Dumb Bill of the Week: "An Act to Protect School Administrative Units and Taxpayers"

Sen. Tom Saviello gives a speech in front of a crowd of organizers with the Maine Education Association.
Sen. Tom Saviello gives a speech in front of a crowd of organizers with the Maine Education Association.
Sen. Tom Saviello gives a speech in front of a crowd of organizers with the Maine Education Association.

Republican State Senators are co-sponsoring a Democratic proposal to restore the Maine Education Association’s (MEA) “virtual monopoly” of teachers’ taxpayer-funded health insurance.

Sens. Roger Sherman (R-Aroostook) and Tom Saviello (R-Franklin) are co-sponsors of An Act to Protect School Administrative Units and Taxpayers (LD 300), introduced by Rep. Henry Beck (D-Waterville). Beck’s bill would repeal a law passed in 2011—and subsequently upheld by two federal courts—that allows school districts to obtain medical loss information from the MEA Benefits Trust (MEABT) which manages a statewide health insurance plan for most of Maine’s public school work force.

Ralph W. Sarty Jr., former Republican representative of Denmark, wrote the law Beck, Sherman, Saviello and others now wish to undo after school superintendents in his district approached him with a complaint.

[Related: School union loses strangle hold on health insurace…]

 “Four superintendents came to me wanting their school districts’ medical loss information so that they could go buy insurance through competitive bidding rather than going through the teachers’ union,” said Sarty. “But MEABT refused to provide the information.”

Medical loss information is statutorily defined as the aggregate claims experience of the group insurance policy or contract, including premium amounts, the amount of claims paid and the loss ratio. Group insurers in Maine generally require at least two years of medical loss data before they can provide quotes. Without this information, school districts cannot shop for better, cheaper health insurance and are effectively forced to purchase plans from MEABT and its partner Anthem BlueCross BlueShield.

 “I did some research and found that the schools did have the right to accept competitive bids for health insurance, but it was unclear whether the insurer or the teachers’ union had to provide the medical loss info required to do so,” said Sarty.

“The purpose of LD 1326 was to give school districts the option to explore ways to reduce health insurance costs by forcing MEABT to provide medical loss information,” said Sarty.

LD 1326 passed by large majorities in the House but only a three-vote margin in the Senate, with both Saviello and Sherman voting against.

“It was a contentious bill, and the teachers’ union fought it hard,” said Sarty. “The union said it was a union-buster, an attack on education, on teachers—it was none of these things,” he said. “It was simply a way to allow school districts to pursue competitive bidding in order to reduce health costs and save money.”

After Gov. Paul LePage signed Sarty’s bill into law in June of 2011, MEABT was flooded with requests from school districts all over the state for medical loss data and responded by filing a lawsuit in district court.

The district court denied MEABT’s request for an injunction halting the laws implementation, but the union appealed to the U.S. Court of Appeals for the First Circuit in Boston, arguing that the medical loss information of public school employees was the union’s confidential trade secret. On September 24, 2012, the Court of Appeals upheld the district court’s decision and the law.

The Court wrote that MEABT held a “virtual monopoly” on the health insurance of school employees that was “perpetuated by the very policy of non-disclosure which it seeks to protect.” The teachers’ union dropped its complaint in October for financial reasons.

Sarty said he did not think the 126th legislature would try to repeal the law he authored given that it was upheld by two federal courts. “I’m very disappointed they’re revisiting this,” he said.

“What disturbs me the most is the bill’s [LD 300’s] title— An Act to Protect Schools and Taxpayers?—give me a break.”

Sen. Tom Saviello voted against LD 1326 and is now co-sponsoring the attempt to repeal it. He said he voted against the original bill because he believed it would negatively impact teachers at rural schools in his district. He said he is now co-sponsoring LD 300 in order to continue the conversation. “I want the dialog to continue,” said Saviello.

“My feeling the first time around was that our school districts would see increased costs,” said Saviello. “If that doesn’t turn out to be the case, I may vote against [LD 300],” he said.

Sen. Roger Sherman, the other Republican co-sponsor of LD 300, is concerned about cherry-picking.

“I think [LD 1326] will decrease rates in the short-term. You’ll get low bids, I’ll put it that way,” said Sherman. “But some districts that aren’t as healthier or are older could see rates rise,” he said. “One massive heart attack in a small district could spike costs.”

Sherman said the question of whether districts that cost less to insure should pay higher premiums to subsidize more costly groups is an ethical dilemma. “It’s kind of a moral issue, I guess,” he said.

“Universal health care might help, I don’t know,” said Sherman. “There are some great studies about the European systems. Is that something we could use here? I just don’t know.”

Sherman said he was aware that his stance on health insurance placed him at odds with the majority of his fellow Republicans. “But the good thing about being termed out is that you don’t care anymore,” he said.  

Calls placed to the Maine Education Association were not immediately returned.

Henry Beck, after initially agreeing to answer questions regarding his bill, did not respond to multiple inquiries.

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  1. So, even “conservative” Republicans OPPOSE a free market with competition? No surprise that the GOP is faltering. Principles and ethics seem to be things of the past for BOTH parties.

  2. This is truly outrageous. The only way to obtain quality insurance coverage at reasonable cost is through a public bidding process. In order to get qualified proposals, you must provide loss ratios and claims info. The legislature should concentrate on making MEABT’s failurte to provide these data a felony. The two Republican senators in question are either incredibly inept or are receiving some form of compensation. There is NO logical reason to do what they are endorsing. I know whereof I speak – for many years I manged emp[loyee health insurance for public schools. We were the first school district to break Blue Cross’s virtual monopoly. And it was successful.
    An alternastive for smaller districts is to form a school district managed insurance cooperative. That is also successful based on my experience.
    The MEA should have NO right to provide insurance.

  3. Remember not all republicans are conservatives, look at Snowe, Collins etc. Still a very bad bill for local taxpayers. Yet they complain about the lack of revenue sharing, which at least the local taxpayer has a say in.

  4. There are many components of an insurance policy that combine to arrive at a decision as to which policy to acquire.

    Cost, of course, is one; but so are coverages, deductibles, claims payment experience, etc.

    It seems to me that the interests of the teachers (the one’s actually receiving the benefits) are better served by having those factors evaluated and weighed by the MEABT than by individual district administrators.

  5. This problem is rampart throughout all levels of government. In Falmouth it seems bidding is optional for everything. Otherwise why would the leadership overpay for heating oil, electricity, banking fees, copy paper, laser printing, etc., etc. While the rest of you (non-retired people) are busy making money, rearing a family, and paying taxes at all levels of government, that same government is just as busy wasting it FASTER then you can send it to them.
    In Falmouth our head bus driver/custodian is paid $108,890.70 total compensation. This is $30,000 more than Cumberland pays his counterpart, and $20,000 more than Cape pays theirs. Do we really get $30,000 more work per year from our manager?
    You can read about what we have found at http://www.falmouthtoday.me.

  6. I’m reasonably sure I read that school districts already have saved money on their policies in current budgets. What’s up? Seems democrats spout freedom, transparency etc except when it comes to their unions.

  7. Termed out! Good riddance if you are going to stab fellow Repubs in the back Sen. Sherman by supporting the teachers union! We the people don’t need you and your union buddies controlling our state. You types always want someone else to pay-subsidize the less healthy with the healthy-Obamacare like.

  8. I really wish these guys would remove the ‘R’ after and teplace it with a ‘D’, because then they would be honest. Sherman says we should look at universal health care? Really? That’s the progressive mantra to the letter! And he’s termed out so he doesn’t care? Do us all a favor and tesign now!

  9. It starting to look like the Republican Party has been co-oped by Democratic sleeper cells. How else can we explain the democratic support for left winged, moon bat, PROGRESSIVE, tax and spend programs by elected ‘REPUBLICANS’? We are in huge trouble not only as a country, a state, but as a political party.

  10. To all tree gentlemen with this temporary brain cramp……the law was passed, and not one but two federal judges upheld it. Now along comes three politicians who are better informed and think that their opinions are more important on the peoples issues? Good way to be out of a job gentlemen when the polls roll around next time. You might want to rethink your positions on this one?

  11. Student enrollment drops significantly in the decade preceding 2012, and number of teachers increased by a mere 3%, yet administrative positions increased between 70% and 80%! What’s up with that/ No wonder they complain, it is one helluva gravy train they are riding! Consolidation was supposed to reduce administrative costs, not increase them!

  12. One of the most important accomplishments of the 125th was Rep. Ralph Sarty’s LD1326. It is lowering school budgets and property taxes. The MEA, who supplied 99% of the health insurance in Maine and who receives a hefty fee for being the agent, fought 1326 vehemently during negotiations, took the state to court after it was passed, dragged it out all summer and fall, and are now working to repeal it. It is all about the money.


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