Premium Issue

Will teachers get insurance?

Last year a teacher in the Lower Rio Grande Valley needed medical care for her son after he broke his leg. She decided to take him across the border to Mexico for treatment. Why? Because she couldn't afford to pay for the care, and her insurance deductible was so high that it did not provide any relief.

Cases like this one are behind the push for teachers' health insurance in the current legislative session. Unlike state-agency employees, teachers do not get any state-paid health insurance. It's provided by local school districts, but many are too small to get affordable rates, and in approximately forty districts, teachers are not offered any coverage at all. Sixty percent of all Texas school employees pay monthly premiums of $500 or more. And while the Legislature passed the largest teacher pay increase in history two years ago, some teachers hardly noticed any change in their paychecks because of higher health insurance premiums.

State leaders agree that the disparity between what is offered teachers in different districts is unfair. But teacher health insurance, like a lot of other problems in state government, has been neglected for so long that any effort to fix it will run into fiscal and political restraints. As Senate education committee chairman Teel Bivins (R-Amarillo), a supporter of helping underinsured teachers, puts it, "All the easy problems have been fixed."

Here are some of the issues lawmakers must resolve before teachers get any assistance:

What will it cost? Estimates range from $1.6 billion to $3 billion a year, depending on how the state splits the cost with school districts. Full state funding would cost $3.3 billion, far more than the state can afford. Lawmakers must find a happy medium that entices school districts to join the plan, without busting the state's budget. While some teacher advocates may argue for the state to pay a larger portion, budget writers are nervous about what would amount to an entitlement that is subject to ever-rising costs. Another peril for teachers is that the cost of health insurance could prevent teachers from getting a pay raise in the future. "For teachers' own good, you don't want to have an open door on teacher insurance costs," says House Appropriations chairman Rob Junell (D-San Angelo).

Where will the money come from? State comptroller Carole Keeton Rylander has estimated that lawmakers will have $5.1 billion for new state spending during the next two-year budget cycle. But the proposed state budget laid out by Junell allocates all but $1 billion of the surplus. An emergency appropriation of $700 million to $800 million is in the works, much of it to pay unexpected Medicaid bills from the last budget cycle. That leaves just $200 million to $300 million to spend on teacher health insurance.

Junell hopes to get more money by modernizing the investment strategy of the $21 billion Permanent School Fund, the bounty from a century of oil revenue. Currently, the Legislature can spend only the interest income from the fund; the new strategy will free up more of the capital gains earned by the fund.

Why don't teachers have an insurance plan comparable to state employees? In Texas, teachers are not state employees. They are school-district employees. Some districts have done a good job of providing health insurance; others have not, either by choice or because of market forces. (Small districts in isolated areas don't get a lot of insurance companies begging for their business.) And teacher organizations have focused on getting pay hikes in the past—rather than health insurance—because pay increases benefit all their members.

By pooling all the school districts that lack the buying power for a good plan, the state hopes to get a better deal for teachers. Many districts will not join the pool; those with good plans will want to remain autonomous. Junell also thinks the state can negotiate with pharmaceutical companies for lower-cost drugs, combining teachers, prisons, state hospitals, and Medicaid patients. "We're a pretty good customer," he said. The result is that uninsured and underinsured teachers will be better off—but not much better.

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