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Union-Owned Insurance Trust Declines Under Teacher Choice
posted by: Alix | April 16, 2012, 07:43 PM   

In 2011, Wisconsin's fight over collective bargaining was the number one domestic story. From protests at the capitol to high-profile lawsuits, the battle to close budget shortfalls and curb union power is still gaining headlines in the state. In the latest development, WEA Trust, the health care insurer that has covered as many as two-thirds of Wisconsin school districts under strict collective bargaining agreements, has seen its revenue decline almost $70 million after a new law gave school districts the freedom to switch health care insurers to save funds.

Established 42 years ago by the NEA's state affiliate, the Wisconsin Education Association Council, WEA Trust was one of the state's largest group-health insurers. In its strongest year, WEA Trust covered about 35% of all public school employees and was negotiated into union-bargained contracts. In these agreements, WEAC dictated that school districts must purchase insurance from the trust for employees regardless of cost.

This controversial and expensive practice came to a halt last year when Governor Scott Walker signed AB 11 into law. Under the new law, individual teachers are not only free from forced unionism, they are now able to select a teacher association other than the WEAC. School districts also have benefited from the law – giving them more decision making power about which health care provider to choose. According to WEA Trust Spokesman Steve Lyons, the trust has lost about one-third of its business with school districts.

One district that dropped the WEA Trust after 28 years was the Muskego-Norway School District. After careful evaluation of the budget and competing insurers, District Superintendent Joe Schroeder has saved the district about $2 million by switching to United Healthcare. "For whatever reason, there's a much more competitive environment now," Schroeder said.

Superintendent Schroeder's district is not alone. According to data from the 52 school districts that changed health insurance carriers, more than $30 million has been saved by switching to other health plans.

Governor Walker praised the news, calling the savings not only important to taxpayers, but to teachers and students who will see budgets freed up for teacher wages and classroom development. "Competition among health insurance providers helped save millions of dollars all across Wisconsin," he said in a statement.

Under the new system, WEA Trust saw its revenue fall 8% since last year, from $867 million to $798 million. As a result, about 35 people were laid off and other positions vacated through attrition were left unfilled. Spokesman Steve Lyons indicated that WEA Trust would work on other projects to expand their business.

The decline of WEA Trust is just another example of cost savings under competition in a one-time forced unionism state. School districts, like teachers, are looking for cost effective ways to obtain the benefits and services they need at a cost they can afford. Just like the teachers from Wisconsin joining AAE in record numbers, school districts are exercising their freedom to selecting an insurer that makes sense for their budget. While the WEA Trust may be suffering, teachers, students and taxpayers are reaping the benefits of choice in Wisconsin.

What do you think about the decline of WEA Trust?
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