When it comes to handling employee insurance, the Killeen Independent School District must do a better job.
That much is evident, following an evaluation by the Texas Association of School Business Officials, requested by Superintendent Robert Muller and discussed at a school board workshop last week.
While the review praised the school district’s staff for its commitment “toward continual improvement of operations,” several problem areas were noted regarding the district’s current health insurance proposal process.
Among the areas highlighted in the review were overcompensation of the district’s insurance broker; the need to have a committee evaluate employee insurance needs; and an unworkable time frame for insurance companies to submit proposals to the district.
This last issue is well worth mentioning. For the 2013-2014 health insurance plan, the review noted, Killeen ISD gave companies just 10 days to submit their proposals. With a multimillion-dollar contract at stake, that’s hardly sufficient time for multiple agencies to prepare bids. Moreover, the shortened time frame heavily favored the existing contract holder.
With a longer bidding period, the district would have a better selection of proposals from which to choose — and hopefully, receive better rates for coverage.
In addition, the association recommended the district hire a licensed insurance consultant to draw up proposals and solicit providers across a wider area in order to bring in more competitive offers.
Currently, the district deals with an insurance broker — a relationship that has worked at some levels but not at others.
For example, during Tuesday’s meeting, it was noted that the broker should have been compensated at a flat rate of 0.25 percent of the billed premiums, but because of contract wording, the rate was 0.87 percent higher in 2012 — resulting in compensation of more than $170,000.
In addition, the review found the broker in 2012 received more than $150,000 in commissions and fees on other health insurance benefit plans, such as dental and life, that do not require a commission payment.
The district’s insurance coverage came to the forefront last fall when district employees participated in a survey to choose a health care provider. A plurality preferred TRS ActiveCare, a program run by the Teacher Retirement System of Texas. However, in a split vote, the school board instead chose Blue Cross/Blue Shield, which had higher premiums.
Moreover, ActiveCare offers Blue Cross/ Blue Shield as one of its options. Comparisons of similar plans showed that TRS Blue Cross /Blue Shield coverage was cheaper.
Additionally, by choosing Blue Cross Blue Shield, a local insurance agency received a hefty commission from Blue Cross /Blue Shield — something TRS would not have paid. The Killeen insurance company — which has a managing partner who previously served on the school board — has done business with the district for 11 years.
Whether this arrangement is by design or by default, it needs to change, as the evaluation emphasized.
Moving forward, the review recommended the district’s insurance consultant, subcommittee for employee benefits and pertinent staff work together to improve benefit plan design and coverage options. The evaluation also advocated use of a comprehensive matrix format to better evaluate the offerings of competing providers.
The 80-page review offered Killeen ISD a broad spectrum of detailed recommendations on managing its multimillion-dollar insurance plan. With more than 6,000 employees, it’s important that the district develop a process that’s both thorough and efficient, while serving the employees’ best interests.
Obviously, the goal of the school board and administration should be providing employees the best health plan at the best price available.
If TASBO’s evaluation helps district officials achieve that goal, it will have served its purpose.