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Room 332, State House
2 State House Station
Augusta, Maine 04333-0002

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For Immediate Release

Date: 06/20/11

School districts gain authority to explore health insurance options

AUGUSTA - The Legislature last week gave final approval to a bill that will enable school districts to explore options to reduce their health insurance costs.

The measure, LD 1326, passed the House on a bipartisan 83-60 vote on June 15. The Senate voted 18-15 a day later. The bill will become law if signed by Gov. LePage.

State Rep. Ralph Sarty (R-Denmark), the sponsor of the legislation, said the bill gives school districts the flexibility to self-insure or find more affordable plans. "Schools will have the option to obtain less costly health insurance policies during this time of financial pressure," he said. "The bill does not mandate anything. School districts can stay with the coverage they have, or they can look around for a better deal."

The bill, "An Act To Allow School Administrative Units the Option To Seek Less Expensive Health Insurance Alternatives," entitles school districts to obtain claims data from the Maine Education Association Benefits Trust (MEA Trust). This is the entity that handles health insurance for all but a handful of school districts in Maine.

"This bill was strongly opposed by the MEA," said Rep. Sarty. "They have refused to release claims data and other insurance experience information. This bill requires insurers, HMOs and other organizations to provide information concerning a school unit's claims history so they can obtain competitive bids. The time has come to consider new options without weakening the quality of health insurance for our public education employees."

The Maine School Management Association, representing the Maine School Boards Association (SBA) and the Maine School Superintendents Association, provided strong support for the initiative. Health insurance consumes up to 14 percent of school district budgets, according to a fact sheet provided by the SBA.

A letter to Rep. Sarty from the chair of the board of directors for the Bonnie Eagle School District, MSAD 6, said the bill would provide a valuable tool. "As funds for education diminish, we must look for ways to control costs and apply the savings to educate our students," the letter stated. "The passage of LD 1326 would mean school districts could gather and analyze data about health benefit packages for employees and possibly realize substantial cost reductions for the same or similar coverage."

Rep. Sarty said he was contacted by 27 school superintendents regarding the bill. "They are not satisfied with the current one-contract arrangement through the Maine Education Association and Anthem," he said. "Many of them believe they could get more reasonable rates, as well as an expanded range of options, by self-insuring. The Maine Municipal Association plan, for example, offers five different choices with varying benefits and premium costs."

The Legislature also passed LD 1333 this session, which will change Maine's health insurance system to encourage greater competition, more choices and lower rates. Rep. Sarty said his bill would mesh well with the insurance market reforms.

"Opening up Maine to a significantly expanded competitive market makes this an ideal time to give school districts this kind of latitude," he said. "They could join with other school districts or regional school units and/or municipalities in the competitive bidding process." ###

Jay Finegan
Maine House Republicans
Tel: (207) 287-1445