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MMSD staff outline options as health insurance costs project a 17% jump for 2026–27
Summary
District staff told the board they estimate the health plan will cost about $98 million in 2026–27 — roughly a 17.3% increase — and presented three cost-mitigation options: increase employee premium shares, raise deductibles, or offer a high-deductible plan with an HSA as a choice.
Madison Metropolitan School District staff told the board the district—xpects roughly $98,000,000 in total health-plan payments for 2026—27 under current benefit designs and initial carrier rates, an increase staff estimated at about $14—16 million, or roughly 17.3%.
Rachel, the district benefits manager, said current enrollment is about 3,700 employees, with about 27% of those enrolled in the Dean plan and the rest with the other carrier. She reported plan claims are running above premiums: the district-wide claims ratio is roughly 105%, and Dean's portion is about 120%.
To reduce the projected increase, staff presented three options: Option 1 would raise employee premium shares (keeping the district—urrent tiered structure); staff modeled a 2-percentage-point increase that they estimated would reduce district costs by about $2,100,000. Option 2 would increase plan deductibles in two a/b flavors; a modest deductible increase (individual from $100 to $250; family from $200 to $500) produced an estimated half-year savings of roughly $774,000, while larger deductible scenarios showed larger savings in staff models. Option 3 would add a high-deductible health plan (HDHP) paired with a health savings account (HSA) as an enrollment choice; staff modeled a half-year savings of about $700,000 in year one, assuming seed contributions from the district (the model used $1,000 individual / $2,000 family).
"We're estimating about $98,000,000 will be paid in 2627 for the health insurance plan based on the benefit designs that we have now and the rates that the health carriers have given to us," Rachel said. She emphasized the HDHP option would require substantial employee education and some administrative steps, including contracting an administrator for HSAs and ensuring the plan design aligns with IRS rules.
Board members pressed staff on equity: how a uniform percentage increase would affect lower-paid hourly staff versus salaried employees; staff responded they will model equity-focused scenarios (for example, keeping the lowest tier at current levels while increasing higher tiers) and said they are already talking with labor representatives. Another line of questioning focused on how many employees are ineligible for the district plan and may rely on BadgerCare; staff said about 75% of employees are eligible and about 75% of those eligible are currently enrolled, leaving at least 25% ineligible for the plan and potentially on other coverage.
Staff cautioned that the HDHP's federal definitions are indexed annually and that carriers will view any added options in the context of the district's overall risk pool, which could create slow-moving changes in utilization metrics. They committed to returning in April with updated carrier quotes and alternative premium scenarios, including equity-centered proposals.
The board did not take a vote on a policy change; members signaled interest in further modeling and in pursuing a mix of options (a modest premium-share increase combined with exploring an HDHP choice and targeted deductible changes) before any final decision.
Next steps: staff will run additional modeling requested by the board, solicit updated carrier quotes, and present refined scenarios at the April meeting.
