Healthy bet pays off for school district

West Allis - School officials had gambled that health costs would not balloon after they ended cash incentives meant to discourage employees from taking the health insurance offered in the West Allis-West Milwaukee School District.

The gamble paid off.

The School Board dropped the cash incentives last July and, out of the 170 employees who had received $4,732 not to enroll last year, fewer than 10 took district health insurance this year without the incentive, said Deb Rouse, director of business services.

That means the schools saved the majority of the $800,000 it had previously paid out in cash incentives, she said.

Despite giving out $800,000 in incentives, the district actually saved money because the incentives were far less than the health insurance premiums for employees taking district insurance as secondary coverage. By avoiding that secondary insurance coverage, the district saved more than $1 million a year over and above the $800,000 it paid in opt-out incentives, Rouse said.

She speculated that the reason so few employees signed up for district health insurance despite no cash incentive was that the district plan is not nearly as good a deal as it has been. While dropping the incentives, the board changed the health plan to make it more like private-sector health insurance, she said.

For example, deductibles went from $100 for single and $200 for family coverage to $1,000 and $2,000, respectively, she said. In addition, employees started paying 10 percent of the health insurance premiums, whereas before they paid nothing.

If the health plan had remained the same, more employees who had previously opted out would have signed up, Rouse said.

The School Board was able to change the plan to be more like the private sector because of changes in the collective bargaining law approved in Madison.

The opt-out amount was set many years ago and rose 3.8 percent a year, she said. That's how the opt-out total came to $4,782 per person, she said.

The district used the nearly $800,000 savings to help balance this year's school budget.