INDIANAPOLIS — Indiana's public schools and universities could save $450 million a year if they joined the state's health insurance plan for public employees, a new report shows.
But most of the savings would come through stingier coverage or higher out-of-pocket expenses for teachers, professors and other employees.
The analysis — done by consulting company Mercer Health & Benefits LLC and presented to lawmakers on the State Budget Committee Wednesday — found that it would cost public schools and universities about $270 million to get the same level of insurance they're getting now. Choosing that higher level of coverage would reduce the savings to $180 million a year.
State Superintendent of Public Instruction Tony Bennett said the study shows schools can find creative ways to save money without sacrificing education.
"These striking results should encourage schools across the state to consider moving to the state insurance plans — because doing so could save thousands of teachers' jobs," Bennett said in a statement.
Republican leaders said the chance for savings was tremendous and especially important during lean budget years.
"Saving money on items like school employee health care would help us avoid tax hikes and dedicate resources to classroom instruction," said Senate Tax Committee Chairman Brandt Hershman, R-Lafayette.
Convincing schools to voluntarily change plans could prove difficult. Only five of Indiana's nearly 300 school corporations opted to join the state's plan this year, Mercer reported.
Health insurance plans are often part of contracts negotiated between districts and teachers' unions, said Dennis Costerison, executive director of the Indiana Association of School Business Officials. Some districts may want to revisit the state's option the next time they renegotiate contracts, he said, while in other districts teachers unions may not like the idea of teachers paying more or getting fewer benefits.
"Those are major issues that need to be determined at the local level," Costerison said.
Lawmakers considered requiring schools to join the state's plan last year but dropped the idea. School health insurance will likely be an issue again during the 2011 legislative session, when lawmakers work to create a budget in tough economic times.
House Speaker Patrick Bauer, D-South Bend, said he'd be open to holding hearings on the topic to learn more about it. But he said the state shouldn't immediately toss out local input on such decisions.
"Let's look at the rest of the story," he said.
Rep. Ed Delaney, D-Indianapolis, reminded members of the State Budget Committee that most of the savings outlined in the report came from reduced coverage or higher costs for school and university employees.
"We've got two accounts here to balance," he said.
Other savings came from increasing the number of people in the state's insurance pool, reducing overhead costs, pooled prescription drug purchasing and other methods outlined in the report from Mercer.
Some lawmakers said Wednesday they preferred to offer incentives instead of mandates to get schools and universities to use the state's plan.
House Minority Leader Brian Bosma, R-Indianapolis, said lawmakers are still considering options. One idea, he said, would be to reimburse schools only the amount of money it takes to cover their employees on the state's plan. If districts chose to keep their own plans, they would have to find the money to cover it somewhere else.
Bosma said any incentives have to be "sweet enough" so that schools get on board.
But Costerison said Bosma's example seemed like it would be "essentially taking local control away."
The report from Mercer found that insurance plans for Indiana schools were more generous than those of their counterparts across the country. The state's insurance plan, however, is less rich than other states, Mercer found.
Benefit packages can help school districts find and retain teachers, Costerison said.
"It does help with recruiting, getting the best and the brightest in the classrooms," he said. "The bottom line is that this is a problem that every school (district) ought to look at. It's our opinion that this is a local control issue — the concept ought to be optional."