Monday, May 11, 2009

Taking a hard look at Camden County's employee health insurance plan.

As I mentioned previously (under comments), I attended the workshop on the county health plan last Tuesday at 5:00 before the regular county commission meeting. I have an insurance background. The county manager, Steve Howard and his risk manager, Staci Bowick, are trying to get a handle on out-of-control costs by making some minor adjustments to coverage and instituting employee wellness programs. Their efforts are being met by stiff resistance from the employees. The employees have largely succeeded in thwarting the plans to bring costs under control by getting to the commissioners, who, unfortunately, on the whole, do not have the political courage to stand up to the implicit threats of loss of employee and employee influenced votes the next time they are up for election. Several weeks ago, the commissioners rejected the original cost reduction plans submitted to them. My guess is that even the highly watered-down plans submitted Tuesday will be rejected. The only apparent solution is for us, the taxpayers, to bring more political pressure than that which can be mustered by the 347 employees who are covered by the plan. To that end, and to the end of educating the employees, who, I fear, really do not understand what a deal they are getting and how very reasonable the requests to help control costs truly are, here are my observations. Let's start off with the bottom line, then fill in the details. The plan runs concurrent with the county's fiscal year from the first of July to the last of June. Ms. Bowick was able to give me all of the data I requested for the 10 months of the plan end the last day of April of 2009. For those 10 months, the total cost of the plan, net of what claims were paid by the re-insurance, was $4,241,272.00. The total amount of premiums paid by the participating employees was just $300, 646.05. Put another way, the employees paid 7.08% of the cost of their health care; the taxpayers paid 92.92%. In the private sector, even the most generous fully insured plans require their employees to pick up at least 25% of the premiums. Well, the employees argue that they are not paid nearly so well as they would be for comparable work in the private sector and that the generous (although they certainly do not see it that way) health plan offsets low pay. Their low pay is a legitimate, but separate issue - and one that should be looked at. Let's now look at the actual premiums charged employees for the coverage. Note that because of the threats, political cowardice, and rampant GOB cronyism as the modus operandi of St. David and E.B., there have only been two rate increases to employees in 12 YEARS! The last was in January of 04, more than 5 YEARS AGO! Here are the current health only rates, charged bi-weekly: employee only - $24.50; employee and spouse - $44.48; employee and child - $38.86; employee and family -$52.60. So, an employee with a wife and 10 kids covered pays $52.60 every two weeks. That's the equivalent of a monthly premium of $113.96. Tell me, folks, how does that compare to what you are paying for full family coverage on your job? Note that if my hypothetical worker is at the bottom of the county pay scale, at, say, $11.00 per hour, that is still just 6% of annual income. For most county workers, it is way less than 6%. I know what you are thinking: for that low a premium , it must be really crappy coverage. Guess again. It is quite likely just as good as - if not better - than what you pay 4 or 5 times as much for at your place of employment. Let's take a look at our employee with a wife and ten kids covered. His annual family deductible for going to in network providers (the plan is a self-insured PPO, or preferred provider organization) is $600.00. The deductible for using out-of-network providers( I.e., those physicians and hospitals who have NOT agreed to give the PPO deep discounts for services), the disincentivizing deductible is $1,200 for the whole family. So, suppose his family burns through the $600.00 deductible. Now he's up to $163.96 per month (the $113.96. per month for premiums plus 1/12th of the $600.00 deductible). Three members of the family had claims. The out-of-pocket max for each member is $1,200. That's another $3,000, or $250.00 per month, for a total monthly cost for health expenses for that year of $403.96 per month. That is his maximum total cost, including premiums, deductibles, and co-pays for three members of the family to be sick assuming they use in-network providers. Note that many people in the private sector pay more than that for family PREMIUMS alone. Just a few more details. The "stop loss" thresh hold is $60,000. In other words, once the employee and taxpayers have forked over $60,000 on an episode of illness, the re-insurance, or "stop loss" policy purchased by the county pays all remaining costs of that episode of illness. In most plans, there are two different co-pay amounts for visits to a doctor's office. It might be $20.00 for a visit to an-in network provider and a disincentivizing $40.00 for a visit to an out-of-network doctor. In Camden County's plan, there is no disincentive to discourage visits to out-of network doctors who charge the plan higher fees. Employees pay the same $20.00 co-pay regardless of who they see. That should be corrected immediately, if only the commissioners can muster up the courage to accede to the risk manager's request. By the way, if an employee needs to see a specialist, and there is not one listed in the list of approved "in network" providers, permission is given to go to an out of network specialist at the same deductibles, co-pays, and out-of-pockets as if they had been an in network doctor. Therefor, there is no reason not to disincentivize going to an out-of-network provider with higher fees when an in-network provider is readily available. As I understand it, Ms. Bowick is also recommending that for certain particularly expensive procedures, there should be established a "super preferred" (if you will - my term, not hers) group of named providers who have a good record of good outcomes matched with a willingness to give exceptionally good fees structures to the PPO. This too, seems reasonable. I was also struck by the fact that all claims processing is done in-house. Ms. Bowick tells me that the 10 month administrative costs and the cost of the re-insurance premiums comes to a non-segregated (I'll ask her when I'm done here to break those apart) of $891,099. What you shuld know is that many self-insured plans employ what are called "TPA's" (third party administrators) to handle all of the claims processing. They offer an efficiency of scale such that their services are often less costly (even with a profit motive) than doing claims in-house. Jax, just down the road, has several TPA firms. If I were on the commission, I would insist on some bids to see if we might save money by using a TPA for claims. There would still be plenty for Ms. Bowick to do. Her brief includes not only health, but property insurance and liability issues as well. I would be most interested in hearing y'alls thoughts on the county health plan. As you ponder whether or not it is worth an e-mail to the county commissioners expressing your concerns - if you have them - bear in mind these data: year-to-date (10 months ending April) the cost per participating employee has been $11,880.32 - of which the employees have paid an average of $842.15 per employee. You and I have picked up the tab for the remaining $11,038.15 PER EMPLOYEE. And y'all thought BTW was the only one buying votes. COLAS, which are voted on in open session and the public immediately gets wind of, provide commissioners with grandstanding "holding the line on spending" opportunities while the overly generous health plan has slipped under the radar - up until now.

10 comments:

Jay Moreno said...

FROM TOPIX:

Cow Chip
Kingsland, GA
Reply »
|Report Abuse |Judge it! |#8 15 min ago
I see that Moreno has completed the report Mr. Howard asked him to do. You know, if the apprx. 350 employees had as much "stroke" as old Jay says, would we not have elected at least 3 friendly commissioners to get us a damn raise sometime! Oh, by the way Moreno, ask the HR head who is Covenant Administrators?

You are wrong, Cow Pie breath. Mr. Howard (nor anyone else, for that matter) asked me to do this. I've not spoken to Mr. Howard since he briefly introduced me to Ms. Bowick at the meeting Tuesday a wek ago.

However, upon a closer reading of a somewhat ambiguous paragraph in Ms. Bowick's original e-mail on the subject, I see where they may in fact be using a TPA ofr claims administration. My original understanding was that they did not and in fact did it in-house. I have left a voice mail on the subject with her this afternoon. I'll get back to you.

Anonymous said...

I would think the County has a TPA firm doing their claims. One person could not handle that job I would not think.
A smart Board of Commissioners would hire an expert in self insurance to come in and make recommendations on how to lessen the burden on the County. I'm sure it could be done. Now would be a good time to go out for bid on these type things. Companies are hurting for business and they could probably get some real good bids, which would cut the cost to the County. The Commissioners should lessen the insurance costs, increase wages for those who deserve it and have not had a raise in a long time. They have waited too long to do this, but sooner or later they are going to adjust the cost to the employee. If they don't do something, they won't have to worry about the employee's trying to get them voted out. There are many voters who can vote them out of office if they will just take a look at th sorry job being done. I cannot see where they have done anything in years to improve any of the situations that need to be improved in County Government. They need to start cutting in their own office before they cut budgets for every other department.

Jay Moreno said...

Upon closer reading of a slightly ambiguous paragraph in Ms. Bowick's e-mail, I suspect you are right. I'll find out for sure later today. It would appear that they are currently using a TPA called Covenant Administrators. It appears that their current contract expires at the end of June with one more option to renew it on July 1, 2009. This is obviously the time to be shopping the contract. If the county has never handled claims in-house before, it would also be a good time to do the obverse - estimate how much it would cost to do it in-house versus via a TPA. My intuition is that he TPA route will still be the optimal way to go.

Several meetings ago, Ms. Bowick made recommendations to the commissioners on various mehtods of reducing costs to the plan. Frankly, I can't remember if these were her own recommendations (well within the scope of knowledge and portfolio of a good risk manager)or those of a consultant. Incidentally, Mr. Howard has also worked in risk management. Most of the recommendations were aimed at reducing utilization of the plan by implementing voluntary employee wellness programs.I beleive, if memory serves me, there was some talk of giving premium discounts to those employees who improved their health throught those programs. For example, someone who, throughj particiapation, brought down their cholesterol, blood pressure, weight, stopped smoking (or whatever they needed to do)could qualify for a "preferred risk" premium lower than the standard premium for less healthy individuals. Naturally, the employees saw this not as a reward for disease prevention and health improvement, but a punishment for not reaching a healthier state. They went to the commissioners - I'm sure mostly to St. David, patron siant of GOBs - and had it soundly rejected by the commission. What was presented by Miss Bowick last week wwas a seriously watered-down attempt with no proposed differentials in premiums - only voluntary, plan sponsored wellness programs. My guess is that employees will object to this too and the commissioners will cave to them, as usual.

Jay Moreno said...

Miss Bowick just returned my call bright and early this morning.

Yes, the county is currently using a TPA.

Riksk management is just one of Ms. Bowicks multiple responsibilities.

The TPA worked with her - at her iinitiative - to come up with the ideas for expense reduction she presented back in February.

My memeory of that presentation was faulty. It was not a matter of a "preferred" premium. The idea was to raise the base deuctibel up to around $2,000, then allow employees the opportunity to earn significant reductions in their individual deductibles by improving their health profiles through emplyee wekkness programs. They would be able to reduce the deductible by as much as 90%, down to only $200.00. That't the idea that went down in flames after employee protests.

That cost of $11,880.32 per employee is the projected cost for the entire current plan year, based upon projections derived fromt he ACTUAL costs for the first ten months.

I will adjust my figures accordingly, as soon as I get beack from having my annual bloodwork drawn.

Anonymous said...

It appears that all of Ms. Bowick's efforts are a waste unless the Commissioners are on the same page with her, which obviously they are not. It would seem that educating the employees to the benefit of the wellness program might be a good way to get their attention but only if the Commissioners say this is the way it is going to be and these are the advantages you will reap (meaning less money out of pocket).
They obviously have no idea how it works or they just don't care how it would benefit them, they just care about getting their way with the Commissioners. This is indicative of the Good ole Boy System. Some employees tend to forget who is actually paying their wages and it certainly is not the Commissioners it is in fact the taxpayers of this County. If they, the employee's, ever took a job anywhere else, what a shock it would be when they began paying their health insurance premiums.

Anonymous said...

If you look back at the minutes of that meeting, it was the Commissioners themselves who halted the proceedings that night. The employees knew nothing of this proposed plan change until a letter was sent in their paychecks the week "AFTER" that meeting. Please feel free to ask any Commissioner to confirm this for you.

Jay Moreno said...

Anonymous said...
It appears that all of Ms. Bowick's efforts are a waste unless the Commissioners are on the same page with her, which obviously they are not. It would seem that educating the employees to the benefit of the wellness program might be a good way to get their attention but only if the Commissioners say this is the way it is going to be and these are the advantages you will reap (meaning less money out of pocket).
......

I agree wholeheartedly with everything you wrote.

Jay Moreno said...

Anonymous said...
"If you look back at the minutes of that meeting, it was the Commissioners themselves who halted the proceedings that night. The employees knew nothing of this proposed plan change until a letter was sent in their paychecks the week "AFTER" that meeting. Please feel free to ask any Commissioner to confirm this for you."

Thank you for helping make my point: the commissioners - particularly St. David - now exhibit a Pavlovian, conditioned, automatic cave-in respomnse at the mere mention of something that might piss off the employees, even before the employees get word of it! It's a pity they have not had that degree of conditioning by the long-suffering tax payers.

Anonymous said...

If the County has a TPA firm in place they could make the wellness program pay for the premiums. Its being done in other place to offset the premium the county pays and reduce major claims for the insurance companies. Its a WIN, WIN.

Jay Moreno said...

That that is not happening is certainly not from a lack of trying othe parts of the country administrator and his risk manager. Talk to the commissioners.