Friday, August 19, 2011

Self-funded insurance pool gains momentum

Ketchum and Hailey joined by 35 Idaho cities

Express Staff Writer

A plan that started in Ketchum last year to pool public employees in order to save health insurance costs has gathered the support of 37 cities in Idaho, including Hailey, Blackfoot, Jerome, Shoshone and Stanley.

On Jan. 1, a group of 833 employees from these cities will move forward as a self-insured entity in hopes of reining in insurance premium increases that have been going through the roof in recent years.

"We never contemplated we would have nearly 40 cities involved before we commenced operations," said Ketchum City Administrator Gary Marks.

Following the advice of Marks' associate Charlynn Herliss, the new organization will contract with independent claims representatives, pharmaceutical sales people, large-case management professionals, wellness specialists and others, rather than pay a premium to an insurance company for these services.

Marks said Dave Turner, an actuary based in California who works for Idaho National Laboratory, will analyze employee statistics and claims data to form the best plan.

Marks made a call last fall to nearby municipalities to form a joint-powers board to initiate a self-funded insurance pool. He was hoping to gather at least 100 employees, the minimum number required by state law to release insurance claims data held by insurance companies.

Claims data can be used to assess the future financial risks of insuring particular groups of people. Marks planned to use the information, and the larger pool of people, to purchase a cheaper insurance plan. Due to the overwhelming support he received, Marks said the group, now called the Idaho Independent Intergovernmental Authority, will instead move forward with forming its own self-funded insurance benefits plan.

The plan is expected to keep insurance premiums from rising precipitously.

"The city of Ketchum's plan went up 18 percent last year," said Marks. "Prior to that we were averaging 8 percent, well above any inflation index in the real world."

Marks said premium costs will be kept in check because the joint-powers board will have few marketing expenses and no profit margin and will be able to allocate money from pharmaceutical company rebates toward lowering premiums.

"This is a practical way for local government to cut costs, save taxpayer dollars and not reduce service levels," said Marks.

"We will also be taking wellness plans to a whole new level," he said.

Marks said he hoped to make diagnostic testing free to the insured in order to catch and treat diseases early on.

"This will help with our quality of life. But it will also save money. It is a lot less expensive to treat cancer at stage 1 than at stage 4," he said.

Marks said a similar pool begun in Whitefish, Mont., in 2004 now has 76 cities in a self-funded plan.

"Prior to forming the pool in Montana, we were seeing double-digit increases annually. After it began, the premiums were limited to average increases of 4.3 percent," said Marks.

"This is a significant savings that we would not have realized had we been privately insured," he said.

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