By Kyle Munzenrieder
By Kyle Munzenrieder
By Terrence McCoy
By Jeff Weinberger
By Ryan Yousefi
By Chuck Strouse
By Terrence McCoy
By Terrence McCoy
The school board paid benefits consultant William M. Mercer, Inc., $275,000 to shepherd the district through a challenging restructure of its health plans, owing to changes in the industry that have occurred since the district's last major bid five years ago. With rising health care and prescription drug costs, company mergers, and huge financial losses in recent years by Florida HMOs, the challenge is to find companies that can provide acceptable service for reasonable prices. HIP's 1997 to 2001 contract with the school district is one of the factors previous company executives had blamed for the HMO's troubles, because the company was locked into a pricing scheme that failed to take into account industry inflation in the past few years. Outrageous fees to lobbyists, numerous contributions to political campaigns, and lucrative executive perks may also have played a role in the company's near demise before Scott.
To make the numbers work this time around, HIP's prices will have to go up. The school board was paying $188.53 per employee two years ago and $238.87 this year. The new rate would be $254.43. That, and the uncertainty of HIP's long-term financial viability, led the consultants to recommend against the insurance provider. "We would like to point out that the pricing ... is in excess of other competitive quotations, and that the Board must remain diligent in monitoring HIP's financial condition," consultant Lew Yeouze wrote in a June 26 letter to Scott Clark, head of the district's Risk and Benefits Management Office. Sherman Henry, president of the American Federation of State, County, and Municipal Employees, the union local that represents the school district's custodians, bus drivers, and cafeteria workers, puts it more bluntly: "HIP's rates are sky high, and quite frankly we don't think they will be in the insurance business much longer. It's strictly economics here. I have no other agenda. We can't agree with that nonsense that Tornillo is putting forth."
Henry represents one of the handful of labor unions and employee organizations that sit on the Fringe Benefits Council, an advisory board that suggests insurance plans to the superintendent and the school board. He's especially unhappy with Tornillo's plan to finance a four percent salary increase by taking the money from the dollars available to employees for extra benefits (the "extra" amount varies depending on the cost of the medical plan an employee chooses). Henry figures this move would cost his members $41.08 per month that they would normally use for benefits such as dental and vision plans.
In a July 10 meeting, Superintendent Cuevas told Tornillo he would recommend two major insurers to the school board, and neither one was going to be HIP. He also said he would not recommend the less-insurance-for-more-salary proposal. Tornillo told the superintendent that was unacceptable to the union and, according to Henry, threatened to "bring the entire process to a halt." Some of the other unions back Tornillo's proposals at least partially because UTD is the largest and most politically powerful union in South Florida. A review of the minutes of the last several Fringe Benefits Council meetings clearly shows that Tornillo is far and away its most influential member. He has used that dominance to keep HIP Health Plan of Florida in the running despite the reservations of consultants, staff, and some other unions.
The union claims its motivation is simply to accommodate employees who want to stay with a familiar health insurance company, since United Healthcare, the school district's other current major insurer with about 22,000 customers, won't be part of the new health plan. Why make the entire workforce of 39,000 have to choose another provider? Tornillo asks. "[HIP] currently covers 15,000 of our employees," he says. "They have the right to make the decision about whether they want to continue using HIP." Tornillo admits that lobbyist Sisser does "pro bono work for us" in the area of legislation and politics, but contends that the union's position on HIP has nothing to do with the money Sisser stands to make from the deal. "Ric Sisser's arrangements with HIP are his business and not the business of the union," he stonily proclaims. Asked how much that free work might be worth if the union was paying Sisser, Tornillo replies, "I have no idea, and I'm not about to speculate."
But it looks as though UTD already is winning on the public-relations front through a monthly radio show on WMBM-AM (1490), press conferences, letter-writing campaigns, and demonstrations that present insurance negotiations and a salary increase as a package deal. The school board is in a weak position to argue that it doesn't have the money for salary increases. The district, through the highly publicized foolishness of Cuevas and the school board, is perceived in the community as a mismanaged bureaucracy saddled with politicians eager to waste money on questionable land deals, lawsuits, and pet projects. So how could it possibly deny teachers their two bits?
What will probably happen is that the school district will contract with the consensus favorites Cigna and Humana, plus HIP on the side for those employees willing to pay higher premiums for continuity's sake. There will be a compromise of some kind on the salary increase. Perhaps the money will come from a different source or a combination of sources. The scuttlebutt among administrators and board members is that it won't matter if HIP is one of the insurance choices, because employees won't pick it. Clark says HIP is the most expensive HMO offering, about $26 per month more expensive than its closest competitor. "At the end of the day, it's six of one and half a dozen of the other," he concludes. "I think not many people will enroll in it, and it may kind of die its own death."