Battle lines are being drawn over Michigan’s new Public Employees Health Benefit Act, as public school districts report they are unable to obtain from a Michigan Education Association affiliate the information they need to seek competitive bids for employee health care.

Enacted late in 2007 as part of a deal to resolve a state budget deficit, the new law requires public school districts to seek competitive bids for medical benefits plans and makes it easier for schools and other public employers to form health insurance pools.

The law also requires insurance companies and third-party administrators that currently work with school districts to release aggregate information about each district’s past medical claims and costs. That claims history is supposed to be made available to individual school districts, which then are supposed to provide the data to any competitor who wants to bid for the district’s business. The idea is that more competition in the school health marketplace will bring down costs.

But the Michigan Education Special Services Association, the third-party administrator that sells health insurance benefits to about half of Michigan’s education market, now says it can’t provide claims data to individual school districts.

In letters responding to districts who asked for their claims history, the association wrote that, "Due to our business model, MESSA has never maintained claims experience data on an individual school district or group basis." The letters go on to say that the association will begin compiling the necessary data as of Dec. 1, 2007, as required under the act. MESSA was established by and is affiliated with the Michigan Education Association.

"What they basically said is, ‘We don’t keep that kind of information,’" Reed City Public Schools Superintendent Steven Westhoff told Michigan Education Report. "I wasn’t too pleased."

MESSA officials did not respond to a request for comment for this article.

Similarly, Blue Cross Blue Shield of Michigan told Reed City that it was unable to provide claims history data because the MESSA pooling model "does not maintain data needed to separate out groups and membership history information." MESSA insurance plans are underwritten by Blue Cross Blue Shield.

That puts school districts in the awkward position of being required by the new law to seek bids and also to provide claims data that they don’t have, said Tom White, executive director of the Michigan School Business Officials.

"It’s holding up (employee contract) negotiations and it’s frustrating people," White said. "To get the best product at the best price, we need the data."

The contract between Reed City teachers and the school district expires in June, and Westhoff anticipates that contract negotiations, including negotiations over health benefits, will begin this spring. After receiving the letter from MESSA, he also sought the claims data from the Reed City Education Association and was told it "has no control over such information."

At this point, he said, the district plans to request claims data from MESSA for December of 2007 and the first three months of 2008 in order to have bids available during contract talks, but he isn’t sure how useful that will be to bidders. Reed City currently participates in MESSA’s Choices II, a preferred provider health plan.

"I think it’s kind of a game," Westhoff said. "It’s kind of like they (MESSA) have bought themselves … time."

"Schools are always put into these rocks and hard places," said Raymond Telman, executive director of the Middle Cities Education Association, a group representing urban public school districts. "What’s the enforcement mechanism? I don’t know."

Staff members of state Sen. Wayne Kuipers, R-Holland, and Sen. Mark Jansen, R-Grand Rapids, both sponsors of the legislation, were to meet in mid-January to discuss the matter, a staff person in Kuipers’s office said, but further details were not available before deadline.

White and Westhoff both were skeptical of claims that the data was not available at the district level.

"Blue Cross is sending bills to school districts with individuals’ names on them. My guess is they have the capacity to do this," White said.

Priority Health, an insurance carrier based in Grand Rapids that sells a variety of insurance products to 25 Michigan school districts, said it is responding to customer requests for data and looks forward to bidding for business in other districts.

"We have decided we are going to comply with the letter of the law as well as the spirit of the law," said Amy Chambers, director of consumer engaged healthcare products. "It takes some effort, but you can do it."

"Having the kind of claims information that Public Act 106 sets free is going to be very valuable for the carriers and for the school districts," she said. "From the school perspective, this information is going to be gold for them. That’s going to give them ammunition to bargain for the best costs and services."

Asked if Priority Health will submit bids in districts where claims data is lacking, Chambers said it depends on the product.

"For a few of our programs, we would need actual claims data," she said.

Without knowing the claims history in a given district, insurance companies or third-party administrators are likely to bid high, building a safety factor into their numbers, said Jim Miller, director of sales and marketing for the School Employers Trust and School Employees Group. SET SEG oversees a group of non-profit entities that offer insurance products to Michigan schools. SET SEG is now offering consulting services to schools on health insurance bidding and has given a number of presentations to school administrators throughout the state about the new law.

"There are schools bidding out, but the problem is they’re bidding without claims data. Some of them are getting bids back, but they aren’t competitive," Miller said.

MESSA and the MEA, the state’s largest school employee union, fought hard against the new statute, asserting that there is no evidence that pooling will save money on school employee health care and that releasing claims data by individual district will encourage insurance companies to offer bids only to "healthy" districts.

MESSA plans are extremely popular among teachers in some school districts, with teachers citing the high quality of both benefits and service. But the cost of these plans is also high. In a number of districts in recent years, union negotiators have agreed to give up pay raises in exchange for maintaining MESSA coverage. Many more have agreed to switch from MESSA’s most expensive plan to its less costly preferred provider option, Choices II. MESSA officials say that shows that teachers are already doing their part to bring down health care costs.

In contrast, some public school districts have switched carriers and used the savings for pay raises. That was the case in Kearsley Community Schools near Flint, where employees agreed to move from a MESSA product to Blue Cross Blue Shield’s Flex Blue plan.

Tim Dillon, assistant superintendent, said the district saved 10 percent on health insurance by switching to a high deductible plan, with the district paying the entire premium and all deductibles.

"It was absolutely amazing," he said. "We took that 10 percent and it equated to about a 2 percent increase in salary."

Dillon said teachers’ medical privacy is not at risk under individual district plans.

"I don’t receive any information on anyone’s medical condition on an individual basis," he said. "It’s not delineated."

Insurance carriers who want to compete with MESSA have the task of convincing teachers that their plans and services are comparable. The final decision on health benefits is generally decided at the bargaining table.

"I’m hopeful this law will open them up to everything that’s out there," Chambers said. "We’re hopeful that this act and a lot of energy around the act will get our information in front of them."

Miller estimated there are at least half a dozen insurance carriers who would like to get into Michigan’s school insurance market, particularly in southeast Michigan.

"This thing will break, but it hasn’t broken yet," he said.