HERMITAGE Health-insurance group announces 2003-04 budget

By HAROLD GWIN
VINDICATOR SHARON BUREAU
HERMITAGE, Pa. -- It will cost the Western Pennsylvania Schools Health Care Consortium about $8,200 per employee to insure the employees of its 12 member school districts this year.
Phil Smalley of Tra-Tech Inc. of Hermitage, the consortium's adviser, told the Hermitage School Board on Monday that the consortium budget for fiscal 2003-04, which began July 1, totals $19,290,735.
Hermitage is one of the 12 member schools.
That cost is about the same the consortium spent in fiscal 2002-03, after a special assessment of $4.6 million to cover a cash shortfall and other financial problems.
The self-funded plan covers some 2,300 school district employees and retirees.
Smalley said last year was the only bad one for the consortium, which has operated for eight years.
The new budget figure includes an estimated $13.2 million for medical payments and $3.7 million for prescription-drug costs. It also sets aside $1.5 million in a "stabilization" fund to prevent a recurrence of the situation that led to last year's special assessment, Smalley said.
Administrative expenses total about $1.5 million, group stop-loss insurance for major insurance claims will cost about $800,000, and nearly $200,000 will be needed to cover some employees who change their coverage package.
All of that adds up to closer to $20.9 million in total costs, but Smalley said the consortium expects to save more than $1.6 million by raising insurance deductibles as well as copayments for prescriptions and doctor-office visits.
The net is a budget of just under $19.3 million, he said.
Smalley said the annual cost of $8,200 per employee is still well below the national average of more than $8,900 per employee in health-care plans.
Dissatisfied districts
His estimates are based on all 12 schools' remaining in the consortium, but both the Sharon City and Reynolds school districts, member schools upset with last year's performance, have notified the consortium they are dropping out as of Jan. 1, 2004.
That will cut the employee pool by about 500 people, Smalley said, but there are "two or three" other districts that have expressed interest in joining the consortium, and that could offset the loss of Sharon and Reynolds.
Duane Piccirilli, Hermitage School Board president, said his board's major concern is premium sharing by employees, having them pay a direct share of their health-care cost.
That issue is being discussed, but the management and labor sides of the consortium board of directors are split on the issue, Smalley said. That board has one labor and one management representative from each member school.
School Director Ray Slovesko said Hermitage will be watching what the consortium does on that issue. If premium sharing doesn't happen, the future of the consortium is limited, he said.
gwin@vindy.com