Schools Shut Out of Health Care Group Because Claims are Too High

A Suburban Health Consortium that some said could save the Strongsville School District $2 million a year in insurance costs has rejected the district's application to join -- and would actually cost the district an extra $2 million if it was accepted.

Treasurer Bill Parkinson said the consortium, a pool of 14 districts that buys health insurance together for a group rate, will not let Strongsville join because its claims are too high.

A report said Strongsville's medical costs in 2010 were 29 percent higher than the group average and its drug costs were 30 percent higher. In 2009, Strongsville's medical costs were 35 percent higher.

"That, in a nutshell, is why the consortium denied the district," Parkinson said.

The Strongsville Education Association, which represents the teachers, has criticized the district for failing to join the consortium.

A post on the SEA's website chastises the district for not applying, saying the consortium could save the $6,000 per employee each year, for a total of $2 million.

But a report done by Group Health Care Consultants says if Strongsville were allowed into the consortium, its claims would "leave a shortfall of nearly $2.58 million annually."

"I've heard a lot of rumors the district could save money," Parkinson said. "But we would have to buy in and pay the overage."

In 2010, there were eight medical claims from Strongsville school employees in excess of $100,000, totaling $1.26 million, and another 12 in excess of $50,000. Five were for cancer treatment ($825,548) and one was for inflammatory and toxic neuropathy ($127,396). 

But it is not only the major claims that are keeping Strongsville out of the consortium. Even if all the cancer cases were removed from the 2010 claims, "the claims cost per employee would still be 13.2 percent higher" than the consortium's, the report says. 

If all the claims over $100,000 were removed, the claims cost is still 5.13 percent higher.

"So it is not just the cancer or claims over $100,000, but overall usage," the report says.

In addition, the district would have to pay $23,962 a month for its 639 employees to buy into the consortium.