Unusually high health insurance claims have forced the addition of $2.8 million to the county’s self-insurance reserve for this year, and rate hikes could go up as much as 15 percent next year, according to officials.
Butler County Administrator Charlie Young said the county needed to build back up reserves in the self-insurance fund because claims last year and so far this year ran higher than anticipated.
RELATED: Butler County bracing for 10 percent health care cost hike
“This is really a result of a much higher claims experience last year than we had, ever had really, and much higher than predicted,” Young said. “The expectation was that we would see less claims than last year. We’re not. We’re seeing about the same level. As a result we were underfunded a little bit last year and this year as well.”
Just one month ago county officials said they were expecting health insurance costs to jump 10 percent next year for the county’s 1,350 insured employees. Young said they won’t know until October for sure what they can expect the hike to be next year.
Young said they had 40 percent more “large claims” — $25,000 or more — than anticipated and a few hit the $500,000 mark. The county has stop-gap coverage that kicks in for claims over $175,000.
The net claims paid per employee per month in 2016 was $825, it jumped 29.1 percent last year to $1,021. In 2018, the weekly average of claims paid is $321,935 and all tolled — through May 20 — the county had paid out almost $6.5 million, against a budget of $17.6 million. The highest weekly claim total reached almost $500,000.
This year the county expected to pick up around $14 million of the health insurance costs, and employees were budgeted to cover about $3.6 million. In years past when the county was hit with large increases, the commissioners have at times shouldered the bulk of the cost increases. They are repeating the practice with this move.
“There will be no impact on the employee contribution in 2018,” Young said. “But the obvious implication is we need employees to help us control these costs throughout the rest of the year and going into 2019, so that we can keep our total health care costs as low as possible and avoid anymore increases.”
The county works with a consulting firm, Horan, and Meritain Health, a third party administrator, to help it manage the self insurance program.
Butler County Commissioner Don Dixon said they are bidding those services out.
“We’re looking at that, we’re looking at Horan, and Meritain too,” he said. “Horan is supposed to help us develop a plan and be competitive in the marketplace, and make sure who is providing the insurance for us gives us the best deal we can get, claims are reasonable and all that… We’re looking at all of it, there’s nothing guaranteed to be a provider (for the county) in any fashion or form with concern to health care.”
The trustees have, however, maintained that going the self-insured route still gives them the most control over costs. Dixon said he believes that’s still true.
MORE: Butler County expecting taxpayer savings with self insurance
“If we hadn’t been self-insured, if we had been in a pool, and we had that experience, in ‘19 we’d be looking at a huge number, maybe double what we’re paying now,” Dixon said.
The county used to participate in the County Employee Benefits Consortium of Ohio (CEBCO), until it moved to the self-insurance model after several years of double-digit rate hikes. The prime mover behind the rate hikes were some large claims in the past few years. There was a single $5 million claim in 2013 and a $3 million month in November 2015.
The county established a wellness committee several years ago, and last year 823 of about 1,350 insured employees were participants. Human Resources Director Laurie Murphy said they have been working hard to get their employees to be smart about their health care decisions.
“You know you use consumerism when you buy a car or buy a refrigerator. There’s no reason to not shop around for quality but lower-cost health care,” Murphy said.
About the Author