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Health Insurance Costs Force Change
Posted 5-16-2000
An important part of an employee's compensation package is the health
insurance coverage offered by an employer.
It is important to an
employee because the cost of paying directly for almost any medical
treatment is expensive, let alone the cost of a major medical treatment
which could be financially devastating.
Health insurance is also an
important issue for employers as it adds to the personnel costs of an
organization.
As health care costs
skyrocketed, many private employers began to ask employees to contribute to
the cost of health insurance. They either had to contribute a portion of the
cost of their own coverage. that of dependents, or both. Fortunately, over
the years the county has been able to provide our employees health insurance
coverage at no cost to the employees.
But like everything else, as
costs continue to escalate we must look at ways of relieving the burden on
the budget. Our projected health care costs for this year are between $8
million and $9 million. We have been wed for many years to a single insurer
and though I pushed for consideration of other plans in last year's
negotiations with our largest union, we never made a serious effort to
instill competition to the process. We also foolishly allowed the vendor's
product to be identified by name in some union contracts. That issue is a
problem because, rather than a level of benefits being negotiated, a certain
product was agreed upon.
Now we are beginning to
instill competition into the process. The county has about 450 non-union
employees, and for that group, we are offering a choice of two different
insurance products. Each vendor is offering an HMO and a Point-of-Service
product.
We will continue to pay for
the coverage of employees and dependents if the employee chooses the HMO.
They will pay the difference in cost between the two plans if they select
the Point-of-Service plan. Since most people stay in their networks, the HMO
option should still meet the overwhelming number of employees' needs.
The current insurer chose not
to co-exist with any other insurer in serving this group of employees so
they are not a part of this change. The non-union group happens to be a
higher claims group under our current self-insured plan. So by making the
change to these two new fully insured products, it is projected that we will
save in the neighborhood of $350,000 per year with this change.
This effort is just the
beginning. We will continue to look at further ways of trimming the health
insurance costs as well as all other budget items. Our effort was prompted
by receiving a fully insured quote this year from our present insurer that
saw an increase of 10.7% for health coverage and 34.3% for prescription
coverage. Combined, that amounted to a 14.3% increase over last year's
rates. That quote caused us to return to a self-insured strategy from last
year's fully insured program.
But without competition, our
options were limited. This process has confirmed for me that competition
causes vendors to sharpen their pencils. Whether it is health insurance or
other products or services, competition is the key to government being able
to find an arrangement that is to the taxpayers benefit.
I know a change of health
insurer may cause some employees consternation, but the alternatives are
simple. Either we look for better-cost alternatives that still provide
quality coverage, or we make employees start paying a portion of the premium
for their insurance. That phenomenon may happen sometime in the future
anyway, but the change being made now will defer the urgency of that action.
Workers in the private sector have gone through these types of changes as a
matter of businesses managing the bottom line. We in government have an
obligation to the people paying for us to be here, to manage our bottom line
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