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Helmut Schmidt, Published August 18 2013

Self-insurance expected to save Moorhead district money

MOORHEAD – The Moorhead School Board is trying a self-insurance plan to cut health care costs for its employees and their families.

Preferred One was chosen to be the plan’s administrator on a 6-0 vote last week, and now the plan is being examined by the district’s largest employee group, Education Minnesota, as required by law.

The move to self-insurance will take place Jan. 1 if ratified by Education Minnesota.

Preferred One in its winning bid estimated that the district could see $4,328,768 in claims and fixed its fee at $508,353 for total expenses of $4,837,120. Revenues were estimated for all of the plans at $5,360,154, leaving $523,034 that could be put into a reserve to handle extraordinary expenses or big increases in health care costs.

“I think we’re charged with fiscal responsibility, and this is fiscally responsible,” board member Kristine Thompson said. “It really allows us to explore the additional health care options for our staff.”

Among the other bidders:

Health Partners expected claims of $4,366,481, with fees of $633,586, for total expenses of $5,000,067. Minus estimated revenues, that left $360,087 for use in a reserve.

Medica expected claims of $4,971,857 and fees of $630,783, for total expenses of $5,602,640. Minus expected revenues, that left a deficit balance of $242,486.

CCStpa expected claims of $4,173,390, with fees of $713,115, for total expenses of $4,886,504. Minus estimated revenues, that left $473,650 for use in a reserve.

The district’s current health insurance provider, Lakes Country Service Cooperative and Blue Cross Blue Shield of Minnesota, did not fully fill out its request for proposal, according to representatives of the school district’s consulting firm, National Insurance Services.

NIS representatives said some costs had to be estimated from figures provided by LCSC and BCBS. The bid was determined to have expected claims of $4,646,072, with fees of $714,084 for total expenses of $5,360,156. With estimated revenues of $5,360,154, the result was no real savings or loss, Linda Fenwick of NIS said.

Preferred One bolstered the attractiveness of its offer by agreeing to match benefits now in force for Moorhead Public Schools employees and their families. Health Partners said it would match 99.6 percent of the benefits.

Medica did not respond to the in-force benefits question, and CCStpa said they would not match in-force benefits.

The district has run for the last four years under a fully insured plan, in which it pays a fixed monthly premium to LCSC/BCBS to take financial responsibility for the medical costs of employees and their families and handle the administration.

In a self-insured plan, the employer takes direct financial responsibility for the medical costs. However, it can hire a third party to administer the plan.


Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583