County ups insurance funding by 10 percent

Posted 6/10/10

The plan ran a more than $1 million deficitover the past two fiscal years,including a more than $635,000 deficit between July 2009 and May 2010 under an unusually large number of high claims.

“I believe a 20 to 25 percent increase would get …

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County ups insurance funding by 10 percent


Opting not to follow the advice of its consultant, the Park County Commission on Tuesday voted to increase funding to its health insurance plan by 10 percent.The county's private insurance consultant, Eric Deeg of Western States Insurance Agency, had recommended boosting funding to the self-insured plan by at least 20 percent.

The plan ran a more than $1 million deficitover the past two fiscal years,including a more than $635,000 deficit between July 2009 and May 2010 under an unusually large number of high claims.

“I believe a 20 to 25 percent increase would get you back on at least the right path,” Deeg said at the commission's June 1 meeting.

But on Tuesday, commissioners voted 3-2 to raise premiums by 10 percent, the lowest option Deeg had presented as a possibility.

“I think that (a 10 percent increase) would be the most conservative thing to do, and I'd be supportive of that,” said Commissioner Bucky Hall.

Hall noted that the plan, after losing more than $220,000 in some of the worst months of this year, ran in the black in both April and May.

Commissioners made a number of changes to the county's insurance plan effective March 1. Those changes included all but eliminating a plan benefit that required employees to pay only a $35 co-pay on most out-patient visits, even if the cost ran in the thousands of dollars. The commission also effectively doubled employees' out-of-pocket costs cap from $2,500 for individuals and $5,000 for families to $5,000 and $10,000, respectively; after hitting the $2,500/$5,000 level, employees are responsible for 20 percent of the costs until they hit the $5,000/$10,000 cap, with the county picking up the remainder.

Hall said the changes apparently led to the lower claims in recent months.

Commission Chairman Jill Shockley Siggins, however, said she would rather err on the side of over-funding the plan — with extras going to insurance reserves — than under-funding it “so we're not back where we were.”

Earlier this year, commissioners shifted $200,000 that had been budgeted for employee raises to the insurance plan and pulled $500,000 from reserves to cover its shortfall as the plan all but ran out of money. The cash was able to be transferred from reserves only after a previously-advertised public hearing.

“You can lower it (insurance plan funding) a lot quicker than you can to raise it in the midyear, as we found out,” Siggins said, adding later, “I think it would be prudent if we at least tried to get (the funding increase) at the middle instead of the low end.”

First Deputy County Clerk Wardi Reber, a member of the county's internal insurance committee, said she was “shocked” to hear Hall, a fellow committee member, suggest just a 10 percent hike rather than the minimum 20 percent Deeg had suggested.

“I feel like 10 percent might not be any more than we did last March,” said Reber, referring to a similar premium increase the county made last year. That increase wasn't enough to cover costs in a year that has seen an abnormal number of extremely high claims.

Reber said it was unknown if claims will stay as low as they did in April and May.

“Part of this might have been luck,” she said.

However, Commissioner Tim French said the county would be looking at the insurance plan quarterly and noted that it would be possible to add more funding again if it was needed. French also said the plan changes look like they “may be having quite an effect.”

Commissioner Dave Burke initially advocated a more than 38 percent increase in premiums, which, according to consultant Deeg, would fund the plan at expected costs.

“I'm most comfortable knowing the plan is fully funded,” Burke said, but he later changed course and voted for the lower 10 percent increase with Hall and French. Citing the improved numbers for April and May, Burke said he was “very comfortable” with the plan's financials.

Commissioner Bill Brewer joined Siggins in voting against a 10 percent increase in premiums.

The increase will mean a $400 to $440 hike for individual premiums and a $950 to $1,045 jump for families. Park County currently has just over 200 employees on its insurance pool, with roughly two-thirds being on a family plan.

All premiums are paid by the county, and a 10 percent increase will cost roughly $193,000 more, bringing the county's total funding on the plan to a little more than $2.1 million in the coming fiscal year, Deeg's estimates say.

At last week's meeting, Deeg said the county's third-party administrator, Meritain, probably should have recommended a higher increase in premiums last year instead of a roughly 10 percent hike. Deeg said underwriters' estimates showed that the county's insurance plan was likely to be about $300,000 underfunded in the current fiscal year.

However, “There is no blame for anybody making any bad decisions here,” he said.

At that meeting, French said the county's reserves had been adequate and that there had been no need to boost them.

“We had that million dollars (in reserves) all along,” said French, questioning why it would be necessary to “take that money from the public and bump it up to 2 (million dollars).”

In July 2008, the insurance reserve account held more than $1 million; as of July ‘09, there was less than $600,000, and with the unusual number of high claims, the money had all but dried up by February.

Deeg has said it will take years to get the county's health insurance plan costs down. He has advocated for increasing employee participation in the plan, such as by creating employee-managed health savings accounts, wellness programs and potentially asking employees to contribute towards their premiums if they don't participate.

Commissioners are planning to look at such changes in coming months.

Park County Treasurer Nena Graham-Burke said the county's March 1 plan already had created “quite a bit” of employee participation. Graham-Burke said she was concerned about the increase in the out-of-pocket cap to $5,000 or $10,000.

“I have some employees and single mothers, they don't have that kind of money,” she said.

However, Siggins and French supported the new cap, with French noting that some county residents don't have any insurance.

Less controversially, the commission's action on Tuesday also decreased the county's stop-loss insurance for the coming fiscal year, which begins in July. The county had been insured so that any claims above $50,000 were covered by the stop-loss plan. Consultant Deeg had said the $50,000 ceiling was unnecessarily low and expensive for the county. On Tuesday, the commission raised the stop-loss threshold to $60,000, a move Burke called “common sense.”