Will health insurance changes boost county?
NATCHEZ —Adams County supervisors say they hope their recent decision to change employee health care plans will be a shot in the financial arm that will boost their long-term bookkeeping health.
Last week, the supervisors voted to move the county in April from its longstanding self-insured health insurance program to a fully funded plan. The change could save the county almost a quarter-million in taxpayer dollars annually, though their insurance agent said they would not likely see those savings in the first year.
The self-funded insurance plan the county currently uses is structured so that the county covers up to $50,000 in insurance costs per employee with funds coming from county coffers. Beyond that, a re-insurance plan kicks in to absorb bills related to catastrophic accidents or illnesses.
County Administrator Joe Murray said that health care setup has run the county a bill that has held steady between $1.9 and $2.1 million for several years.
That’s in part because under the self-funded model employees who are known to be high-risk — in other words, those who have known health issues — can be pooled in a group over which the county would have to cover costs up to $150,000.
That weakness in the plan was evident in recent years when at one time the county had four employees or their spouses who were covered by the plan in end-stage renal failure, insurance agent Randy Hazlip said. Other county employees were being treated for cancer.
Those employees have since retired or moved to other jobs.
“Those catastrophic illnesses that periodically occur among your employees really drive your costs that you put into your health budget,” Supervisors President Darryl Grennell said. “(Budgeting for it) was a haphazard thing. We had no idea of what to program into the budget because we had no idea of what we would face for our employee health care in the year.”
In 2012, Supervisor Mike Lazarus said the insurance plan was costing the county at a rate of $10,000 per employee that year.
Under the fully funded plan, which functions like standard employer health care coverage, the cost to the county will be approximately $6,000 per employee, Lazarus said.
“Since we never knew what our insurance would be, we never had the desired end-of-year cash balances we wanted,” he said. “Every year the bulk of it had to go to cover medical costs because we were self-insured. It ate up our cash balances. Now, when we set our budgets we will know exactly what we have to spend.”
Supervisor Calvin Butler said having a firm number for health care costs frees the supervisors up from worrying about those numbers if other surprises come along.
“It kind of holds us more accountable,” he said.
The county currently covers 148 people with its insurance offering, Hazlip said.
While the county expects to pay less for insurance under the new program, employees won’t see many changes in their benefits.
The $500 deductible county employees have to meet for medical treatment will stay the same even though under the new plan their deductible is actually $7,000. That’s because the county is purchasing a supplemental plan as part of the package that covers the costs beyond the initial $500, Grennell said.
One thing that will change is that employees will now have to meet a $50 drug deductible.
“I think the $50 deductible is great because you don’t want to throw a $100 or $200 deductible on the employees, which would be a tremendous hardship on them,” Grennell said.
“When choosing these plans, we look at the numbers, what is going to impact the county in terms of dollars, and in previous years we talked about deductibles and co-pays, looking at what is it costing the county. We did not want to create a burden for our taxpayers nor did we want to create a strain on our employees in terms of having higher deductibles or co-pays, so we came up with what is best in terms of dollars for taxes and for what is best for our employees based on their salaries.”
When the supervisors chose the new plan, Hazlip told them it had the potential for a gross savings of $218,074 annually. That savings would probably not be realized in the first year because of overlap between the two insurance programs, with claims from the self-funded months that are filed after the switch eating into the extra cash.
Once those claims are off the county books, savings should be realized.
But in 2014, the county will also have to budget for an annual assessment of $63 per person covered by the county’s health care plan. The once-a-year payments to the federal government will be used to fund the health insurance exchanges that are to be operated under the Affordable Care Act, and will have to be paid regardless of which insurance plan the county offers its employees. That would also take away from the savings.
Lazarus said in future discussions the county would have to look at raising deductibles to save money.
“We have got some pretty good insurance, and raising the deductible might not kill anybody,” he said.
Supervisor David Carter likewise said he would rather raise deductibles than raise taxes.
But Supervisor Angela Hutchins said one way to drive down health costs would be to lower premiums by having fewer claims filed, a goal that could be accomplished by getting more county employees to participate in the preventative health program Healthy You. Even having employees go to yearly checkups so health problems could be detected sooner would drive down costs, she said.
“Prevention is the key,” Hutchins said. “If they can do that, that can help with claims.”
Grennell likewise said he would like for county officials to think creatively in the next year to find ways to encourage employees to seek preventative care. One idea he suggested would be to have the county information technology director develop a prompt reminding employees who use the county’s electronic information systems to schedule doctor’s appointments.
Carter offered a compromise position, noting that the supervisors tried to entice employees to participate in the Healthy You program last year with the potential to win a $900 prize, but only a handful of employees participated.
“If $900 doesn’t motivate you to participate in it, I don’t know what does,” he said. “We might have to say that if you don’t participate in the Healthy You program, your deductible goes up.”
Having employees participate in Healthy You will ultimately help the county achieve the goal it is setting out to do when it offers health care coverage, Carter said.
“If you have a healthier workforce, you have a more productive workforce,” he said.
“We are not just trying to save money, we are trying to get a healthier workforce.”