Healthcare costs are rising fast enough to erase any equity gains from a modernized formula.
Rising healthcare costs are consuming district budgets at an unsustainable pace, squeezing districts & staff and crowding out the investments that support student learning and success.
Districts are already coping by tapping facilities reserves (52%), cutting instructional materials & technology (31%), and delaying hiring (34%), just to keep pace. A single cost driver is doing most of the damage: prescription drug spending, especially GLP-1 weight-loss medications, which rose 75.1% in drug spend in a single year.
1
Cap what health plans pay hospitals, tied to Medicare rates. S4282/A5086 would cap reimbursement for high-cost hospital procedures at 165% of Medicare in-network. Oregon’s near-identical 2017 law saved $107.5M in 27 months and cut patients’ out-of-pocket costs by 10%, with every hospital staying in-network.
2
Rein in pharmacy benefit manager (PBM) markups. Prescription drugs, especially GLP-1s and specialty medications, are the single biggest driver of premium growth. Georgia’s HB 196 is a working model: transparent pricing, fair dispensing fees, and closed discount-program loopholes.
3
Give payers a seat at the table. Reform SEHBP/SHBP governance so workers, retirees, and the towns footing the bill help shape plan design and vendor contracts, paired with the pricing reforms above (not instead of them).
4
Build a healthcare cost-growth factor into the formula. When premiums spike, the formula should reflect it in real time, not force districts to fund the gap out of reserves meant for facilities and emergencies.
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Do not fix this by degrading benefits or shifting costs onto employees. That’s already happening nationally and functions as a pay cut for teachers and staff. The workforce shouldn’t absorb a cost problem it didn’t create.