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.