Texas Districts Merge Health Plans

By Robert C. Johnston — April 11, 2001 2 min read

Hoping to drive down their insurance costs, the two largest school districts in Texas have formed a partnership to seek out health-care coverage for their 47,000 employees.

The Houston Independent School District brings 28,000 employees to the arrangement, while the Dallas Independent School District adds another 19,000. Their school boards approved the deal last month.

It’s not unusual for school districts—especially small ones—to join forces to share the costs of educational services, such as psychologists, or to make equipment purchases. The five-year merger between the big districts on health care is unusual, however.

“We’re combining the two largest districts in the state. That’s much different from what’s been done in the past,” said Charles Fridia, the operations executive for the Dallas schools’ financial-operations department. And it may be just the beginning, he said: “Potentially, we’ll add more districts.”

No one is predicting just how much the districts might save, but the partnership will be put to the test soon.

The current health-plan contract in Dallas runs out in December. Employees in the 162,000-student district will be watching closely to see how the new process works. They may be forgiven for being skeptical, though.

Last year, Dallas school officials revealed they had lost track of the district’s previous health-care contract deadline, and then were forced to scramble to come up with an emergency, one- year policy that increased premiums for most employees.

“It didn’t work well for people who moved from preferred providers to [health maintenance organizations],” said Maureen Peters, the executive vice president of the Alliance of Dallas Educators, an affiliate of the American Federation of Teachers. “There were three-month waits for primary-care doctors.”

Currently, Dallas employees pay as little as $30 a month for single coverage and up to $682 a month for the most costly family plan. In Houston, the lowest rate for single coverage is $10 a month, while the top family plan costs $543 monthly.

Statewide Issue

The new partnership calls for two health- care consultants to the 210,000-student Houston schools—William M. Mercer Inc. and Automated Data Inc.—to outline a health-coverage strategy for the Dallas district and to negotiate Dallas’ premiums.

“They should be able to find better rates for insurance for more employees, and with better flexibility,” said Roy Kemble, the president of the Classroom Teachers of Dallas, an affiliate of the National Education Association. “But the proof will be in what kind of program they come up with.”

In addition to promising lower costs, the arrangement will allow Dallas employees, like their colleagues in Houston, to register by computer for their coverage, thus reducing the paperwork burden for district employees, who last year were deluged by some 13,000 applications for coverage.

Responding to similar concerns from across the Lone Star State, the Texas legislature, which meets once every two years, is now debating policy proposals that would add teachers, for the first time, to the health plan that covers state employees.

But with a price tag of $2 billion, it is unlikely that teachers will get a plan comparable to that of the state employees. Instead, lawmakers are looking at a program that would cost half that.

Still, Ms. Peters is pleased that the state is finally trying to improve the coverage, which could help alleviate the teacher shortage, teacher activists say.

“We’re sure something is going to happen,” she said. “We just don’t know what.”

A version of this article appeared in the April 11, 2001 edition of Education Week as Texas Districts Merge Health Plans