Self-funding is becoming a vital option for school districts as they face rising insurance costs and changing education policies. This shift is particularly important as local governments take on more responsibility for education, leaving districts to figure out how to manage their own risks.
In recent years, health insurance premiums have skyrocketed. Reports show that over two-thirds of policyholders have seen their premiums rise by 50% to 200%. With inflation and climate-related damages adding to the financial strain, many schools are rethinking their insurance strategies.
Pedro Reyes, who leads the education practice at Newfront, has witnessed this change firsthand. He notes that while districts have always made local decisions, the recent push for decentralization from the federal government raises new concerns about funding. Schools are trying to prepare for these changes, but it will take time to adjust.
Many districts already struggle with budget constraints, making it hard for them to adapt to new funding models. Reyes points out that self-funding allows schools to have better control over their costs. He explains that with health insurance costs rising by about 10% each year, the traditional insurance model is becoming unsustainable.
Reyes highlights that the cost of health insurance for families has increased by over 200% in the last three decades. Self-funding can be a solution for larger organizations, and more schools are starting to consider this option. He criticizes methods that merely shift costs without addressing the underlying issues, suggesting that self-funding is a more effective way to manage expenses.
Insurance for property is also becoming a concern. As climate risks grow, property insurance is becoming more expensive, especially in vulnerable areas. Reyes emphasizes the need for brokers to find cost-effective solutions for schools each year.
The education landscape is also changing post-pandemic, with more schools adopting hybrid and virtual learning models. This shift challenges traditional insurance systems. Reyes points out that schools with employees across different states need health plans that work nationwide, making geographic flexibility essential.
Telemedicine is gaining traction as a solution. Reyes believes that virtual care options will be welcomed by schools, as they help people access healthcare without needing to travel. He also stresses the importance of transparency in insurance pricing. Knowing costs upfront can help families make informed decisions about their healthcare.
Reyes believes these changes are crucial, especially since every dollar saved on insurance can go directly into the classroom. His mission, along with Newfront, is to provide insurance services that benefit the community.
In a market where only a few insurance providers used to dominate, schools are now looking for alternatives due to rising costs and inflation. Telemedicine, which gained popularity during the COVID-19 pandemic, is now seen as a valuable resource for both physical and mental health care.
As schools continue to adapt to these challenges, the focus on self-funding and innovative insurance solutions will likely grow, impacting the future of education funding and student outcomes.