| |
Voting Against the
County Budget
Posted 1-16-2006
This year was the first
in my 10 years as county commissioner that I voted against the county
budget. The $318 million budget certainly was not a perfect match of
revenues and expenses, but none ever are. And unlike our leaders in
Washington, we do not have the ability to pass deficit budgets and let
future generations pay the bills. We faced a number of rising costs that
are not of the county's own doing, but costs that nonetheless we are
required to address.
Because of changes in
state funding for the county's Children’s Bureau, we had to increase the
county's financial commitment to maintain services. While the cost of
juvenile placements experienced a significant increase, state
reimbursements remain flat. So now, rather than the county paying about
20 percent of the costs of placements, we will now pay more than 30
percent of this expense. Several important capital expenditures have to
be made in 2006, including a new central control system for doors at the
county prison, and new security and HVAC systems at the juvenile
detention center. And, of course, operational expenses like utilities
and labor costs continue to increase and we must deal with those costs.
One area where the
commissioners do have control is contracted services -- basically
deciding with whom the county chooses to provide a variety of services.
Among the most important, and costly, contracts are with the county's
healthcare providers. The county is self-insured, meaning that we
ultimately pay claims for our employees' health insurance even though we
enter into contracts with health insurance companies to administer the
programs for us. Throughout my early years in office, during the late
1990s, Highmark was the sole firm administering the county's health
insurance program. Highmark was so entrenched that the company's name
was even written into union contracts. With no competition, we saw the
county's healthcare costs escalate every year with little effort by
Highmark to reign in those costs.
In the earlier part of
this decade, we introduced competition by bringing UPMC and Aetna into
the mix. That effort was the first real progress we made in controlling
costs. In 2003, we had three insurers serving the county, and the
expenses reflect Highmark's higher costs for essentially identical
service. Highmark's cost per employee per month, $460, was significantly
higher that Aetna's $412 and UPMC's $392. It is also notable that during
that time, in addition to higher claims costs, Highmark's administrative
fees were also considerably higher.
At that point in time,
Highmark chose not to co-exist with other providers, and in 2004, we
selected UPMC and HealthAmerica to administer our health care program.
In attempting to "settle up" with Highmark, the County Controller's
Office identified $38,000 in overcharges before they could close the
books on Highmark. Yet, by the end of 2005 Highmark has still not paid
the county that money.
While the historical
perspective is important, the problems with bringing Highmark back into
the county are also very much current. As it was in 2003, Highmark’s
administrative fees (the only known "fixed" cost since the county is
self-insured) are still considerably higher than other providers -- $52
per subscriber versus $41 and $45 for our other carriers. Also, Highmark
was never able to prove conclusively its assertions that it would save
money in claims. In fact, Highmark's early attempts to sell us these
"savings" were rebuked so decisively by the other carriers that even
Highmark admitted to its flawed logic and methodology. On top of all
this, Highmark is the only insurer that requires reserves be set aside
to pay claims, which prevents the county from earning interest income on
this money that now has to be advanced to Highmark.
For the past two years,
healthcare costs have increased less for the county than for many other
organizations, claims processing has been smooth and service has been
capable and professional. For 2006, my colleagues have chosen to bring
Highmark back into the mix. On the surface it may seem like just another
vendor. But given Highmark's known costs, its inability to prove it will
save the county money and the concrete evidence of its historical costs,
I believe it is a fundamental step backwards and I could not support a
budget that included Highmark. Ultimately with a mandatory enrollment
process, they will sign up members throughout county government, so the
increased costs will likely be felt in every department.
In county government, we
have so much thrust upon our budget that we must pay for whether we like
it or not. Many programs are partially funded mandates and others are
unfunded mandates. That is why when we have the opportunity to make a
choice about which firms we enter into contracts with and we have
evidence that a firm has historically been the most expensive we should
avoid inviting higher costs. When the issue is health care, it becomes
even more sensitive since we just endured a 48-day strike from one union
over contributing towards the cost of healthcare. Piecing together a
$318 million budget, and figuring out how to pay for it is tough enough,
adding to the cost unnecessarily is simply not prudent.
|
