MOUNT VERNON — While municipalities and other government entities are forced to consider changing insurers when employees’ medical insurance premiums go up 10 to 20 percent from one year to the next, one local government has had no such problem.
Last year, about 360 Knox County government employees saw their health insurance costs rise only about 2 percent, with a similar increase expected this year. The key to lower health costs, say Knox County Commissioners Thom Collier and Teresa Bemiller, has been going the self-insured route over about the past two decades. The county has worked through an insurance broker the past seven years, Frank Flaugher of Flaugher Insurance Services Ltd., and he receives bids from third-party insurance providers. Currently, Meritain Health is the county’s third-party health administrator/provider through the Aetna network. Tuesday, Flaugher met with commissioners to provide a health insurance update.
“Certainly, there is a risk when you’re self-insured, but it really is about whether you’re a big enough group (to be self-insured),” County Administrator Jason Booth said.
That risk involves having a large enough pool of employees to spread the risk so that a big claim for really high medical expenses from one or more individuals can still be absorbed and offset by the entire group. Other factors are important too, like maintaining an appropriate fund balance.
Collier and Bemiller said as a self-insured entity for health insurance, Knox County has taken some simple yet effective steps to keep medical costs in check. One has been to ask employees to select generic prescription drugs when possible over the much higher-cost name brand drugs. County employees pay $10 monthly on prescription copays, but Collier said they are encouraged to buy prescriptions with a 90-day supply, at $20, to save costs.
The county also makes use of a “Swift MD” program in partnership with Knox Community Hospital, which Collier described as “kind of like urgent care over the phone.” County employees, and their household family members, can call Swift MD, receive a basic diagnosis over the phone from a KCH doctor, like a skin rash developing, and receive a prescription soon after for it. Swift MD saves the county money through employees and their family members often not having to visit the doctor. The program costs the county just $6 per employee per month, with dependents 3 and up not charged, for a total expenditure of about $20,000 per year.
The county also requires its employees to receive yearly health checkups, Bemiller noted. Whether those checkups require mammograms or colonoscopies, employees must take the tests, which being self-insured covers.
Every three months, Knox County reviews its overall medical funds balance to make sure there is approximately $1.5 to $2 million in the fund account to pay out medical claims.
“Pretty much every doctor in Knox County, and the (Knox Community) Hospital, are in our network,” Collier said.
He added that the maximum out-of-pocket an individual county employee pays in a year is $2,250. In addition to low $10 copays to visit the doctor, the county covers 85 percent of each employee’s medical claim cost.
Last year, Knox County paid out net medical claims totaling $5,447,268. If any one county employee, or employees, has a life-threatening serious illness, is better to pay out a large billing claims in one year, at up to $1 or $2 million, and spread the cost amongst all employees than it is to raise everyone’s premiums. The county is assigned a maximum overall amount for yearly medical claims, or an “aggregate attachment,” which was $7.76 million last year. Asked why more municipalities and county governments don’t go the self-insured route for medical care, Flaugher said some of it has to do with familiarity with the current system and reluctance to embrace the unknown.