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MMSD faces double‑digit health insurance renewal; board weighs cost‑sharing options
Summary
District staff reported projected health insurance renewals that would raise employer costs by about $11.3 million (15.3%) under current plan designs and presented a menu of cost‑sharing and benefit design options for trustees to consider.
Rachel Carabell, the district’s benefits manager, told the Operations Work Group on April 21 that renewal quotes received for 2025–26 would raise the district’s employer share to about $84.4 million, an increase of roughly $11.3 million (15.3%) if plan designs remain unchanged.
Consultants from M3 and district benefits staff laid out the renewal landscape: Quartz (an HMO referred to in the meeting as “Quartz” or “Courts”) submitted a renewal in the high‑teens percentage range and Dean Health Plan’s renewal was quoted at a lower nominal rate in the packet but Gartner‑style volatility has made single‑year comparisons difficult. Rachel summarized the district’s baseline projection: employer premiums rising to about $84.4 million for 2025–26 with employees paying an average 6% of premiums and retirees covering 100% of their costs.
The staff team presented several options to reduce the district share of the increase, including increasing medical deductibles (e.g., from $100 to $200 single / $400 family), raising office‑visit co‑pays, rescinding dependent visit waivers and increasing pharmacy or specialty drug tiers. A summary slide estimated that increasing the single deductible to $200 and family deductible to $400 would yield about $1.0 million in premium savings, while changing the primary‑care co‑pay to $50 could yield similar savings; a composite set of adjustments (deductible, ER co‑pay and specialty drug co‑pays) was shown to reduce the projected renewal increase from 15.3% to about 9.6% in one scenario.
Board discussion was robust and clearly divided on principles. Board Member Vandermuellen said bluntly: “I’m very against any plan design changes,” arguing that higher cost‑sharing undermines retention and makes care unaffordable for employees with serious medical or family needs. Several board members urged sensitivity to employees who work irregular hours or part‑time and to avoid measures that would discourage parents from taking children to the doctor. Others, including Board Member Sumpkin, said the district must share some of the rate increase because health‑care inflation is beyond what local taxes alone can absorb.
Staff also compared MMSD’s current employee premium contributions to other large Wisconsin districts (Milwaukee Public Schools, Racine, Kenosha, Dane County and other Dane‑area districts) and noted that some peer employers require higher employee contributions. Rachel said the district will not pursue eligibility changes for part‑time workers at this time; that idea was discussed in earlier meetings but staff reported the board signaled no interest in revoking eligibility.
Nut graf: With insurer renewals showing double‑digit upward pressure, district staff recommended trustees consider limited design changes (deductible and co‑pay adjustments and dependent waivers) to shrink the fiscal hit; trustees split along lines of cost‑containment versus preserving employee access to care.
Staff emphasized tradeoffs: measures that target high‑cost services (specialty pharmacy, emergency care) spread savings across fewer members but can distort care patterns; increasing widely used cost shares (deductible, office visits) spreads savings widely but raises out‑of‑pocket costs for many. Rachel and consultants said pharmacy specialty costs remain a major driver of overall plan claims and that plan design changes in pharmacy have limited short‑term savings impact relative to total pharmacy spend.
Board members asked for more granular impact modeling by employee salary band, and about whether rebalancing membership between carriers (Quartz vs. Dean) would materially reduce premiums; staff said carrier network capacity and provider access complicate single‑carrier strategies and the district has been working to keep provider access broad for members.
Ending: Staff asked for board guidance on which design options to pursue in negotiations and offered to return with more analysis of member impacts and of alternative premium contribution models that would allocate premium shares by employee salary band rather than a flat percentage.
