Lehighton Area School District’s healthcare bill is climbing faster than anyone had planned for.

Business administrator Matt Lentz told the school board Monday night that the district’s annual healthcare renewal through the BSI consortium will require a 12.4% increase over the current year, worse than the 10% bump that had been built into the district’s multi-year budget projections. In real dollars, the jump translates to approximately $900,000 in additional spending next year, bringing the total healthcare bill to $8.7 million, up from $7.8 million this year.

The district participates in a healthcare consortium that purchases shared coverage and pools risk across member districts. Three separate factors, Lentz said, drove the rate up: the consortium’s stop loss insurance — which kicks in to cover catastrophic claims — increased 19.5%; the district’s required contribution to the consortium’s shared risk fund was 18%; and the district’s own underlying claim rate came in at about 10%.

“It’s a total of around $900,000,” Lentz said. “Again, it will depend upon where contribution rates land, because we obviously split that on the premium share piece.”

Monday’s news prompted board member Dave Bradley to ask why hadn’t the district shopped its healthcare coverage before accepting the increase?

“Of the $8 million expenditure that we’re going to have, did we even consider bidding it out again?” Bradley said. “We did it back years ago, and we reviewed the different providers, and it was significant savings as usual, made them compete a little bit — they sharpened their pencil pretty well.”

Lentz explained that the structure of the consortium creates a constraint. Leaving mid-cycle isn’t an option because each member district’s claims history affects the shared risk pool for everyone else.

“You’re committed to be a part of the consortium,” Lentz said. “There’s an agreement with the consortium, and you can’t, when you get rates, withdraw, because it affects everybody else’s rate who’s part of that shared risk. So you have to withdraw in whatever fashion related to the provision for that agreement.”

Bradley followed up by asking when the withdrawal window actually opens.

“I think you have to submit your notice to withdraw around an October time frame,” Lentz said.

“This coming October, or in September, go out for bids, find out where we stand, and then make our decision as to whether or not we withdraw in October,” Bradley responded.

Lentz noted there are penalties associated with withdrawing from the consortium, and that the exact terms of the exit provisions would need to be reviewed.

“One of the great benefits of being a board of directors is we don’t have to play ‘let’s make a deal,’” Bradley said. “We literally get to open up all the doors in and see what’s behind door number one, door number two and door number three, and then make a decision. Rather than just casting off the work that we do for them, we can actually remove the doors, open them all, and see what they think is worth.”

Director Denise Hartley noted that healthcare costs have been rising sharply across the state, not just in Lehighton.

“We’ve talked about health insurance increasing all over the board,” Hartley said. “I’m just trying to make a point that we’re saying it’s more than the 10% we thought, 12.5%, and that’s a scary number. But in the same process, is it really scary compared to what it could be?”

Superintendent Jason Moser acknowledged he had heard of districts facing steeper increases.

“I heard some districts talking about 17, 21% increases,” Moser said. “Again, that doesn’t mean that’s the average — I’m not trying to say that. I just anecdotally heard that at the superintendent’s meeting.”