Rising healthcare costs are placing significant financial strain on school districts across the country and Garfield Re-2 in western Colorado is no exception. The district’s school board recently discussed a proposed 13.5% increase in medical insurance premiums, a jump that equates to over $1.06 million, according to information presented at their Wednesday meeting.
The increase, presented by Emma Dahlin of Willis Towers Watson, a risk management and advisory company, reflects broader trends in the healthcare industry. Dahlin explained that claims are currently high “not unique to CEBT, it’s happening all across the state and across the country,” and that costs haven’t been this elevated since the early 2000s.
Garfield Re-2 currently utilizes the Colorado Employer Benefit Trust (CEBT) for its employee benefits. CEBT is a non-profit, self-funded trust specifically designed for public sector entities within Colorado, currently serving over 450 groups and approximately 37,000 employees, including those in 99 school districts. Only public sector employers are eligible to participate in the trust.
Factors Driving Up Costs
Several factors are contributing to the surge in insurance rates, Dahlin explained. Inflation is playing a role, but a significant driver is the increasing cost of specific medications. Notably, Glucagon-like Peptide-1 (GLP-1s) – medications like Ozempic, Wegovy, and Zepbound commonly prescribed for diabetes and, in some cases, weight loss – are contributing to higher expenses. Even as the CEBT plan doesn’t cover these medications for weight loss, they are covered for diabetes and certain cardiac conditions. New and expensive dermatological drugs and a rise in cancer diagnoses are adding to the financial pressure.
According to the National Institute of Diabetes and Digestive and Kidney Diseases, roughly 40% of U.S. Adults are classified as obese, a factor that contributes to the demand for these medications.
Board member Chance Jenkins questioned the situation, pointing out that hospitals received federal relief funding during the COVID-19 pandemic. Dahlin acknowledged the funding but noted that hospitals are also facing increased costs for employees and medical supplies, as well as grappling with ongoing workforce shortages. The American Association of Colleges of Nursing estimates the Registered Nurses (RNs) workforce will grow around 177,000 from 2022 to 2032, but also reported a drop of approximately 100,000 RNs between 2020 and 2021 – the largest observed decline in four decades.
A Decade of Relatively Stable Rates
Despite the current 13.5% increase, Dahlin pointed out that Garfield Re-2 has historically enjoyed relatively stable rates through CEBT. Over the past 10 years, the district’s average rate increase has been 7.3%, which is below the average medical trend and inflation rate of around 8.5%.
The current increase breaks down as follows: medical insurance is up 13.5%, dental rates have risen 15%, while vision and life insurance premiums remain unchanged.
Concerns on the Western Slope
Jenkins expressed frustration with the situation, noting that hospitals on the Western Slope, despite appearing financially stable with new construction and property acquisitions, are claiming to recoup losses. He stated, “We’re scrapping for every dollar we can find that we could actually deliver to our staff that could go into buying a house or buying something.”
Dahlin acknowledged the concerns and stated that the situation on the Western Slope is particularly challenging due to limited competition among hospitals. She added that conversations are ongoing with hospitals to find common ground, noting that Grand River Hospital is ranked highly in quality and has slightly lower costs compared to Valley View and Aspen Hospital.
Looking Ahead
The Garfield Re-2 school board will need to address the significant insurance cost increase as they develop their budget for the coming year. The district is exploring options to mitigate the financial impact while maintaining quality benefits for its employees. Dahlin and Willis Towers Watson will continue to function with the district to identify potential solutions and negotiate with healthcare providers. The next steps involve further analysis of cost-saving measures and continued dialogue with hospitals on the Western Slope.
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