Statewide System of Health Insurance Coverage for Teachers

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School district superintendents and school committee members across Massachusetts are reporting budget distress. Even though Chapter 70 spending was increased by $217 million for FY2007, non-discretionary spending and contracted yearly raises will once again mean increases in budgets that will significantly exceed revenue growth in many districts. Indeed, once these obligations are paid, there will be little left over to fund real education reform and improvement.

One of the major causes of this budget trouble is healthcare, which (as in other sectors of the economy) is making up an ever-greater portion of employee pay packages. Teacher contributions to their health insurance premiums often lag behind that of the private sector, and the taxpayers—who are hurting from their own health care premiums—are picking up the tab. Teachers typically contribute between 0 and 20 percent of their health insurance premiums, compared to 15 to 30 percent for state or private sector employees. Compounding the problem, healthcare is increasingly becoming an obstacle in collective bargaining negotiations.

Moreover, the district and municipal insurance groups to which these teachers belong tend to be small—most often, in our nearly one-million-student, 350-district state, numbering down in the tens and hundreds. Since the groups are so small, districts have little or no bargaining power with insurance carriers, so that the rates they pay are rarely, if ever, economical. Between low contributions and small pools, school employees’ health insurance is absorbing a large share of most municipal budgets, and the situation is worsening yearly, as premiums continue to rise disproportionately to other expenses.

A standard agreement on group health care for all public school teachers across the Commonwealth, including them in the large pool of state employees in the state-administered Massachusetts Group Insurance Commission (GIC), would save the municipalities hundreds of millions of dollars and could shift the focus of teacher contract negotiations to how to improve student performance. The money saved could both alleviate some of the current budget strain and fund innovative programs that would improve educational performance.

The Problem

According to a report released by the Massachusetts Taxpayers Foundation in 2005, the cost of providing health insurance to municipal employees (including teachers) has risen by an average of 63 percent between 2001 and 2005, and is nearly double the annual growth of health care costs for employees at the state level, who are pooled together in a plan administered by the GIC (see Figure 1 below). The same report indicates that the share of local government budgets dedicated to employee health care costs has risen by 42 percent, from 7.4 percent to 10.6 percent, during the same period.

Additionally, and just as problematic, the subject of employee contributions to health care plans has become such a focal point of contract negotiations that it consistently dwarfs the issue that should be of primary importance in any teacher contract: the conditions and measures that will result in educational excellence, such as enhanced professional development, career ladders, and differentiated pay. While teachers contracts have always been mostly about working conditions, they should also leave some room for agreements on ways to improve education. An examination of more than 30 teacher contracts from across the Commonwealth, however, indicates the word “learningis almost always omitted completely from these contracts, as are the words “achievement,” “success,” and even “student”—unless it is in a clause concerning class size.

Negotiations over employee contributions to health insurance policies have been the sticking point in many collective bargaining sessions, and the primary cause for teachers working without contracts for extended periods in various districts. For example, teachers in Springfield have been without a contract since 2002, and although there are many innovative educational reforms and condition changes on the table in the Education Association’s negotiations with the Financial Control Board, employee insurance contributions are a main issue of contention.

Worcester is another city where health insurance contributions stalled collective bargaining—to such an extent that the teachers were forced to work for a year without a contract. The agreement that was finally reached in June 2006 appears to have brought the teachers in line with other collective bargaining groups in the city, but closer inspection tells another story: Existing teachers would pay 20 percent of their health insurance cost under the new contract, and new hires would pay 25 percent, the same arrangement police officers agreed to last year. In exchange, though, teachers will receive a bump in salary of $1,350 in fiscal 2007, an amount designed to offset the increased health insurance costs.[i] Nine of the 47 schools in Worcester have been declared underperforming, and the agreement that was eventually reached addresses the important issues of common planning time and class size, and gives teachers and administrators more flexibility in how they improve underperforming schools. These essential educational improvement matters should not have been held up for a year by health insurance negotiations.

This problem is not unique to Massachusetts. The start of the 2006–07 school year in Gary, Indiana and Detroit, Michigan were indefinitely delayed by teacher strikes based in large part on union disagreement with an increase in teacher contributions to health insurance premiums (in Gary it was an increase from 7 to 10 percent, in Detroit it was an increase to 20 percent). If insurance were not part of the collective bargaining agreement, teachers could be off the picket line and students in class for the first day of school, because negotiations would have centered on pay and the educational improvement initiatives that were proposed in both cities.

Proposed Solution

A standard agreement on group health care for all public school teachers across the Commonwealth, including them in the large pool of state employees in the state-administered GIC, would both save the municipalities hundreds of millions of dollars by taking advantage of a larger pool and make room for the discussion of raising student performance by taking a divisive topic off the negotiating table. Moreover, besides saving cities and towns money, it will also make the local budgeting process more consistent and predictable. With mandated participation in the GIC system, school employee and retiree contribution percentages will be set once and in a fiscally responsible manner for everyone—not 350 times in 350 districts and subject to periodic change during agonizing contract negotiations.

There are favorable precedents for such a policy. The Massachusetts Teachers Retirement System (MTRS) covers all 74,000 public school teachers and 40,000 public school teacher retirees in the Commonwealth. Since 1914, all teachers have been required by law to pay into the system (M. G. L. c.15 s16). The employee contribution to this system is non-negotiable and is currently set at 11 percent of gross pay for all new public school teachers. Employees with greater seniority pay as little as between 5 and 9 percent.

The MTRS has eliminated what could have been a major source of conflict from the negotiation process, especially since pensions are just as important to union members as health insurance, and because union members close to retirement often dominate the bargaining table. In 70 Massachusetts districts,[ii] the hornet’s nest of retiree health benefits has also been removed from the negotiating table. These school districts (none of them major urban centers) have chosen to participate in the Retired Municipal Teachers’ (RMT) program to take advantage of the financial benefits of belonging to a large insurance group.  When member districts’ teachers retire, they enter a multi-district health insurance group administered by the GIC, which is aligned with the state employees’ health coverage program and contribution schedule for retirees. This successful arrangement alleviates the need for retirees’ health benefits to be part of the teachers’ contract negotiation process, as occurs in the other 280 districts, thus saving districts not only money on retiree benefits, but also this bargaining complication.


While shifting the focus during negotiations to how to increase student performance is crucial, the strongest argument for teacher participation in the GIC is a fiscal one.

The 350 small groups, comprising 74,000 teachers, simply do not have the buying power and clout as one large group consisting of 270,000 state employees. Moreover, while most teachers’ contracts specify just one or two insurance options, the GIC administers a dozen different plans.

The FY06 appropriation by the state to pay for its 85 percent share of health insurance premiums for 270,000 employee members of GIC was $1.0232 billion, which breaks down to approximately $3800 per member,[i] far less than school districts currently pay into employee health insurance. In some cases, this figure is even less than teacher contributions to their district plans.

Some school districts are paying more than $20,000 a year per employee. Although Westport has bargained itself down to paying only 50 percent of the insurance premium for a town employee, it, because of its small pool of employees, pays more than $9,000 per employee. Winthrop, another town with a 50-50 split, pays $8670. Another small district paying astronomical contributions to health insurance is Nantucket, which, with its 90 percent employer contribution to Blue Cross/Blue Shield, pays nearly $22,000 per school employee.

The larger districts fare no better, since they tend to pay larger portions (75–99 percent) of the premiums. A sampling of the current per capita health insurance costs for several urban Massachusetts school districts[ii] and an estimate of the yearly savings they would enjoy by participating in GIC follows:

District            FY06District Contribution       Approx. Total Savings
Per Teacher              with GIC         

            Boston                         $13,672                           $45,658,000           

Brockton                     $11,934                            $9,061,000

Cambridge                  $20,200                            $9,758,000

Haverhill                     $13,702                            $5,396,000

Lawrence                    $16,645                           $11,740,000

Lowell                         $9732                               $6,856,000

Peabody                      $14,100                            $4,903,000

Springfield                  $10,820                           $16,202,000

Worcester                    $15,412                           $20,449,000

Suburban districts across the state are in the same situation as the urban districts, and in this time of especially tight budgets, even with the influx of new Chapter 70 money, they would also benefit from a statewide system of health insurance for teachers:

District            FY06District Contribution     Approx. Total Savings
per Teacher             with GIG

Acton                          $12,415                                   $1,214,700

Lincoln-Sudbury         $9457                                      $780,666

Longmeadow              $7313                                      $857,172

Marlborough               $13,481                                   $3,399,000

Nantucket                   $21,663                                   $2,500,820

North Adams              $11,990                                   $1,466,000

Weston                        $21,737                                   $3,569,000

Districts should be making their insurance contributions to the lager GIC pool, instead of separate plans. By following the proposed plan to include their teachers in a statewide insurance pool administered by GIC, the savings realized in these 16 municipalities alone would be almost $150 million per year. The savings from 350 districts would be proportionately greater. In a time in which more than one hundred Massachusetts schools have been identified as having more than half their students failing the MCAS for more than two years in a row, and when fewer than 40 percent of the students in our state are proficient in mathematics, and only 44 percent are proficient in English language arts (according to the National Assessment of Educational Progress), that money can be much better spent elsewhere.


The magnitude of the savings that would result from this policy change—money that could and should be pumped into targeted education reform—is quite astonishing, but there will be resistance from teachers unions as well as from the municipalities who will be saving all of the money. Local control is a precious thing in New England, especially when dealing with an intimate issue such as health care. Also, even though premiums under the GIC will be considerably less for most teachers (for instance, the 15 percent contribution to the state plan is significantly less than even the 10 percent [~$1400/year] contribution a Peabody teacher currently makes, because of the economies of scale in the GIC), many will still object to letting the state set the percentage, especially when it is on paper higher than the presently bargained contribution.

A small number of retiree health benefits currently under the auspices of the RMT system may have to be adjusted under this policy, which could also be a concern, and may provoke objections from the Retired State, County, and Municipal Employees Association of Massachusetts. There will also have to be consensus about requiring all retirees to enroll in a Medicare extension plan, but this will no longer be a question for the negotiating table, as it is now.

These mainly emotional objections are far outweighed by the pragmatic and financial benefits of removing health insurance issues from collective bargaining agreements and entering teachers, retired teachers, and, indeed, all school employees in the state-administered GIC, with districts making their health insurance contributions to the state, rather than to prohibitively expensive individual district plans.

The hundreds of millions of dollars that would be saved by creating a standard agreement on group health care for all public school teachers and including them in the GIC would be better spent on educational reform and improvement. We will finally have the resources to improve the underperforming schools in the urban centers and to work on increasing the number of students doing proficient and advanced work in the economically crucial areas of math and science. We should not be throwing away district funds and hard-earned teacher pay on collectively bargained insurance plans and premiums when there is a viable plan available to us in the GIC, in which districts and municipalities can participating as equal partners with the state.

 Including teachers in a statewide system of health insurance should just be a first step in reforming municipal health insurance policies. Once health insurance has been successfully removed from teachers’ collective bargaining agreements, it should also be removed from all other municipal collective bargaining agreements: this will be the focus of further research.

[i] Massachusetts Group Insurance Commission web site.

[ii] Figures from the Massachusetts Department of Education.

[i] Jacqueline Reis, “Teachers Union Ok’s Contract,” Worcester Telegram and Gazette, June 20, 2006.

[ii] Amesbury, Andover, Amherst, Amherst-Pelham Regional SD, Barnstable, Berkshire Hills Regional SD, Berlin-Boylston Regional School District, Billerica, Blackstone Valley Regional SD, Blue Hills Regional SD, Braintree, Bridgewater, Bourne, Cohasset, Dedham, Dennis, Eastham, Everett, Franklin, Gill-Montague Regional SD, Gloucester, Granby, Greater Lawrence Regional SD, Narragansett Regional SD, Harvard, Hampden-Wilbraham Regional SD, Hingham, Holbrook, Holyoke, Hudson, Lawrence, Martha’s Vineyard Regional SD, Medford, Millis, Milton, Monson, Montague, Newbury, North Adams , North Andover , North Attleboro, N. Middlesex Regional SD, Norwell, Orange, Pelham, Pioneer Valley Regional SD, Plainville, Quabbin Regional SD , Randolph, Rehoboth, Revere, Rockland, Rockport, Rutland, Salisbury, Salem, Saugus, , Shawsheen Valley Regional SD, Spencer, Spencer-E. Brookfield Regional SD, Stoneham, Stoughton, Upper Cape Cod Regional SD, Ware, Wareham, Watertown, Westfield, West Bridgewater, West Springfield, Weymouth, Whitman-Hanson SD, Winthrop, Wilbraham Paxton, Woburn


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