pay more out-of-pocket medical expenses.

Mr. Brady acknowledged that increased teacher contributions to their current health insurance plan has saved money, but said those savings are not enough.

"The teachers and most administrators are now using these riders which have proven a cost savings, albeit on one of the most expensive plans in the region," Mr. Brady said.

Mr. Brady said right now the Erie 1 plan is about 35 percent cheaper than that being offered by St. Lawrence-Lewis Insurances, but acknowledged premiums for Erie are projected to grow at a faster rate than the teachers' existing insurance package. He said Erie officials have predicted a 9 percent annual increase "over the next couple of years" while the St. Lawrence-Lewis costs will grow just 1 percent this year and 3 percent in 2010-11.

Mr. Brady said when factoring in the different rates of growth, and the fact Erie 1 is now 35 percent cheaper, it would take 10 years before the two plans equal each other in cost.

Mr. Vaccaro disagrees with that calculation, saying Erie 1 officials have given no guarantees that costs would not go up even more than projected. He said Erie 1 projects a 9 percent increase next year, but that rate could turn out to be more because of higher medical costs associated with the north country.

"They tell us there is not a great deal of competition in our area. Hence, costs on average for medical services are higher," Mr. Vaccaro said.

Mr. Brady said he and other school officials are worried they may have to eliminate staff if they can't control health insurance and other expenses.

"The main thing that kept us from making deep employee cuts this year was federal stimulus money," Mr. Brady said. "That is why we are seeking out alternatives to health insurance that will lower costs but provide adequate coverage."

He also said it is unrealistic for employees to expect the district to find a health plan exactly like the one they already have, but at a lower cost.

"There must be some give and take as well as an open mind to working together for solutions that will save jobs while maintaining a high quality educational program for our students," he said.