On Thursday, March 1, Ketchum and dozens of other cities across the state will end their relationship with traditional health insurance companies, marking the launch of a self-funded health benefits pool. Supporters of the change say it will enhance the health of members as well as save millions of dollars over the long haul.
"It's absolutely one of the most exciting projects I've had the pleasure to work on," City Administrator Gary Marks told the Ketchum City Council on Feb. 21. "It really does empower the little guy."
The new Idaho Independent Intergovernmental Authority Trust functions like a health insurance provider but technically is a trust, formed by a partnership of Idaho cities through a joint powers agreement. It is governed by a board of trustees, who are elected or appointed officials of member cities, and is administered by employees of Idaho cities. Marks is chair of the board and Lisa Enourato, Ketchum city administrator assistant, is secretary.
The trust is aided by health benefit, actuarial and legal professionals.
Members can pool their resources for bargaining power and have more say over their programs, Marks said.
"We have fundamentally altered one of the major cost drivers in local government," he told the Idaho Mountain Express.
Marks said the self-funded pool provides lower rates for several reasons: It eliminates the profit margin, does away with marketing costs and allows the group to keep pharmaceutical rebates.
Ketchum is among 39 cities and an irrigation district—involving 800 employees plus their dependents—taking part.
Marks helped create a similar program in Montana. When he took the job in Idaho in 2008, he saw an opportunity to bring the model here.
Historically, he said, annual increases in health insurance have far outstripped the annual inflation rate. He said a self-funded pool allows for more transparency, cost control and overall management.
"We can tailor and change the plan for the city of Ketchum as we wish," he said.
But, he added, "most important to me, we will become very proactive in wellness."
An approach he'd like to see implemented is free diagnostic testing, as well as incentives for employees to get those tests.
"If we can capture cancer in stage 1 instead of stage 4, we're probably going to save a life," he said, "and a bundle of money."
Initially, Ketchum will avoid the premium increase it would have had under its former insurance plan, saving an estimated $31,000 to $77,000 for the remainder of the fiscal year, he told the council.
That estimate rises to $200,000 in savings over two years, and potentially between $500,000 and $1.6 million over five years.
Statewide, if membership were to stay the same as today, he estimates a cumulative five-year savings of between $5 million and $16 million.
"What that represents is not necessarily money saved but [taxpayer-funded] expense avoided," he said.
Ketchum Mayor Randy Hall called those figures a "home run."
"That is profit to corporations that don't have any connection to our community," he said. "Now, it gets to stay in our community."
Hailey Mayor Fritz Haemmerle sent a letter to Hall on Feb. 17, thanking Ketchum for its "vision and tenacity."
"The effect of these efforts on the City of Hailey is that our employees remain insured without a redesign in benefits which would have eliminated significant health coverage," the letter reads.
It further states that Hailey taxpayers will fund city employees' benefits at last year's costs, saving tens of thousands of dollars.
Marks anticipates that other political entities will join.
"Our growth potential is enormous," he said. "If they have employees with health benefits, we can take them into membership."
Rebecca Meany: email@example.com