Consultant encourages city to self-insure

Monday, Sept. 24, 2012 8:31 PM
Last updated Tuesday, Sept. 25, 2012 6:44 PM
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The Augusta Convention Center sign has been installed above the entrance. The Augusta Commission is reviewing documents on the building's operations.   EMILY ROSE BENNETT/STAFF
EMILY ROSE BENNETT/STAFF
The Augusta Convention Center sign has been installed above the entrance. The Augusta Commission is reviewing documents on the building's operations.

Going self-insured means Augusta would have greater control over employee health insurance premiums, but it also means slightly more risk if claims exceed what the city budgets for them, a consultant encouraging the shift told commissioners Monday.

Over the past three years, Augusta and its employees have paid Blue Cross Blue Shield about $20.4 million in premiums, while claims have averaged around $18 million, said Lisa Kelley, a consultant with Wells Fargo Insurance Services.

The city could earn interest off the difference and further limit the claims if it went self-insured, she said at a commission work session.

“On those months when you take in more in premiums … where claims aren’t as much, that’s to your good,” she said. “Your employees really won’t see a difference.”

Most governments hire a third-party administrator to manage the pool, at a much lower expense than paying for full coverage, and the city would immediately save a 2 percent tax on insurance premiums, she said.

Control over claims would come from wellness and prevention programs targeted to Augusta’s needs, she said.

“You have the wellness resources that Blue Cross puts out there, but there’s nobody really overseeing the program or calculating the return on investments,” Kelley said.

Once governments change, however, it’s tough to return to full coverage of all employee pre-existing conditions at an affordable price, she said.

“At that point, you’re going to be at every carrier’s mercy,” Kelley said.

If claims exceed the pool, stop-loss coverage covers the difference, but cities that repeatedly run over their budgets might find stop-loss coverage rates pricey, she said.

Commissioners asked about the stop-loss coverage and the impact of the change on employees with primary-care physicians in Blue Cross’ network.

Kelley said that even if it self-insures, Augusta must remain with the Blue Cross provider network to keep those physicians in-network.

She said she’ll be back Oct. 8 with a recommendation for self-insurance and full coverage from companies responding to the city’s request for proposals.

IN OTHER BUSINESS

• Commissioners received a thick packet of legal documents governing the downtown convention center from Jim Plunkett, the special counsel for the convention center and parking deck projects. Paul Simon, the president of Augusta Riverfront LLC, which will run the center and the parking deck under the Marriott brand, urged the commission to approve the 15-year documents by mid-October to allow management to hire and train staff and obtain an alcohol license in time for the center’s first event, a January convention of police chiefs.

• After a closed-door meeting with attorneys, the administrative service committee took no action on Commissioner Bill Lockett’s call to hold Mobility Transit in default of its contract to run the city bus service. “As far as we knew, it had been cured,” said Robert Hagler, Mobility’s Augusta counsel, who attended the meeting with Mobility Chief Operating Officer Joe Davis. Davis said he’d seen the item on the agenda but had “no clue whatsoever” what the concerns were. Augusta issued a notice to the company in May for not paying vendors, breaking reporting requirements and other issues. “We think things are going well,” Hagler said.

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rebellious
21408
Points
rebellious 09/24/12 - 10:13 pm
3
0
This is interesting

I applaud the commission for looking into this (although they should be cautioned of the objectivity of a consultant from the Insurance Services division of Wells Fargo). Prima Facia, some concerns though, or maybe just questions.
Three years of history seems inadequate. I would be more interested in the yearly claims/Premium ratio and the range of fluctuation.

I would also look very carefully at a census and the average age of employee. I know we have reduced ranks, most through attrition and retirement, but the demographics of the workforce and which way it is trending should be an indicator of claims directions.

I would be very concerned about the impact of the recent additonal 1 percent TSPLOST on retail sales, and the accompanied impact on sales tax revenues. In fact, the stability of all revenues should be considered when embarking down a road which, as the article states, is very difficult to divert back into fully insured plans when preexisting conditions are evident. Should a year arrive with a significant number of major claims (Cancer, Kidney transplant, Heart attack, etc...) would we have the reserves to go "in the hole" and still fund the claims payments.

Consideration to the cost of the TPA is also critical to the financial feasibility of such a move.

Will the self insured city be able to pay for services on the same reduced schedule negotiated by such behemoths as Blue Cross and United Healthcare. If not, claims dollars spent rise.

Not a slow Insurance day, but then again it is 11:09 at night.
Insert Smiley Face Icon here :)

The idea does warrant a close look.

jackrussell
219
Points
jackrussell 09/24/12 - 10:33 pm
2
1
HORRIBLE decision to self insure.

And just what is Kelley getting out of this? What has she promised to whomever she's courting on the commission to try to get this passed? I'm sure she's not making recommendations out of the kindness of her heart. If the county goes through with this, I foresee more money out of the employees' pockets. And God forbid if the county needs money elsewhere and dips into the healthcare budget. I think becoming self insured under our local government is a horrible idea. I mean, they've already screwed up so many other things. Just look at the parking deck situation.

The fact is our local government is too irresponsible to handle this. And like Kelley said, once you self insure, it's a nightmare (and very expensive) to switch back.

Richmond County employees haven't had a raise -not even a cost of living raise, in what, 5 or 6 years? Yet their insurance costs have gone up EVERY year. $30 for a regular doctor visit? $50 for a specialist? $300 for an ER visit? Of course if you're Fred Russell, I suppose those copays are affordable. For the "regular" employees, that could amount to a car or even house payment! I mean, first you HAVE to see your PCP for a specialist. And if you went to the ER first, you're looking at $380 PLUS followup visits and medications. And everyone knows that if the county even THINKS they may fall short, they're going to pass the costs to the employees, a majority of who lives paycheck to paycheck. Heck, if you require physical therapy and have to go 3 times a week, that's $150 a week, $600 for a month, and God help you if you have to go longer than that!

Richmond County, how about not spending so much money on unnecessary costs (like all those unnecessary studies, etc) and start taking better care of your people. I bet if you did, they'd be a lot more loyal and better employees. They would respect those who respect them enough to take care of them! And self insured use NOT the way to go.

Riverman1
90162
Points
Riverman1 09/25/12 - 05:26 am
1
1
So now you call Fred Russell

So now you call Fred Russell if you have a stomach ache? He tells you to try Pepto Bismol and call him back in a few days?

OpenCurtain
10049
Points
OpenCurtain 09/25/12 - 08:34 am
1
2
Why not just

use University Hospital?
Just contract the Univ. Hospital for $15M to $18M to deliver all care for ALL ARC workers and politicians?

University already forced to deliver free services now, at taxpayer expense. So why not also fund it as a sole source healthcare facility for ARC Workers and put the money into it?

Oh! in case any one wanted the math:
Interest on $2.4 Million based on the currently offered 1% is not that much. Only $24,000. It would not even cover admin costs to monitor the paperwork.

Questions :
If the reserve is tapped, and it likely will be year 1, are the taxpayers are on the hook?

If not, how do overages get funded?

What about Lawsuits?
One good lawyer, and we seem to have too many in Augusta, and the county will selling bonds to payoff another lawsuit.

Welcome to the Obama-Care Regulations.

Transparency
8
Points
Transparency 09/25/12 - 09:14 am
3
0
Know the facts

Self-funding is a legitimate option for an employer the size of Richmond County. More than 70% of municipalities the size of ARC in Georgia are self-funded. For any one that understands self-funding you would realize it has progressed greatly the last 20 years. For instance, many carriers rent their networks to TPA's allowing for employers to self-insure and still take advantage of those discounts offered by the "behemoths". As stated in the article, the most cost effective way to reduce claims is to create healthier employees and take advantage of wellness and prevention programs which have been proven to signficantly reduce costs for both employers and employees. Self-funding gives you the best chance at achieving that.

Contracting with just one local facility is not the prudent thing to do. Not only will employees be upset by their employer severly limiting their access to providers but what about services that University can't provide? And what about employees and dependents that live outside of Richmond County?

Little Lamb
47857
Points
Little Lamb 09/25/12 - 10:20 am
0
0
Location

What does where the employee live have anything to do with it? You can live in Columbia County and still receive your health care from University Hospital and University Physicians. University even has some facilities in Columbia and McDuffie counties.

Little Lamb
47857
Points
Little Lamb 09/25/12 - 12:39 pm
0
0
Sidebar

For some reason, the sidebar to this story in the print edition did not make it onto the web. Here is a curious story from Susan McCord from today's print edition:

After a closed-door meeting with attorneys, the administrative service committee took no action on Commissioner Bill Lockett's call to hold Mobility Transit in default of its contract to run the city bus service. “As far as we knew, it had been cured,” said Robert Hagler, Mobility’s Augusta counsel, who attended the meeting with Mobility Chief Operating Officer Joe Davis. Davis said he'd seen the item on the agenda but had “no clue whatsoever” what the concerns were. Augusta issued a notice to the company in May for not paying vendors, breaking reporting requirements, and other issues. “We think things are going well,” Hagler said.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

What is it with Lockett and his "full employment for city workers" act? He has fought outsourcing at every turn. It may have been correct to call them on the carpet in May, but when Mobility responded and improved its performance, they should not be treated this way. If Lockett has specific grievances against the company, lay them out in public session. Don't go hiding behind closed doors.

Our commissioners are becoming too fond of conducting city business in secret.

Transparency
8
Points
Transparency 09/25/12 - 07:37 pm
0
0
Location

There are many dependents enrolled in the medical plan that live not only outside of Richmond County but outside the State of Georgia. College kids that live across the country. Location has alot to do with it.

Karen Slater-McDaniel
3100
Points
Karen Slater-McDaniel 09/25/12 - 07:52 pm
1
0
How about those of us who

How about those of us who would have to be unconscious or unable to communicate and on deaths door holding the grim reapers hand with one foot in the grave before we'd allow our cat to be treated at UH ... much less ourselves or other human family members?

And does RC start measuring the BMI of all potential employees & their anticipated covered dependents, pre-employment bloodwork & physical medical evaluation of the same, maybe take a 3 generational family medical history of both paternal & maternal side of the same ... how far should RC go in ensuring that future employees & dependents are not high risk to their self-funded insurance plan? Maybe if an employee is diagnosed with cancer RC could immediately terminated them so as to not raise the risk ratio.

No thank you ... I'd rather pay a higher amount then to trust RC government with anything SELF-FUNDED! And yes ... insurance agents are in it to make commission ... Well played Ms. Kelley, well played indeed!

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