MESSA

Michigan Education Special Services Association, or MESSA, was founded in the 1960s to provide benefits for members of the MEA.  More often than not, MESSA is negotiated into school employee contracts in Michigan.  MEA staff has convinced many of its members it is better to negotiate MESSA into a contract and forego a raise than it is to receive a comparable insurance benefit and put more money into the teacher’s compensation.  More often than not, the financial interest of the MEA wins the day over its rank-and-file members.

Myron Lieberman, a former consultant to the NEA and chairman of the Education Policy Institute, wrote in his 2000 book, “The Teachers Unions: How They Sabotage Educational Reform and Why,”

“The foregoing relationships [MEA and MESSA] constitute an indefensible union conflict of interest.  When school boards bargain with an MEA affiliate, the union’s obligation is to negotiate the best possible carrier from the teachers’ perspective.  Union representatives cannot do this if their employment responsibilities require them to promote the union-controlled carrier.  This conflict of interest would not be negated by the fact—it if happened to be a fact at any given time—that the union-controlled carrier was the best carrier from the teachers’ perspective; it is unrealistic to expect the union representatives to urge school boards and union locals to switch to a different carrier when the union-controlled one is no longer the best.”

Many districts are doing their research and coming to the realization that there are comparable plans at a much lower cost.  For example, in the Centreville district, teachers switched from MESSA directly to Blue Cross Blue Shield and, according to the Kalamazoo Gazette, there are three areas employees no longer receive coverage: sex-change operations, massages, and a treatment for Christian Science practitioners.  By making the switch, the district saved over $200 per student.

MESSA: It's not 'profit,' it's 'net assets'

MESSA is quick to point out to the media and others that they're a non-profit entity, so they don't make a 'profit.'  Using their language for a moment, let's review their financial picture.  Their 'net assets'--technically, their assets after expenses--have been growing significantly over the last several years.

For just the last three, their assets have more than tripled.  Click on the dates to see the summary page for MESSA's filing with the Office of Financial and Insurance Services.

NET ASSETS

June 30, 2007: $359,379,500

June 30, 2006: $268,783,041

June 30, 2005: $118,996,077

MEA’s control of MESSA

The union’s control of MESSA is indisputable.  A MESSA Bargaining Guide, found here, notes the number one bargaining goal for MEA local affiliates is to maintain MESSA-brand coverage (see page 2). MESSA’s board of trustees is comprised of MEA leaders, as well as local union leaders.

For those that will dispute the notion that the MEA calls the shots, here is an organizational chart for MESSA that was filed with the state of Michigan.  It shows the executive director of MESSA reporting to the executive director of the MEA.

Additionally, the MEA reported receiving over $4.7 million from MESSA for "marketing" services (see page 68 of 148) in the LM-2.

Amazingly, these issues have been around for a very long time.  In the 1990s, the Mackinac Center for Public Policy conducted an extensive exposé on MESSA and its conflicts and relationship with the MEA.  It can be found here.

MESSA and Blue Cross

MESSA actually has no liability; they contract with Blue Cross Blue Shield to underwrite all claims.  MESSA is simply a Third Party Administrator (TPA)—a middle man if you will.  A strong argument could be made that if districts simply cut out the middle man, significant savings could be found.

Here is the once confidential operating agreement struck between MESSA and Blue Cross Blue Shield.

In 1996, the state of Michigan conducted an examination of MESSA and released its findings.  It forced MESSA and Blue Cross to change the way they did business.

The MEA and MESSA fought reform efforts in 2007, specifically Senate Bill 418—now Public Act 106 of 2007—because they knew what competition would mean to their business.  At the launch of this site, MESSA has still not released claims data to school districts because of a “loophole” in the law, according to the Grand Rapids Press.

Education Action Group had two columns published in the Detroit News on the reform measure.  They can be found here and here.

It appears MESSA hasn't tried very hard to help school districts out.  This case study (hat tip: Rob Lawrence) from ImageNow Perceptive Software, Inc. tells how how easy it is for MESSA to search for member records using their company's software. 

"Documents are automatically indexed by the member’s social security number. To access an entire member record, an employee enters the social security number, clicks the ImageNow button and the documents are retrieved instantly," the study reads.

The necessary technology is at MESSA's fingertips and MESSA has the ability to search by individual member information. Now granted, we're not paid the wages of MESSA executives but here's an idea: what if they ran a report to compare a list of employees to the records they hold.  Perhaps that information could be given to school districts so they could provide responsible benefits at competitive rates?  Nah, too easy!

No help in sight for schools

After the 1996 examination of MESSA by the then Department of Insurance, an agreement was signed by Michigan Insurance Commissioner D. Joseph Olson and Warren D. Culver, executive director of MESSA. Click here to read the agreement.

Two key components which emerged from that document were a cap on the assets MESSA could accrue, as well as a requirement to list seperately the Blue Cross portion of MESSA's rates. The latter basically allowed the department--and the public--to be able to see how much MESSA was keeping for themselves and what they were using to pay the company with the actual insurance liability, Blue Cross.

On October 23, 2007 (less than one month after the legislature passed a sweeping reform affecting MESSA), bureaucrat Frances K. Wallace, "chief deputy commissioner" of the now Office of Financial and Insurance Services eliminated those two components of the agreement.

A letter obtained though the Freedom of Information Act reads that "our respective staffs met to discuss these changes" and that OFIS "agrees that the changes you requested in your June 30, 2006 letter and in subsequent discussions are reasonable."

What did bureaucrat Wallace do?  She said "the net asset limitations...are lifted."  Additionally, "...there seems no need to separately list the BCBSM portion of MESSA's rates.  Accordingly, that requirement in section 3(f) of the Settlement Agreement is discontinued."

Did Wallace have the authority to make such a decision?  That would probably have to be determined by a court, but this document would lead us to believe 'no'.  The authorization issued by Commissioner Linda A. Watters is dated October 31, 2007--more than a full week after Wallace signed the agreement.  Whoops!

Nevertheless, Wallace gave the approval to MESSA to run up as much in net assets as they would like, with no regard to the premium payers--that is, school districts spending tax dollars.

So much for state government trying to help districts contain costs!