Can Walworth County curb health care costs?
Take the amount Walworth County has budgeted for employee health care in 2008 and divide it by the number of employees and retirees receiving the benefit.
That’s $17.6 million divided by 975 employees and retirees.
What do you get?
An $18,049 cost for each employee and retiree and their families on the plan with the cost resting mostly on the shoulders of county taxpayers.
Health care costs for Walworth County government are “soaring,” according to the 2008 administrator’s budget.
Last week it prompted Supervisor Robert Arnold to call for sweeping changes to the county’s self-funded health insurance plan. With an 11th-hour proposal, he asked the county board to cut more than $567,000 from the budget and find a private insurer.
He said a large company could negotiate with health care providers for lower costs.
Arnold’s suggestion failed, but looking for cheaper health care costs is on the to do list for county staffers.
“Obviously, we have a system that is totally out of whack and needs a house cleaning,” Arnold said at the county board meeting last week.
County Administrator David Bretl said the county has sought reform in its health care plan before.
But each time private insurers came back with quotes at or above what the county budgets for insurance, or they offered plans with less coverage, Bretl said.
The county has contracts with seven employee unions. Massive changes to insurance would no doubt result in employee grievances and arbitration, Bretl said.
“Why not have private insurance? In concept, it would be great,” Bretl said. “You can buy it off the shelf and it’s there.
“The problem is if employees, represented through their unions, don’t want that, then they can take it to binding arbitration.”
To comply with employee contracts, insurers would have to customize their plans and build in profit on top of it, Bretl said.
In the past, that has meant a higher cost than the county’s self-insured plan, Bretl said.
Neighboring Racine and Kenosha counties both are self-funded and belong to cooperative networks that have the power to negotiate lower costs.
Racine County, which networks with municipalities and large companies in the area, has employees pay 10 to 15 percent of their health insurance, said Doug Stansil, county finance director.
Kenosha County keeps its insurance costs lower by having higher co-pays and deductibles.
“Not only is it a way to manage our costs, but a way to remind the employees (of insurance costs),” said Barna Bences, a financial consultant for Kenosha County. “If you had fully insured insurance, and (employees) pay little for it, there is no incentive for you to not go to the doctor every time you have sniffles. If they have co-pays and deductibles and a pay-as-you-use system, it makes you a better user of insurance and providers.”
Walworth County has a similar setup.
The four-tier plan offered by the county has both co-pays and deductibles. Depending on the plan, employees pay zero, 3, 5 or 10 percent toward premium costs. The county uses a preferred provider organization to try and negotiate lower costs from providers.
Arnold isn’t the only county board member who feels other options should be explored. His proposal failed 18-7, but some who voted against him said they did so because his proposal came in late.
Wages and benefits make up 46 percent of the county’s budget. The $6.5 million increase in wages and benefits for 2008 includes a 27.5 percent increase in health insurance rates.
For every $1 spent on wages, the county will spend 74 cents on fringe benefits, comptroller Jessica Lanser said.
The amount spent on county benefits has soared more than 60 percent in five years—from $19.1 million in 2003 to $31.3 million in 2008.
The health care budget rose $2.7 million in next year’s budget and it might need $1 million more if union negotiations result in no changes to the current plan.
The county had shortfalls with its self-insured plan in 1996, 1998, 1999 and 2001. Between 1996 and 1999, about $750,000 unbudgeted dollars were added to the account. In 2001, the plan had a $1.2 million deficit, according to Bretl’s budget outlook.
After 2001, the county started building a health care a reserve fund. It reached $3.1 million in 2005.
Increasing claims through 2006 forced a 35 percent increase in insurance rates for 2007, but even that was too small. In February this year, $900,000 was added to the account and $1 million more was added in July to keep a reserve, according to the administrator’s budget.
Bretl projected finishing this year with a “slim” balance of $370,000.
Here are the costs of self-funded insurance plans in area counties:
Kenosha County: $18.4 million budgeted for 975 employees and retirees, which is $18,830 per person.
Racine County: $23.0 million budgeted for 1,483 employees and retirees, which is $15,487 per person.
Rock County: $16.4 million budgeted for 1,207 employees and retirees, which is $13,572 per person.
Waukesha County (no retirees on plan): $14.7 million budgeted for 1,283 employees, which is $11,447 per person.