Buffalo Public Schools saving millions in healthcare costs with new union contracts

Sep 18, 2017

Buffalo Public Schools are chipping away at the vast costs of health insurance for current employees and retirees, saving millions of dollars.

The district expects to spend $138 million this current school year on paying bills for medical care for employees and retirees. That is down millions from last year and potentially down more this year - much of that because of new union contracts with teachers and administrators.

Hundreds of retirees have decided to switch from their district-provided health coverage to a Medicare Advantage plan put together by Lawley Insurance, the school district's consultant on health care. Lawley Partner John Berger said that plan saves the district more than $700,000 per retiree a year, more than 800 of whom opted for the advantage plan.

Employee benefits figures presented at a recent Buffalo School Board meeting.
Credit WBFO's Mike Desmond

"You can see that in the 17-18 row - which is not do now, but actually do nothing - you can see a reduction in the retiree health costs," said Berger, "and that's one of the levers that we have actually implemented thanks to the support of this board over the last three years to run a grassroots approach to offer a Medicare Advantage plan."

That plan is specifically geared for school system retirees and Berger said there was a lot of interest.

"We have 3,200 rows of people that we're trying to convert or coerce to think about the Medicare Advantage plan," he said.

He said 810 teachers and 264 administrators have voluntarily asked to be signed up.

There also are a variety of other efforts to cut costs, many of which will not be visible to the recipients and they potentially save millions of dollars more, Berger said. For example, what is called "eligibility management" has cut costs for 210 employees getting benefits they were not entitled to.

"What we found in that, believe it or not, is that most of the people that weren't eligible, it wasn't dependent or children, it was spouses in divorces," he said. "So the judge orders and says, 'Hey John, you have to offer your ex-spouse insurance.' That doesn't mean I have to make my employer pay for it."