Aetna Chosen for Health Insurance

Thursday, May 19, 2005



By SUE HAGAN

ThisWeek Staff Writer



Columbus Public Schools will switch from United Health Care to Aetna, Inc. as its health insurance provider, effective Sept. 1.



The school board approved a three-year contract with Aetna at its Tuesday meeting by a vote of 5-0, with board President Stephanie Hightower abstaining. She did not give a reason and -- having adjourned into a closed door session -- was not available for comment after the board meeting.



However, after hearing the recommendation, she expressed concern over rising health costs and the fact that providers can't guarantee that costs won't exceed estimates.



"This has been an issue for us over the last couple of months," she said. "We are struggling to provide the best benefit for our employees" but need to keep costs down, she said. "I hope we did our due diligence."



Craig Bickley, CPS human resources executive director, said the district's insurance committee recommended Aetna based on the company's financial strength and its "fit" with the district's emphasis on wellness.



"It came down to Aetna and Anthem," he said, adding that Anthem offered deeper discounts against health costs, but an analysis showed lower claims costs under Aetna.



The analysis was done by Mercer Human Resource Consulting, hired by the board in January to find a new insurance provider and restructure the insurance plan.



Comparisons among the four final companies -- narrowed from 16 that submitted proposals -- show five-year health care costs ranging from $373-million under Aetna to more than $400-million with Medical Mutual of Ohio. Costs with the other two -- UHC and Anthem -- were estimated at $398-million and $478-million, respectively.



Bickley said those estimates were arrived at by applying one year of actual CPS claims and having them "processed" through each company's system.



"The final issue is this," Bickley said. "If you look at one year of data, Aetna and Anthem are fairly close together. The real difference comes when you take that forecast over time."



He said that Aetna provides early intervention through software that -- for example -- integrates pharmacy data, claims and lab results to hold costs down.



Aetna will charge the district an administration fee of $24.15 monthly for each employee on the health insurance plan, a cost that Bickley said would add up to about $2.2-million a year. UHC is charging the district more than $29 monthly per employee, he said.



Hiring Aetna is a step toward getting the district's health insurance fund on solid footing, Bickley said, but it doesn't solve the immediate problem of how to erase a $21.8-million deficit in the insurance fund.



He said Mercer hopes to bring recommendations to the board by June 30 -- the end of fiscal year 2005 -- on how to fund that deficit.



State law requires that the fund be solvent by the end of the fiscal year, but a ruling is still pending on whether the district has to plug the entire gap by then or if payment could be spread out over time.



In other business, the board unanimously approved $24.9-million in cuts from the 2005-2006 budget.



Superintendent Gene Harris recommended some of the cuts -- including the closure of Kent Elementary School -- in March, and the rest at the May 10 Business Committee meeting.



The cuts are necessary if the district is to cap annual spending increases at 3 percent, a promise made after voters approved an operating levy last November.



Based on last year's budget, that means an allowable increase of only $17.8-million for fiscal year 2006. Harris said expenses next year are projected to increase by more than $42.7-million, due largely to higher payments to charter schools, negotiated salary increases and insurance costs.



Besides closing Kent next fall, the cuts include eliminating 120 teaching positions because of declining enrollment, the decision to increase elementary school class sizes from 25 to 26 students and allocating fewer art teachers.



More savings will come from reducing the maintenance and telecommunications budgets, changing school schedules so bus routes can be consolidated and shelving a plan to integrate the district's various computer systems, among other things.



Harris said she intends to present the full fiscal year 2006 budget at an upcoming Business Committee meeting, and to the full board on June 7.