At Issue
Setting the record straight on the MESSA-MEA relationship
Information you can use to respond to false, misleading information coming from superintendents at bargaining tables.
In recent months MEA members, leaders
and bargainers have reported that their
local superintendent or a member of their
school board has published or passed on
at the bargaining table misleading and erroneous
information about the relationship
between MEA and MESSA.
The misinformation is often based on unsubstantiated charges publicized by the Mackinac Center since the mid-1990s, charges that were examined and dismissed in 1996 as part of a two-year review of MESSA by a series of insurance commissioners appointed by former Gov. John Engler.
The charges are politically motivated and have no substance in truth.
Often, the people distributing the erroneous information are attempting to further their own agenda at the bargaining table or politically. Sometimes, they are just misinformed.
This information is provided to help you set the record straight at the bargaining table or when you’re presented with similar outrageous rumors about the relationship between MEA and MESSA.
What is MEA?
MEA is a nonprofit 501(c)(5) organization and must abide by federal tax laws for such groups. As a labor union, MEA represents more than 160,000 public school employees, including teachers, educational support personnel, higher education faculty and staff, college students and retirees. MEA was established in 1852.
What is MESSA?
MESSA is a not-for-profit 501(c)(9) membership organization known as a voluntary employees’ beneficiary association (VEBA). It does not accrue profits. MESSA is fully regulated by the state and federal governments. It distributes an annual report containing detailed financial data to superintendents, legislators and the media.
As a VEBA, MESSA has a fiduciary duty to its members to always act in their best interest.
By law and by its charter, MESSA funds must be spent to pay and administer its Setting the record straight on the MESSA– Information you can use to respond to false, misleading information coming from members’ medical claims. It cannot and does not make expenditures on political campaigns or PACs.
How did MESSA get started?
As part of its long-term commitment to raising the professional status of public school employees, the MEA partnered with a Lansing insurance agency in 1937 to provide a source for affordable health coverage for MEA members.
When the insurance agent retired in 1960, MEA leaders faced a choice. Under state insurance law, the MEA could not act as its own insurance agent, so leaders and members decided to form a separate not-forprofit organization, and MESSA was born.
MESSA pooled the small employee groups together to provide stable rates and to save districts money by leveraging the pool’s bargaining power with insurers.
The founding of MESSA and the adoption of a pooling strategy were visionary for the times. Many other states are still trying to catch up with Michigan’s emphasis on providing quality benefits for school employees as a way to attract and retain quality employees.
Progress wasn’t always easy or without conflict. In the 1960s, school boards were typically reluctant to provide health benefits to employees. School employees simply didn’t have a level playing field for bargaining contracts and compensation.
The passage of the Public Employment Relations Act (PERA) in 1965 granted school employees the right to bargain collectively.
Working with local leaders, MEA’s network of professional bargainers placed an immediate emphasis on improving working conditions, wages and benefits for school employees. As more MEA units bargained for health coverage, MESSA grew from about 10,000 members to the 86,000 members it has today.
MESSA is a market leader, serving about 50 percent of the Michigan education market. When Senate Republicans hired the Hay Group to look at the market two years ago, the actuaries told lawmakers MESSA was “well-run,” impressive, and it had squeezed just about all of the savings out of the system.
What is the relationship between MEA and MESSA?
MESSA was created by MEA to provide an affordable source for group health coverage. Each organization has its own board of directors. Each board has its own distinct set of fiduciary duties.
About 57 percent of MEA members have MESSA coverage. The rest either have coverage from another insurer or they don’t have health coverage.
About 85 percent of MESSA’s members are MEA members. The rest are employees such as administrators, superintendents, nonrepresented staff or groups represented by other unions (as long as one MEA group in a school district has MESSA, all other employees are eligible to choose MESSA as well).
Unlike for-profit insurers, MESSA doesn’t pay commissions. MESSA markets its products to MEA members, leaders and bargainers. MESSA also works with MEA staff and bargainers to train them on MESSA plans, options, underwriting and bargaining strategies. There are costs for both MESSA and MEA associated with marketing and communication efforts.
In 2005-2006, the most recent year for which data is available, MESSA paid MEA a marketing and member access fee of about $3.3 million. The fee equals less than one-quarter of 1 percent (0.23 percent) of MESSA’s 2005-2006 revenue.
These fees are incurred as part of MEA’s bargaining efforts to provide and maintain quality health coverage for MEA members. The fee also ensures marketing support from MESSA’s statewide network of local field representatives, member education meetings to explain MESSA’s benefit plans to new and existing members, health fairs, and other items.
The fee includes office space, facility rental and administrative services such as access to telephones, copiers and other equipment for MESSA’s local field representatives in MEA offices around Michigan. The arrangement saves money for MESSA members because it would cost MESSA more to rent standalone buildings, office space and equipment for its field staff.
As a cost-saving effort, MEA, MESSA and MEA Financial Services (MEA-FS) consolidated administrative services several years ago. Sharing administrative services saves the organizations significant money through consolidation and elimination of duplication and redundancy.
The arrangement was reviewed by the state insurance bureau in the 1990s. The fees for the services are required to reflect fair market value. The fees are on a costreimbursement basis and are not a revenue generator for either organization.
MEA provides financial accounting, human resources and printing and delivery services to MESSA, while MESSA provides information technology, facility services and telecommunication services to MEA.
In 2005-2006, MEA paid MESSA about $1.9 million for the services received from MESSA. MESSA paid the MEA about $1.6 million for the shared services provided by MEA.
Is public reporting required?
MESSA’s payments are reported publicly in its annual financial statement to the state Office of Financial and Insurance Services. MEA reports the figures in its annual filing with the U.S. Department of Labor.
Where can I go for more information?
Contact your local president or MEA Uniserv director, or visit the individual company Web sites at www.mea.org , www.messa.org, or www.meafs.com.