Nonprofit Health Provider Faces New Competition in Wisconsin

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March 13, 2011; Source: Journal Sentinel | The recent vote to deny Wisconsin's public employees collective bargaining might also threaten WEA Trust, a nonprofit that has provided health insurance for unionized school district employees for the past four decades. According to the Journal Sentinel, school districts will now have greater options to offer coverage through other providers.

Some cash-strapped school districts might see this as an opportunity to contract with the same lower-cost companies as they do now for non-union teachers. "It's such a large-ticket item; it's such low-hanging fruit," said Cedarburg School Board President Kevin Kennedy. "You can lay off an aide or increase your student fees, but that doesn't make up such a magnitude of saving as insurance does."

Observers say the future of WEA Trust, which currently insures school employees in about two-thirds of the state's school districts, will depend on its ability to compete with for-profit firms. Andy Serio, a group health insurance consultant, says WEA hasn't faced much competition in the past because it frequently is named as the carrier in school district contracts. "There literally is no competition if you're named in the collective bargaining agreement, so that would be the most dramatic effect on WEA," he said. "Because clearly, if you're in a collective bargaining agreement, you're in."

Steve Lyons, director of public affairs for WEA Trust, told the Journal Sentinel such claims are over-stated and that the company is named in only one-third of the school district contracts where it provides health insurance. And even in those districts where it is the provider, one-third of districts can switch to lower-priced carriers.

In touting the benefits of WEA, Lyons also said the company beats out other providers by returning 93 cents out of every health care premium dollar back to the districts in health care coverage, while "some of our for-profit competitors keep more than 20 cents out of every dollar." With more options available to school districts, WEA will have to work harder to be sure that message is heard or face losing out to competitors waiting to pounce.—Bruce Trachtenberg

  • David Cearley

    According to the WSJ, the state employee union controls the WEA, their rates are up o 30% higher than competitive carriers, and the WEA has refused to provide the experience data necessary for any competitors to generate a fee quote. Also note that the cost of teacher benefits I’n Wisconsin is currently 97% of their salary. It is certainly time for the bloated, inefficient, and uncompetitive WEA to face real competition in the marketplace.