TOWN'S HEALTH INSURANCE COSTS GOING UP IN 2008
05 01 08 - 17:47
13 Percent Hike Will Cost Taxpayers An Additional $800K
By Keith Hagarty
Health insurance premiums for township employees will be going up by 13 percent, or nearly $808,000 in the new year, Mayor Stephen Acropolis announced at one of the town's last council meetings of 2007.
The township agreed to remain with Horizon Blue Cross/Blue Shield to serve their employees, with last year's premium costs budgeted at slightly over $6 million.
According to Acropolis, there are two things municipalities have a very difficult time controlling: utilities and healthcare costs.
"We can control contracts. We know the percentages of the increases that we give employees over a period of time, but health care, we don't know," Acropolis said at the council's December 18 meeting. "If we're self-insured, we have a little better handle on what those numbers are."
With Acropolis having only been in office since November, he suggested a lack of hands-on involvement by the former township administration possibly contributed to the escalating costs.
"I wasn't here in August, September and October when these negotiations should've been taking place," said Acropolis. "Last year, we tried to spearhead it a little bit, while this year in our administrative function, we did talk about self-insurance and claims."
He said a $900,000 claim by an employee was a contributing factor to the 13 percent increase for health care premiums.
The township's health insurance premiums are entirely claims-driven. While township employees do not pay any of the premium costs, they are expected to continue to co-pay for doctor visits and prescription plans, said Acropolis.
"We're actually going to ask the current broker if they can give us a retro-premium, where you can actually ask them with our 13 percent increase they could take, let's say, five or eight percent of that and put it into some kind of an escrow account," Acropolis explained. "They would then look at the claims for the year. If the claims are high, well then they're going to get that money at the end of the year. But if the claims are where they should be- which is where they were over the last couple of years- then we'll actually keep that money."
The mayor said such an option would serve in much of the same manner as a standard rebate system.
"That's one of the things we're looking at," said Acropolis, "and we will be looking at this in the first quarter of next year."
The idea of shared services- such as combining health insurance plans and premium costs with the township board of education or municipal utilities authority (MUA)- would be an attractive option for the town, however, it would not be permitted under state law.
"They're separate entities, and until the state changes their antiquated laws when it comes to shared services, we can't do that," said Acropolis.
However, Acropolis offered the idea of possibly having two or three health clinics setup in town to accommodate the municipality's and school district's 2,300 employees. The clinics would be for minor ailments, and could further reduce incurred health care costs, he said.
"So instead of employees calling their doctor where it could be a week or four days, they could instead walk into one of our clinics and see a physician's assistant," he said. "Normally, when you go to the doctor, he'll see you for about two minutes, and about 70 to 80 percent of what a doctor can do, a physician's assistant (PA) can do, and instead of our health plan being charged $120 for a doctor visit, they would only be charged, let's say, $30 on average for a PA visit."
Such an option, although merely in the idea phase right now, could result anywhere from a 3 to 1 or 6 to 1 savings for the town, according to Acropolis.
"Our claims would go down because our people won't have to go to a doctor, they'll go to a PA," he said. "So that's one of the things we're going to look at next year for self-insurance."
The town will investigate the costs associated with the clinic option in the coming months, Acropolis said.
As the lone Democrat on the Republicanmajority council, Councilwoman Kathy Russell questioned why the health carrier negotiations seemingly waited until the last minute.
"I find it hard to believe that we would wait until the eleventh hour to negotiate health benefits with the carrier," said Russell. "It's a big number. It's a big piece of the budget."
The negotiation process between the town's contracted health insurance broker and various carriers actually began in August. Ultimately, the town remained with Horizon Blue Cross/Blue Shield, according to township administrator Scott Pezarras.
"We have this clause in our contract that says it's supposed to be the equivalent of the same coverage they (township employees) receive and it's been argued whether or not the network is considered to be equivalent," said Pezarras. "But that's something I don't think we want to test, so if we could stick with the same carrier, obviously that would be preferable because we don't want to be the test case on whether or not that gives us the equivalent coverage in the same network to network type of service."
The best way to further reduce costs is for everyone on the governing body and business and finance committees to do their part to find new ways to help reduce costs while preserving good coverage for employees, according to Council President Michael Thulen.
"This sort of work needs to be done in June, July and August, and was not done by this last administration this past year," said Thulen. "But I would fully expect this mayor (Acropolis) to take care of that sort of situation, and I think you're going to see more competitive bidding, and he really wants to look into self-funding, or self-insurance. I think you're going to see some major differences with the new administration."