About a year ago at a Miami-Dade County school board meeting, superintendent Alberto Carvalho was happy to announce the district and the teacher鈥檚 union had just ratified a new contract.
鈥淚 believe that this contract honors and dignifies what you do every single day,鈥� he told the school board members. It included bonuses for most teachers and it settled how to handle health care expenses after yet another year of rising costs.
鈥淲e know exactly what the district pays out in terms of claims, because we are the insurance company. There鈥檚 no profit to be made,鈥� he said.
Alberto Carvalho, superintendent of Miami-Dade County Public Schools, talks with students in August 2014. (Photo by Lynne Sladky/AP)
Like most large employers, the Miami-Dade school district is . It bears the financial risk of covering its own employees.
The school board鈥檚 reaction to the health care costs in the new contract was incredulous. They are an elected board and didn鈥檛 look forward to telling the teachers their prices were still going to go up. One board member after another questioned the rise in prices.
鈥淒o we sit with our employees, knowing what their salaries are, and help them carve out the best options insurance-wise?鈥� one asked. 鈥淭wenty-seven hundred more for his family鈥檚 health 鈥� can you comment on that?鈥� asked another. Yet another lamented, 鈥淥ur employees are tired of hearing about rising health care costs.鈥�
This was not the conversation the superintendent expected.
鈥淚 thought we were coming here today [to] first and foremost celebrate something pretty remarkable,鈥� he said.
Now, a year later with another new contract, the school board is still grappling with health care costs. Teacher contributions to insurance will mostly stay the same, but it means the district will absorb another 4 percent increase in costs.
Fedrick Ingram is head of the Miami-Dade County teacher鈥檚 union, which represents nearly 15,000 members.
鈥淥ur salaries have not gone up in the same way that health care costs have gone up,鈥� he explains. So he鈥檚 been urging the school district to figure out where the money is going.
鈥淲e have to know who鈥檚 driving up costs,鈥� he says. 鈥淲hat鈥檚 going to affect the bottom line for our premium costs, and what is actually contributing to that.鈥�
Turns out, that is incredibly . But it鈥檚 a conversation more businesses should be having, says Uwe Reinhardt of Princeton University.
Businesses and employees need to stop taking for granted that rising health care costs are inevitable because they make tradeoffs, Reinhardt says.
鈥淓mployees actually pay for what they think is company-provided insurance, by lower wages,鈥� he says. But it鈥檚 so hard to get costs under control because the actual prices are secret.
Self-insured organizations like Miami-Dade County schools have to hire an insurance company to manage the claims process and negotiate rates with hospitals and doctors. But insurers and providers keep the rates secret, even from those employers hiring them.
Carvalho鈥檚 right: The district knows exactly what it pays overall for health care claims. What it doesn鈥檛 know is how much it鈥檚 paying to any one hospital or provider for a given service.
That means it doesn鈥檛 know who鈥檚 the most expensive provider, or who is the cheapest. That may drive prices higher for employees, Reinhardt says.
鈥淚t鈥檚 almost like blindfolding people, shoving them into Macy鈥檚 and saying, 鈥楤uy efficiently for a shirt.鈥� 鈥� Reinhardt says. 鈥淲ell, you come out with a pair of shorts.鈥�
The school district is subject to the state鈥檚 open records laws, but Cigna, the insurance carrier they use for employees, refused to share accounts of what was actually paid out, citing trade secrets. Even though the county school district, which is taxpayer-funded, takes on that risk, it鈥檚 not allowed to see the contracted prices.
The district is seeking ways to get around the legal obstacles. It鈥檚 planning to shop for a service that can work with its limited and at least figure out average costs. Ideally, district officials say, they鈥檇 like to know enough about costs to offer incentives for employees who choose less expensive options.
Until there鈥檚 more transparency, Miami-Dade teacher鈥檚 union member, Cheryl Collier thinks the situation would offend even her second-graders.
鈥淭hey would be angry that they are being forced pay for something, not really fully understanding the value of what they鈥檙e paying for,鈥� she says.
It鈥檚 a lesson the school district and other employers are starting to learn.
This story is part of a partnership that includes , and Kaiser Health News.