“The plan is underfunded for both the past plan year and the current plan year we’re in,” Mark Browder, vice president of the independent insurance broker firm Mark III, told commissioners during a March 12 work session. “It’s not that claims are spiking this year. It’s about getting to the right funding level.”
Jackson, like many counties, is self-insured — meaning that when someone has a claim, the county foots the bill. Therefore, it’s important for the county to have reserves built up, because some years claims are smaller, and some years they’re larger. Jackson’s reserves have fluctuated over the years, reaching $2 million in 2009 and then moving up and down until a few years of high claims resulted in a steady decline that began in the 2014-15 fiscal year. In addition to high claims in past years, rising medical costs have also contributed to the decline in reserves.
The 2017-18 fiscal year ended with only $14,615 in reserves. This year, it’s dipping below the zero mark.
“There’s no increase in claims. It’s actually down 2 percent compared to the prior year, but the negative position is still intact,” said Browder.
Bottom line? The county needs to increase its funding by 149 percent over the current $5.3 million in order to keep the plan afloat, Browder said.
“It’s a bad place to be,” he said.
Mark III sent Jackson County’s plan out for “anybody and everybody” to bid on, said Browder, and received responses from the League of Municipalities, Blue Cross Blue Shield and the current administrator, Crescent. Commissioners were most interested in proposals from Blue Cross and Crescent but did not see an immediate winner between the two. They did agree that it made sense to continue with the self-funded plan rather than moving to a fully insured plan.
Browder agreed with that assessment, telling commissioners that 80 to 90 percent of his firm’s clientele is self-funded, as it’s a better long-term strategy. Some years you lose, but some years you win, he said, while wins are few and far between when it comes to fully insured plans.
Currently, the county bears 86 percent of the plan’s cost with employees picking up the remaining 14 percent. The county pays the entire premium cost for its employees, with employees making some contribution for dependent coverage — rates are $420 for a family, $310 for a spouse and $210 for a child. Meanwhile, the county contributes $887 per employee, $1,231 for each spouse-employee or child-employee pair and $1,363 for each family.
Insurance reserves have historically floated up and down in Jackson County but in recent years have taken a nosedive. Donated graphic
It’s a very “nice plan,” said Tracy McCarthy, senior consultant for Mark III. While the plan the county may end up on in order to keep the program afloat isn’t a bad plan, she said, it’s certainly not as good as what’s currently offered. The changes, whatever they may be, are “going to be a shock” to employees, she said.
“If you don’t go to the doctor these changes don’t impact you other than there’s a probability that you’ll be seeing an increase in dependent premiums,” said Browder.
That’s not to say the county has been doing nothing as it’s watched claims go up and reserves go down. Employees have seen a 7.5 percent increase in rates for the past two years, with fiscal year 2017-18 being the first year the county attempted to raise rates.
“Year before last we tried several things,” said Finance Director Darlene Fox on March 12. “We adjusted the benefits and we also changed drug companies to save $500,000. And that didn’t happen. It didn’t happen.”
To keep the program afloat, commissioners may get rid of the enhanced plan the county currently offers and use the existing standard plan as its top-tier plan. Commissioners favored an idea Commissioner Mickey Luker floated of adding a lower-tier plan as well to give employees a second choice.
But eliminating the enhanced plan won’t completely solve the problem, said County Manager Don Adams. Doing so will get the county to a 134 percent funding increase but fall short of the 149 percent that’s needed.
“The $2.2 million required from the county to keep the current plan without any changes, I’m just not sure it wouldn’t be almost impossible,” Adams said. “It’s going to be a struggle even when you got to Option 1, basically turning everyone back to the standard plan. We’re talking about $1.5 million from the county.”
Coming up with an extra $1.5 million “is going to be a struggle,” Adams said.
Commissioners will meet for a work session at 2 p.m. Thursday, March 28, to talk about their options and hopefully come up with a solution, because the clock is ticking. The new plan will have an effective date of May 1.
“There needs to be a decision by April 2,” said Browder.
The Jackson County Board of Commissioners will hold a work session at 2 p.m. Thursday, March 28, in Room A227 of the Jackson County Justice and Administration Center in Sylva, to discuss options for renewing its health plan.
The meeting is open to the public, but there will not be an opportunity for public comment. 828.586.4055.