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County's Health Insurance Cost Rises

Posted on: Friday, 14 October 2005, 21:00 CDT

By Jennifer Learn-Andes, Wilkes-Barre, Pa., Times Leader

Oct. 14--Health insurance costs are estimated to rise 15 percent for Luzerne County government workers in 2006.

Though it's not good news, county officials think the scenario would have been much worse if they hadn't switched to self-insurance in 2004.

Commissioner Todd Vonderheid estimates many employers will face health insurance rate increases of 22 percent or more next year.

"We feel very comfortable that we're saving money," he said. "We're not going to save money on health care in this environment, but we will reduce increases. That's what we're trying to do."

With self insurance, the county pays insurance claims with its own funds rather than paying an outside provider to take on that risk and pay claims. The county also purchases stop-loss insurance to cover more extensive "catastrophic" claims.

County Budget/Finance Chief Sam Diaz estimates insurance will cost $800 per employee on average in 2006, up from the $695 estimate in 2005.

The $800 factors in what the county expects to spend on claims, the stop-loss insurance and a third-party administrator that oversees the plan. The administrator helps process claims and lock in county rates with doctors and other health care providers.

In 2005, Luzerne County budgeted $14.77 million for health insurance, and $11.6 million was spent as of the end of September, according to the county's computerized financial tracking system.

The current administration tracks health insurance costs by department -- and it adds up in some of the larger ones. For example, health insurance at the prison alone is projected to increase from $2.1 million in 2005 to $2.8 million in 2006.

Non-union employees contribute 10 percent toward the cost of insurance. Payment toward insurance also is being phased into union contracts, but only for new hires.

Vonderheid said he hopes he can bank on the proposed work force reduction program -- being dubbed a "life transition plan" -- to reduce payroll and health insurance costs.

If the early retirement plan doesn't materialize because of insufficient savings, commissioners will have to look for a "more drastic plan" to make ends meet, he said.

"We still have financial problems, structural problems that will exist several years," he said. "This is a deep hole we're in. It will take us awhile to crawl out."

Multimillion-dollar pension subsidies and revenue shortfalls at the county nursing home continue to contribute to an annual $10 million shortfall, Vonderheid said.

This year's solution was a plan to refinance county debt that would free up $8.9 million. Diaz and others are still working to refinance the debt.

"If we don't have savings in the life transition plan, we'll have to be more severe," Diaz said. "I don't know yet what that means. We hope employees really take a strong look at the plan. They shouldn't be assuming that if they don't take it, we'll do it again next year."

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Copyright (c) 2005, Wilkes-Barre, Pa., Times Leader

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Source: The Times Leader (Wilkes-Barre, Pa.)

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