May 11, 2016

County insurance plan beating trends; commissioners sticking with it

National health care costs have risen by upwards of 10 percent over the past four years; in contrast, the Park County government is actually spending about 8 percent less than it was in mid-2012.

Those striking figures are one of the reasons that Park County commissioners have decided to stick with the county’s self-funded insurance plan instead of switching to a larger pool that — at least for the coming fiscal year — was offering a cheaper rate.

Whether it’s county employees’ hard work, luck or the county “doing the right things,” the self-insured plan is doing well and “we can’t find a compelling reason to make a change for a short-term potential savings,” insurance consultant Eric Deeg told commissioners last week.

The county made sweeping changes to its health insurance plan in 2010, after costs grew out of control. That included raising deductibles and putting a greater emphasis on prevention and wellness efforts.

“We can’t find a compelling reason to make a change for a short-term potential savings,” said consultant Eric Deeg.

While it’s hard to pinpoint the exact reason, “we’re just seeing fewer and fewer large claims,” Deeg said. The county used to have three to six employees suffer a severe and costly health problem each year and is now seeing one or two, he said.

Opting to stick with the self-insured plan is kind of like betting on the health of the county’s roughly 200 employees.

Park County set aside about $2.59 million for the insurance coverage this year, but that’s just a guess. Being self-insured means the county pays the actual costs of its employees’ covered health care claims.

If employees generally have a year of good health, the county can end up spending less than expected. For example, the county spent $260,000 less than it had budgeted over the first eight months of this fiscal year.

That continued success made it easier for commissioners to turn down two quotes they received for fully-funded insurance coverage.

Deeg warned that a switch to either of the two trusts that offered coverage “might have first-year savings that evaporate very quickly.”

The county's insurance consultant, Eric Deeg, compiled this analysis of options offered to the county.

Joining the Joint Powers Trust, for example, would have cost $2.21 million in the coming fiscal year — potentially saving the county more than $400,000. But Deeg said rate increases in coming years could wipe out those savings; he noted the Joint Powers Trust has raised rates by an average of nearly 8.3 percent a year over the past five years.

On the other hand, the downside and risk in being self-insured is that you can have a year that’s worse than expected.

While the county has stop-loss insurance (or reinsurance) that covers any extremely large claims, an unhealthier year still could cost the county much more than the $2.59 million budgeted.

One of the appeals of switching to a trust is that its larger pool of insured people would buffer the impact of a horrible year of claims.

“We’re going to do our best to make sure you don’t have any horrible years, but again, it’s a little bit of luck, too,” Deeg told commissioners.

Steve Penwell — an information technology staffer for the county and a member of the committee that oversees the health insurance plan — said a couple castrophic health problems could “take us out pretty quick.”

The committee “felt it was best to stay where we’re at” for the time being, but it’s aware of the security a trust could offer in the future, Penwell said.

“We’re doing really good and as long as things stay there, probably we’re alright for a couple years,” he said.

The two trusts that offered to insure Park County's employees have had generally higher increases to their rates each year, compared to the county's current, self-funded plan.

He and commissioners said more insurance options could be coming; for example, state legislators have discussed the possibility of opening up the state of Wyoming’s insurance pool to county governments.

Beyond the financial considerations, commissioners say they also like the control they have over the self-insured plan.

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