Bedford Central: Volatile health care costs vex board

Chart showing actual vs budgeted medical expenses for the past three years

By JEFF MORRIS 

The Bedford Central Board of Education received sobering news from the Segal Group, the district’s health care consultant, at its Sept. 17 meeting. However, while the report shows overall health care expenses rising, the key issue for the board was that district expenses have been much higher than the trend.

The number that jumped out was total medical expenses for 2024-25 coming in at $3.6 million over what was budgeted.

The Segal report shows medical PPO plan trends projected to be up 9.3% for 2026, the highest projection in more than a decade. Segal also said that overall medical price inflation is being driven up by rising labor costs, regulatory changes and ongoing workforce shortages. 

For 2026, the projected annual cost trend for prescriptions is 11.0%, similar to levels seen in the prior year. Many of the same top drivers continue to be observed, according to Segal, including new therapies, manufacturer price increases, and steady utilization gains in top categories, particularly diabetes. However, Segal noted that Bedford Central does not currently cover GLP-1s for weight loss.

Looking at the district’s medical expense figures provided by Segal during the hourlong presentation, board President Gilian Klein noted that the amount budgeted for 2022-23 was $11,831,045; the amount budgeted for 2023-24 was $16,102,421; and the amount budgeted for 2024-25 was $16,029,440. “The actuals were 15, 16 and 19 [million], so we were under in every year,” she said, which “looks like clearly under-budgetting.” She said, “with all due respect to Segal’s formulas” that “the formula doesn’t work for us. And in order to not be in the position going forward that we’re in this year, with a $3.6 million deficit in health care, we are going to have to be proactive and either get out of self-insured, or budget a greater cushion — or someone else who’s better financial-minded than me has a third option.”

The question preoccupying the board was why the district’s premium claims for 2024 were up over 18%, which is far above the national average.

Trustee Steven Matlin said that the finance committee had attributed the discrepancy to be most likely due to certain high-cost claims, and that they would have to dig through the last three year’s worth of data to determine if that is indeed the case. He said that information was not available in time for the meeting.

Trustee Prasad Krishnan observed that there seemed to be a systemic issue of “being all over the place on the budget going back to the 2022-23 school year; we missed on our medical budget by 20%. If you look at the prescription line, we forecasted $8.5 million dollars, we only spent four. So net-net, it actually helped us that year, but we’re so wildly off.” He said he didn’t understand why they didn’t make sure they had a better grasp of both medical and prescription costs, rather than “retroactively looking back and trying to back-solve it.”

Matlin said he thought they were going to have to either “bite the bullet” and join a consortium and pay the upfront cost to reduce volatility, or continue with the volatility in order to avoid the large upfront cost. Klein said this was a data-driven conversation based on whether they could afford the upfront cost.

Board members were in agreement that a consortium would be more manageable; Klein wondered if they could develop an RFP to look at consortiums. Trustee Lisa Mitchell said she didn’t think they yet had the information needed to make a decision, and wanted to get the final audited numbers in order to decide based on more precise data. Vanessa Flynn of Segal said the consultancy had looked at consortium quotes, and found it would be more expensive “to the tune of a couple of million dollars, as well as requiring some fairly substantial benefit changes.”

Matlin asked that Segal make it a priority to update the finance committee monthly on claims numbers, so that they can stay on top of trends. “If this keeps getting worse, the team’s got to figure out a way for us to budget for this,” said Matlin. “It doesn’t seem likely that it will trend back more in our favor; it may only trend further toward a further deficit.”

Superintendent Robert Glass thanked Segal for providing the data; Flynn said they are committed to getting the district on the right path, before signing off her remote connection.

Glass concluded the discussion by reminding the board that they can move on one particular consortium “by providing data for them to crunch to find out what the reserve buy-in would be to participate.” He said they could use the data they get from Segal, and it was about a $10,000 cost to do that analysis. He said he would like to move it forward, and would do so unless the board said not to. Glass said the consortium he was talking about, with which they are familiar, is represented by the same carrier they currently have, and it would presumably not result in any service disruption for members. No one on the board objected to spending the $10,000.

“You think about the budget work that we’ve done over the last few years to stabilize and right-size the budget,” lamented Glass. “It was about a $3 million effort, and that’s what we’re dealing with here in one chunk.”