Alara Group consultant tells Saint Croix Central board self‑funding health plan could cut long‑term costs

Alicia Schwartz, a consultant with Alara Group, told the Saint Croix Central School District board on May 18 that shifting from a fully insured employee health plan to a self‑funded model could reduce the district’s long‑term costs while preserving employee access to care. She said an actuarial simulation gave self‑funding a 72% chance of outperforming fully insured in year one, roughly 90% over three years and about 98% over five years.

Schwartz summarized the scope of the district’s current renewal: a fully insured premium projection of about $4.2 million and a district share of the 12% rate cap equal to about $456,000. She described a modeled self‑funded scenario with expected annual costs near $3.9 million and a possible maximum near $4.8 million depending on claims, and outlined two approaches for pharmacy rebates and fixed administrative costs that would affect initial cash flow.

Why it matters: employee health insurance is one of the district’s largest recurring costs. Schwartz said the self‑funded approach allows the district to retain rebates and invest in targeted programs — for example, direct primary care clinics — that can reduce costly specialty and emergency claims over time.

Schwartz explained core mechanics: self‑funded plans pay claims as incurred (about 75–80% of total plan costs), maintain fixed administrative costs (15–20%), and rely on stop‑loss insurance to cap catastrophic expenses. She recommended a specific stop‑loss deductible around $125,000 per individual and described aggregate stop‑loss protection at roughly 125% of expected claims.

She described two local direct primary care (DPC) vendors the district evaluated. Reform Medicine offers multiple clinic locations and quoted an introductory per‑employee‑per‑month (PEPM) fee starting near $39 with potential utilization‑driven increases (Schwartz noted a maximum scenario near $79 PEPM). Sensible Solutions is smaller, limited to a couple sites, and quoted an annual PEPM equivalent that Schwartz summarized near $328,000; Sensible Solutions also includes alternative and functional medicine services. Schwartz said both vendors aim for same‑day access and can be structured to avoid disrupting employees’ existing primary‑care relationships.

Board members asked about access, utilization and implementation. One member asked how small clinics could meet same‑day goals; Schwartz said both vendors positioned staffing to allow same‑day appointments and that utilization would need encouragement through employee communications and incentives. Board members pressed on reserve rules and whether plan reserves could be used for other district needs; Schwartz emphasized that employee premium funds must be earmarked for the medical plan and recommended hiring an actuary to set reserve policy and projections.

Timeline and next steps: Schwartz warned that, under the district’s contract with HealthPartners, a commitment to move to self‑funding for the 2027 plan year would need to be made prior to July 1. She recommended phased work: further pricing negotiations, an actuary’s reserve study, staff and union engagement, and pilot or phased adoption of DPC if the board chose to proceed.

Direct quotes: “It’s a no‑brainer,” Schwartz said when asked whether the modeled long‑term savings and care‑integration strategies justified further pursuit; she immediately cautioned that timing, capacity and careful communication to employees would determine whether 2027 is the right start year.

Alicia Schwartz’s presentation included specific numbers and scenarios for the board to review; administrators said they would continue vetting vendors, commission actuarial work and bring options back to the board for formal decisions.