When the cost of health care goes up, employers feel the burden as much as anyone. Health benefits are a big part of most employers’ yearly budgets, and an increase in the cost of care has a significant impact on their bottom line.
For this episode of the HealthChangers podcast, host Ashley Bach spoke with Dave Roberts, chief human resources officer for the West Ada School District. West Ada is the largest school district in Idaho, with 38,000 students and 5,000 employees. The district is also a Regence customer.
Roberts has unique insight into how the cost of care impacts a wide swath of employees, not just teachers and administrators but also custodians, administrative assistants and other school staff. He talks about the innovative way his district, with help from Regence and moves from the Idaho Legislature, cut the cost of premiums for employees and what we can all do to ensure we’re getting effective, affordable health care.
Listen to the full podcast episode on the player above. Below are some highlights, which have been edited for length and clarity.
AB: How have you seen health care change in Idaho over the years, and what has the West Ada district done to support its employees through these changes?
DR: I've been in the education business for the last 14 years and have been in this role for the last nine. Medical costs are rising, which drives up the cost of health insurance as well. Lately, it does seem like prescriptions are a big portion of that, even though they are probably only about one-third of our total spend.
In Idaho, and in our school district in particular, the cost of insurance for employees is a big deal. As a school district, we don't pay the highest salary rates compared to some of the private markets, and so our benefits need to be important – retirement benefits and our health insurance benefits.
About four or five years ago, the Idaho Legislature, which provides funding for school districts, changed some of our funding to specifically separate a portion of that funding for health insurance. And then three years ago, there was an opportunity for school districts to join the state health insurance plan. That was attractive because state employees have enjoyed a very, very robust plan at a very, very reasonable cost over the years.
The cost of insurance is the cost of insurance; the differential in that is how much is the employer able to contribute to that cost of the insurance versus the employee? In the past, with West Ada, we've only been able to contribute the employee portion, and that's been very powerful because our employees pay a very low $35 a month if they're a full-time employee for their health insurance benefit, which is very, very attractive for a very good policy. People that had dependents, however, it was cost-prohibitive for them to buy our insurance in a lot of cases.
AB: You mentioned before we started recording that it did not make sense financially for your district to join the Idaho state health plan, but you still found some inspiration in how the state approached its health plan. What was that inspiration?
DR: Looking at how the plan is structured at the state really opened our eyes to how we could fund our insurance, and is there a way for us to provide a better benefit for all of our employees. We actually changed our premium structure to model what the state does. Now we contribute a premium based on every employee that's taking our benefits, and that premium that we contribute is larger than what an employee-only premium is. So it basically supplements the entire plan and by doing that – along with what our legislature has generously provided in substantially more dollars for health insurance for school districts – it's been extremely powerful for our employees.
The cost that an employee pays for care for themselves and their family has gone from $1,063 a month in 2022 to $534 a month today. And if you want to add a spouse, it's gone from $759 to $376. So almost half the cost (from 2022), and that's been significant for our employees to have reasonably priced insurance that provides incredible health benefits.
The other thing that we did that was significant, especially for our classified employees. These are employees that are not teachers and not administrators, so our school secretaries, our custodians, our school nutrition people, our classroom aides – people that are very, very important and vital to our environment, but are on the lower end of the pay scale. A lot of them work for the school district, not necessarily for the salary but for the benefits. We used to have employees contribute the set amount [for insurance], but if they were less than a full-time employee, they also contributed the employer’s portion for the portion that they weren't full time. We changed that and went to more of a cliff structure that if you worked 30 hours or more for us, you get the full-time benefits; and if you're between 20 and 30 hours, you pay a little bit more, but it's substantially less than what it was. We’ve been able to provide the same benefits for much, much lower cost for most of our employees.
AB: That's such an incredible savings, about a 50 percent cut in what a family pays for health coverage. What kind of feedback have you gotten from your employees?
DR: They've been very, very happy with the change in the premiums. If you were an employee who had a family that you were covering, you really got a $6,000 raise. For our classified employees, that's a significant percentage increase for the year that's going into their pockets versus going to pay insurance. So it's been very, very positive.
AB: You mentioned all the work that went into significantly cutting monthly premiums for your employees. Was Regence part of that process?
DR: Absolutely. That was one of the awesome things about our partnership with Regence. I built a model so I could see if you have an employee only, here's the premium; if you have employee plus three children, here's a premium, and if you have employee plus a spouse, here's the premium. I could easily do the math to know, just say for number’s sake, that I need to contribute $30 million a year to my health insurance plan. I knew, [adapting] the model that the state had already developed, how I could structure premiums in a way that brought in the same $30 million.
Then I was introduced to Regence’s underwriting people. We really worked together side by side to make sure that Regence was comfortable with how we're paying the premiums.
AB: How does the rising cost of care impact your district or your employees?
DR: The rising cost of health care is always a concern. In the United States, we have the best health care system in the world; that creates an expensive system in a lot of ways. One of the things that's a challenge with a rich insurance plan is it's easy for our employees not to be good consumers of health care.
In my past life I was a CPA (certified public accountant), and I've asked questions to people: How do you know if you have a good CPA or not? Well, generally you don't. It's very technical. You get your tax return, you get a bill, you pay the IRS or the state and you move on. You don't really have a way of qualitatively measuring how good that person that did your tax return was or not.
It’s similar in the medical field. How do we know what the cost of that is? MRIs, for example. In this [Idaho] market alone, you probably have five or six different price points of MRIs, from $3,500 to $1,500. It’s probably a similar machine, probably a similar outcome, but you have a significant cost difference. And it's hard that our patients just don't know that. Historically, we've grown up, we go to the doctor, they write us a prescription and we go to get that prescription. We don't ask anything about cost or anything about, “Is there a better way to do this?” or, “Should we do this?”
So how do we educate people to be better consumers of health care? Because even though [employees] are not writing a check, somebody is. Our health plan is. Somebody is paying for that check that increases that cost.
AB: Why do you think folks still are not being conscious consumers of health care like they are with other goods and services?
DR: A lot of times with medical care we’re unhealthy, so there's a lot of psychological and emotional decisions that goes into it that makes it really hard. I do wonder how often people get second opinions and seek other health care or other options.
I also think that the market is not very transparent. You go to a grocery store and there are prices on everything. Go to a doctor's office, and there's no prices on anything. You don't get a price until the end when you're standing at the counter and they're saying you owe $20 for a copay.
The other thing is, let's say I injured my knee and I need to have an MRI, and the doctor writes me a script for the MRI and it's at facility A. [A patient] feels like they're offending the doctor if they said, “What is the price of facility A?” and, “Is there a facility that's cheaper?” When I've talked to employees about this, they feel like that creates a conflict with their doctor. It doesn't feel like there’s open communication to do that. I think we have to give people permission to ask those questions.
AB: How has Regence been as a partner in keeping care more affordable?
DR: Our experience with Regence so far has been nothing short of fantastic. When we went through the process to select Regence as our carrier, we felt they wanted to partner with us, and they wanted to know us. All the people that were involved [at Regence] are members of our community, had kids in our schools and really cared. And when we have issues that our employees have struggles with claims or not having something covered, Regence has been always Johnny-on-the-spot in handling those cases and staying in contact with us.
We have access to Regence’s doctors that have been fantastic. [Regence Executive Medical Director Dr. Daniel Meltzer] is available at all times and will talk to me about different kinds of cases and provide me why or why not a certain condition is covered or not covered, or how it's covered or what, you know what needs to happen to be covered. We never had that conversation in my entire career with another carrier the way that we have it with Regence.
AB: Is there a sweet spot in ensuring that care is affordable while still getting good health outcomes?
DR: Absolutely. Regence, from our experience so far, does the best to look at the outcomes and look at what is the right therapy for the right situation and make sure that we're consistent with that. Right now we have all of these Type 2 diabetic drugs that are being used by people out there for weight loss. What is the long-term result of that? What kind of studies have been done? And I think Regence is concerned about that, they're researching that and I'm confident in the physicians at Regence and the research that they're doing that they'll provide the best advice for us in in those areas.
The other thing I will talk about Regence that has been really valuable is case management. How does our carrier help us in helping our employees with chronic conditions get educated on what are the best results? Regence, with West Ada, has had a very successful rate on contacting our [employees] with chronic conditions and putting a care provider with them to walk them through their care and help them understand the care that's being provided to them. And that's been really fantastic.
AB: Contract negotiations between health providers and payers around the country have become increasingly contentious over the last few years as hospital systems demand large increases in the cost of care. What is your reaction to this trend?
DR: [During the request for proposals process] we were actually really encouraged and excited about what Regence has been able to do in the market with our two large hospital systems, Saint Alphonsus and St. Luke’s. Regence has done a really good job in negotiating their contracts. It is important to me to know, what are my costs for services at either one of the hospital systems, and do I have incentive to help our employees go to one hospital system over the other if prices are substantially different?
If either of those contracts are somewhat comparable to each other, or if there was a big discrepancy in how we buy medical services between one over the other, I'm confident that Regence would let me know. And I have confidence in Regence that they are negotiating the best deals that they can do for their customers, for their groups, and for all of their customers in the entire system.