Tuesday, May 4, 2010


Just this morning as I was driving along I heard that the MEA is increasing their insurance premiums. All I could do was shake my head in silence, wondering how they can do that NOW? Here is the answer: they lost their shirts on their own investments and need to replenish, on our dime?

MESSA loses millions through bad investments, pension costs

MEA-owned insurance carrier using rate hikes to replenish coffers? Now it all makes sense.

We admit we were a bit astounded a few weeks ago, when we discovered that school districts throughout the state were again being hit with double-digit insurance rate increases by MESSA.

Of course rate increases are nothing new for MESSA, but we half expected the MEA-owned insurance giant to employ a bit of political savvy (and mercy) this year and take it easy on client districts, given their fragile financial condition.

Then we got our hands on MESSA's latest state financial statement, and the lights came on. It seems MESSA is dealing with its own financial dilemma – a loss of more than $100 million in its fund reserve due to bad investments and growing pension liabilities.

Last year MESSA reported having a fund reserve of $365 million, and the statewide average of its rate increase for schools was somewhere around six percent. But this year MESSA's fund reserve has dwindled to a measly $259.5 million, and the average increase is expected to be 13.3 percent.

According to state records, MESSA's outside investments lost $46 million in value over the past year, and it had to contribute an unusually high $64 million to its employee pension fund.

MESSA officials are eager to replace that money, and they're clearly doing it on the backs of the schools and taxpayers, according to Frank Webster, a former MESSA executive director. After all, how could MESSA, a non-profit agency, survive with only $259 million in the bank?

"You can be sure that MESSA will have rates that will recover what they lost during the recession," Webster wrote in recent summary of MESSA tactics. "They will do the best they can do to make it all up.

"Many American companies would like to make up for the recession losses, and MESSA is one that has - thanks to the Michigan taxpayers. It has a license to steal from taxpayers!"

None of this would be so bad if schools weren’t in such miserable financial shape to start with. The MEA says it cares about our schools, then allows its pet insurance company to raid district coffers. To those who argue that that the MEA isn't involved, we would remind them that many of the same people who run the MEA sit on the MESSA board.

And it wouldn't be so bad if schools, like normal consumers, were allowed to turn to the free marketplace for less expensive coverage. But as we all know, state law continues to make health insurance a topic of collective bargaining, and local unions continue to insist on MESSA coverage.

It's ironic now to picture Randi Weingarten, president of the American Federation of Teachers, protesting last month outside a meeting of insurance company executives in Washington, D.C.Weingarten called them criminals and said they should be arrested for the high rates they charge American consumers.

We wonder what Weingarten would say about MESSA, a big, fat, greedy insurance company owned by her union brothers and sisters?

Read more here about the ugly numbers http://tinyurl.com/27p2nun

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