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WEA Trust takes $70 million hit

WEA Trust takes $70 million hit

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MILWAUKEE — WEA Trust, the not-for-profit insurer that covered about two-thirds of Wisconsin school districts last year, has seen its revenue decline almost $70 million after the state gave districts more freedom to switch insurers.

Despite the drop in revenue, WEA Trust officials say they're confident in their long-term business plan. They say the trust has expanded its market beyond school districts to include municipalities and individual state employees, and they believe their customer service may coax former customers back.

A number of school districts — including current and former WEA Trust clients — agree that the insurer's service has been consistently strong. However, they note that cost is always a key factor, and that WEA Trust's longevity will depend on its ability to keep its prices competitive.

WEA Trust, a nonprofit and one of the state's largest group-health insurers, was started 42 years ago by the Wisconsin Education Association Council, the state's largest teachers union. It covered about 35 percent of all public school employees in the state last year, but its business took a hit after the Legislature passed a law eliminating collective bargaining right for most state employees.

The change gave districts more power to switch insurers — and many did. WEA Trust has lost about one-third of its business with school districts, spokesman Steve Lyons said.

"The thing with school districts, though, is they come and go all the time. We lose districts and we win some too," Lyons said. "We're adjusting to it."

One district that left was the Muskego-Norway School District, after 28 years with the insurer.

District superintendent Joe Schroeder said school officials considered switching five years earlier but found back then that WEA Trust offered the best value. After re-evaluating this year, the district discovered it could now cut its $8.5 million bill for health insurance by about $2 million by switching to United Healthcare, he said.

"For whatever reason there's a much more competitive environment now," Schroeder said. He added that WEA Trust had provided solid enough service that the district might consider going back if the trust's costs come down in the future.

WEA Trust saw its revenue fall 8 percent since last year, from $867 million to $798 million. As a result, about 35 people were laid off and other positions vacated through attrition were left unfilled, Lyons said.

To adapt, WEA Trust has stepped up efforts to expand its business.

While teachers are generally on group plans in which everyone has the same benefits, certain other state employees can choose their own benefits plan from a list. Those people represent one new market that WEA Trust can serve right away, Lyons said. Another is counties and municipalities.

WEA Trust's core business took a hit following Gov. Scott Walker's push to eliminate certain collective bargaining rights, an effort that prompted massive protests at the Capitol by thousands of teachers and other union members. Walker's office has countered by releasing data this week that it says shows how well the new law is working.

The data, from 52 school districts that changed health insurance carriers, show total savings of more than $30 million. Walker said the savings are good news for taxpayers, and also free dollars for teacher wages and classroom development.

"Competition among health insurance providers helped save millions of dollars all across Wisconsin," he said in a statement.

Critics of the law say the savings can be misleading, since those who switch aren't necessarily getting identical benefits from their new insurers. For example, some people who used to pay deductibles of $100 or $250 for individuals might now pay as much as $2,000.

Deductibles at the School District of Menomonee Falls went up from $100 per individual to $250 when the district switched from WEA Trust to Humana. However, the new plan helped the district save almost $1 million on health care costs.

Jeffrey Gross, the district's director of business services, said WEA Trust offered a plan that was high-quality but too expensive.

However, other districts said even with the increased freedom to switch, they preferred to stay with WEA Trust. They said the insurer offered them a competitive price along with the secondary benefit of strong customer service.

One example is the School District of La Crosse, which insures about 1,000 people. Its premiums actually went down 3 percent last year, associate superintendent Steve Salerno said, in part because the district has been a WEA Trust customer for 18 years. That allowed the insurer to set rates in line with the district's historic costs.

Salerno said insurance rates tend to be higher in his region because there aren't as many competitors as there might be in the Milwaukee or Madison areas. He did say a number of insurers offered competitive bids, but in the end the district realized the best choice to stay with what it had.

"I think it's unmatched," he said of WEA Trust. "With their level of customer service, nothing else comes close."

Dinesh Ramde can be reached at


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