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Board hears Brown & Brown briefing on self-funded health plans; directs staff to continue study
Summary
Brown & Brown presented alternatives to traditional fully insured health plans, including a self-funded model with stop-loss, transparent PBMs, bundled payments and advanced primary care; the board directed staff to further investigate and gather pricing comparisons.
Consultant Greg Kaldewai of Brown & Brown gave an extended briefing to the Southwest ISD Board about employee health-plan options and the drivers of rising costs, and the board directed staff to continue exploring a self-funded model.
Kaldewai identified four primary cost drivers: commercial insurers' market dynamics, escalating hospital costs, the PPO "discount game," and pharmacy benefit managers (PBMs). He described techniques Brown & Brown uses to contain costs, including transparent PBM contracts, direct pharmacy agreements for generics, bundled surgical payments, reference-based pricing, high-performance networks, and advanced primary-care models that provide capitated access with lower out-of-pocket costs for employees.
Kaldewai and colleague Pat McMahon explained how a self-funded arrangement would be structured and protected using per-person and aggregate stop-loss insurance to cap employer risk. They said this model can reduce carrier profit layers and create more transparent fees to the district, but emphasized a need for significant employee education and an implementation period that commonly creates initial friction with providers and staff.
Board members asked about claims administration, provider acceptance, privacy of claims data and potential short-term transition problems; Brown & Brown said third-party administrators would process claims (not in-house) and that some districts use two plan options during transition (one with a traditional PPO network and one without) to ease employee concerns. Brown & Brown listed several local school-district clients as references and described examples of claims and cost savings under their programs.
After discussion, the board asked staff to continue researching self-funded options, gather comparative pricing for fully insured and self-funded designs, and engage with teacher and employee groups for feedback; staff will return with more detail in subsequent meetings.
