NEW MEXICO PUBLIC SCHOOLS INSURANCE AUTHORITY

1. NEW MEXICO PUBLIC SCHOOLS INSURANCE AUTHORITY

2. NMPSIA is born • Created by New Mexico legislators in 1985 • Response to unfavorable conditions in the insurance industry • Many schools could not find risk insurance • Medical insurance increases in the twenties • School administrators lacked the expertise to bid and evaluate responses or manage programs

3. NMPSIA Structure • Mandatory participation by 88 of 89 school districts and all charter schools • Original proposed law was modified to exclude school districts with 60,000 or more students • Colleges and universities not mandatory, but may opt to participate • Other non-profit educational entities may also participate

4. Initial Resistance Obstacle Solution • School administrators resisted because of loss of local autonomy • Added an opt-out provision every four years • Notification of opt-out provision given to school superintendents during the contract bid time period • To opt-out, school district must prove same coverage obtained at equal or better price

5. Initial Resistance Obstacle Solution • Union resistance due to lack of local autonomy and right to negotiate benefit package • Local insurance agents loss of commission • Gave unions seats on the Board • Allowed schools to elect to pay commission to local agent

6. Board representation 2 classroom teachers from NEA 1 classroom teacher from AFT-NM 3 Governor appointees 1 Superintendents’ Association 1 School Business Officials 1 Educational Entities at Large 1 School Boards Association 1 Public Education Commission

7. Key Components to Success • Build constituent support • Mandatory participation to prevent adverse selection • Balanced board representation • Deficit payback provision for voluntary members who leave the pool

8. Self-insurance • Initially, all programs were fully insured • Over the years, both Risk and Benefits changed to self-insured • The Risk coverages are protected with a self-insured retention limit of $750,000 • The Medical, Rx, and Dental coverages are totally self-insured without reinsurance

9. NMPSIA Today • Benefits and Risk Programs covering • Mandatory: 88 Public School Districts • Mandatory: 67 Charter Schools • Optional: 24 Other Educational Entities • 11 Staff Members

10. Risk Program Exposure • 270,000 students (activities covered at no cost to student) • 41,000 employees • Property values in excess of $7 billion • 5,000 buses and other school vehicles • Thousands of field trips • 42,000 sports participants • 6,500 volunteer workers

11. Risk Program Loss Control • Civil rights training to discourage discriminatory employment practices • Ergonomics Program to reduce repetitive motion injuries • Premises safety inspections • OSHA trainings • Customized coverage documents

12. Medical/Rx Claims

13. Past Medical Trend vs. NMPSIA

14. Recent Medical Trend • FY 08 our medical trend exceeds national average • 15.5% NMPSIA versus 11% nationally • Catastrophic claims • 10 between $330K & $550K • 4 over $550K • Overall increase in utilization and cost of service

15. Medical Cost Containment • PPO plans with negotiated discounts administered by BCBS and Presbyterian • Modifying behaviors through health management programs • Encouraging appropriate care through plan design (i.e., $0 copay for preventive and diabetic supplies)