NCPA - National Center for Policy Analysis


September 16, 2004

Health care benefits for public school employees are far more expensive than necessary because of the Michigan Education Association (MEA) and the political and economic power of its insurance arm, the Michigan Education Special Services Association (MESSA), says researcher Paul Kersey (Mackinac Center for Public Policy).

  • MESSA is a "third-party administrator," meaning that it does not provide insurance itself -- it merely repackages benefits that are actually provided by Blue Cross/Blue Shield of Michigan.
  • MESSA coverage is extremely generous but also very expensive; while it thus makes perfect sense for school districts to look at savings in this area, any school board that considers other insurance must be prepared to face at least the threat of an employee strike.
  • School boards must also deal with the fact that MESSA cannot provide a prospective insurer with the claims data the insurer needs to make an accurate assessment of costs; without competitive bids, school districts are all but forced to stay with insurance they know to be a budget buster.
  • If school districts were able to match the coverage and terms typically found in private sector employment -- rather than attempt to match MESSA's coverage -- they could save as much as 20 percent.

The MEA, for its part, has indicated that it is willing to go to extreme measures, including going on strike, to maintain the status quo on health care, says Kersey. The most recent example involves four Grand Rapids-area school districts that have taken the modest step of proposing that teachers contribute a portion of the cost of health care. If this proposal were adopted, teachers in these districts would have an incentive to consider lower-cost alternatives. In order to protect MESSA from that economic pressure, MEA officials have already begun laying preparations for illegal teacher strikes in the four districts.

Source: Paul Kersey, "MESSA: Keeping School Districts from Saving Money on Health Care." Michigan Education Report, Summer 2004.


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