Sacramento Teachers Don't Have To Pay For Health Care For Life, A Perk They'll Fight To Keep [The Sacramento Bee] - Insurance News Net

Apr. 11—Retirement is comfortable for Richard Creel.

Creel, 62, taught in the Sacramento City Unified School District for 26 years, owns his Rancho Cordova home outright and receives a pension through the California State Teachers’ Retirement System.

And he doesn’t have to worry about health insurance.

That’s paid for in full thanks to the benefits he earned in his teaching career.

It’s a perk that gives him peace of mind. Creel said he wouldn’t be afford to pay for his health insurance these days, “especially as we get hit with inflation,” he said.

The security he and other Sacramento educators feel was at the center of the eight-day strike that shut down city schools.

The main sticking point in contentious negotiations centered on the district’s effort to cut its spending on an especially expensive health insurance plan offered to teachers. The district spends about $35,000 a year per employee on the HealthNet plan, a sum that administrators consider unsustainable.

The district originally wanted to shift employees to a different Kaiser plan that is still fully covered by the district but costs about $22,000 per worker. The savings would reach about $12 million a year if all of the teachers in the HealthNet plan moved to Kaiser.

“Our health benefits structure is not sustainable because we offer very costly health benefit plans to our employees,” District Superintendent Jorge Aguilar said in a March 30 video message. No one in the region, state, government, colleges, universities, city and county governments pay this amount of money for health benefits.”

The deal the district ultimately struck to end the strike leaves the HealthNet plan in place, for now, although it commits the administration and the teachers union to finding an alternative plan that offers the same level of benefits at a lower cost. The deal requires both parties to agree to any future health coverage plans, and the district and teachers union have not agreed on much in recent years.

The teachers union’s members ratified the deal, and the school board is expected to vote on the agreement at a future school board meeting.

Multiple state and county audits have cited health care spending as a primary source of financial distress in the Sacramento school district, which was on the cusp of a state takeover in 2019 because of its projected deficits.

Over time, the health-related expenses include a $700 million unfunded liability for the cost of health insurance benefits it promised to retired teachers.

The district’s proposal to cut spending on the HealthNet plan was unacceptable to the the teaches union, which considers full employer-paid health coverage vital to attracting educators to the district and supporting working families. It referred to the proposal as a $10,000 pay cut for teachers, referring to the amount the district indicated it was willing to pay for each employee’s health care plan.

For Creel, the retired teacher, the idea of paying a fraction of his health care plan, especially while the cost of living continues to rise, scares him.

“I couldn’t afford the difference, and I would have to make a switch,” he said.

Other districts and teachers make different calculations, accepting less lucrative benefit plans while obtaining higher wages for educators.

Even though Sacramento teachers are paid less than the state average, their district is the only one in the region to provide a full employer-paid benefits package, according to multiple state audits. As a result, the district spends about $23,393 a year per employee on health benefits, more than the state average of $14,958.

Average teacher wages in Sacramento City Unified amount to about $83,000 a year, less than the state average of about $85,000 a year.

Teachers in the Modesto City Schools District, by contrast, earn about $10,000 more per year. Their benefits are less generous and teachers pay a share of their health insurance costs.

That suits some Modesto teachers and retirees, who say they like the extra money.

But making a change would not be easy in Sacramento, where teachers have relationships with their doctors and are reluctant to leave the plan they know.

“Once you formed a relationship, you don’t want to change,” Creel said.

High teacher pay in Modesto

Modesto’s teachers union in the 1980s chose pay over benefits in negotiations with the school district. Today, its teachers are well-paid, but some educators opt for neighboring districts because they want better benefits.

Megan Gowans, a retired Modesto teacher and former union leader, said the union favored higher pay because some of its members did not want full family health care coverage, either because a partner had insurance or because they were single and preferred higher pay for other expenses.

The higher pay had a secondary benefit: It raised teachers’ lifetime earnings in pensions. The California State Teachers’ Retirement System calculates a member’s pension based on years of service and the member’s income.

Higher pay at the end of a teacher’s career means more money in a pension, for life.

“The thinking was a person who didn’t need a full family plan or didn’t need a plan at all could then capture the value of the health care dollars on the salary schedule and then that of course benefited the people in retirement who could purchase the more expensive plan, and it benefited everyone in retirement because your STRS calculation was based on your salary,” she said.

In retirement, Gowans, 66, has a Medicare plan she purchases through the California Public Employees’ Retirement System.

“In retrospect, it could be argued we let health care slip away for people who needed the family-oriented plan,” she said, acknowledging the higher costs Modesto teachers pay for health care.

In some ways, the Modesto deal helped families, too.

Henrietta Sparkman, 74, a retired Modest teacher who worked in the district for nearly four decades, said having a higher salary offered her and other teachers some more flexibility, such as paying for childcare.

“There were a lot of younger teachers, who had families and found it very expensive, Sparkman said. “In my perspective there was another way of dealing with that.”

Sparkman said she is happy with her health care, Anthem Blue Cross. She also pays more for a PPO. Twelve years into her retirement, the trade-off between more pay and health insurance was an easy one for her.

Were plans historically designed for married women?

About three quarters of teachers in the U.S. are women, according to the National Center for Education Statistics. Many health care agreements had women in mind — women who would obtain their benefits from their husbands.

Jewel Gould, the former Director of Research for the American Federation of Teachers, said unions have pushed to protect teachers who were deemed as financially dependent on their husbands.

His aunt, an educator in Missouri, invited her boss to her wedding in 1917. On the dance floor, the superintendent told her he was happy for her, but also for himself — now that she was married, he could cut her pay.

But the U.S. saw a shift during those years at the start of World War I. Women also rose to leadership positions in education. Throughout the 20th century, unions worked to ensure that teachers could live off of a fair salary and benefits.

Why workers would choose benefits over pay

Gould spent decades analyzing health care policies and advising teacher unions and school districts on health care insurance provisions of contracts.

In his experience researching what happens at the bargaining tables and behind the scenes, several teachers unions fought for full benefits amid concerns that health insurance rates would continue to climb.

Medical costs have been rising steadily in at least the last two decades. California school districts often pay a higher share of health care premiums, so they are more vulnerable than most private employers.

That makes Sacramento City Unified’s salary and benefits package more attractive in the long run.

“Quite often districts would rely on outside experts and consultants, and those consultants would say that health insurance costs would rise,” Gould said.

Projected 3% jumps would turn out to be double digit increases for some companies, Gould said. With little protection from so-called arbitrary increases in health care, Gould said there is no telling how much employees could end up paying.

“What we found was employers would come with an inflated number, and then we experience an increase to costs,” Gould said. “But the flu never hits, women don’t have children, surgeries won’t be conducted as often as they were projected to be. And the employer tops off what employees paid up front, and they don’t lower the cost the following year.”

Teachers should choose a package like Sacramento’s in a heart beat, he said.

What does Sacramento City Unified have to offer?

Two companies offer health plans for teachers in the Sacramento district, but one insurance provider — HealthNet — costs nearly 54% more than the other, Kaiser Permanente, according to the district’s numbers. That’s a leap from the 35% difference between the two providers in 2019.

About 940 certificated staff members are enrolled in HealthNet, representing about 43% of teachers union members.

New hires at Sacramento City Unified will still be offered HealthNet after the latest agreement. The district will not mandate that any employee switch to the Kaiser plan.

Not everyone wants Kaiser

Jennifer Sparks, 62, a third grade teacher at Ethel I. Baker Elementary, became an educator when she was 40. She chose Sacramento City Unified because of its health care plan.

Sparks was diagnosed with breast cancer five and a half years ago. She called the medical treatment at UC Davis Medical Center “extraordinary.”

Sparks doesn’t want to make the switch to Kaiser. Relatives who receive medical treatment at Kaiser simply don’t have the same access to care, she said.

“I wouldn’t have access to the same team,” she said. “I would probably retire and find another job.”

Staying with HealthNet, and not receiving full benefits anymore under the district’s proposal, could mean she would pay about $600 each month — money she didn’t account for when she took a job at Sacramento City Unified.

“If new hires want to be put on a Kaiser plan, and they accept that, that’s their choice,” Sparks said. “It works for them, but it doesn’t work for me.”

Depending on a family’s needs, a family’s coverage could be in the thousands of dollars.

“Mental health illnesses, special needs or even allergies could cost you thousands,” Gould said. “If you don’t have good health insurance, that could be devastating to families.”

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