Noble County insurance costs run high

By Steve Garbacz

ALBION — After just four months, Noble County already has spent $1 million of its $1.3 million budget for employee health insurance.

That’s not particularly good news, especially considering getting a better grip on health spending was a main goal for 2017.

The county changed health insurance companies to try to reduce cost, increased the amount withheld from employees’ pay for insurance premiums and passed a new income tax that helps free up money to cover health costs.

As of right now, even that’s not looking good enough.

There are some extenuating circumstances that have inflated the 2017 spending on insurance, but May isn’t even over and one thing is already clear:

Health insurance is going to bust the budget again.

“It is short. It’s absolutely short,” Noble County Council President Mike Toles said.

The county has overspent its health insurance budget every year dating back to 2010. That’s forced the county to spend more than $2 million out of its reserves.

Last year, the county had budgeted $1.2 million, but appropriated $2.2 million for health care expenses. The county might have spent all of that by the end of the year, but at a maximum could have run over by as much as $1 million, county coordinator Jackie Knafel said.

The outlook for this year is already grim. With more than six months left on the calendar, the county has about $300,000 of its original budget remaining. Oftentimes, medical expenses spike toward the end of the year, after people reach their deductibles and schedule appointments or procedures that the insurer mostly covers.

Last year during budget hearings, Knafel initially had suggested a health insurance budget of $1.6 million total. Council members cut it back to $1.3 million, because there was no way they could fund the higher amount while maintaining services in other county departments.

Even if that $1.6 million figure had survived the budget process, it likely wouldn’t have been enough, Knafel said.

“We will need additional before the end of the year,” she said.

Part of the issue is Noble County is picking up two months of claims from 2016 on the 2017 budget, so it’s as if the county has spent for six months instead of just the four calendar months that have passed, Knafel said. That’s skewing the total, so it’s difficult to gauge what a regular yearly cost is supposed to be.

The county is also self-funded, meaning it pays for employee claims, instead of fully funded, where it pays a set amount of premiums to an insurance company that would pay the claims. Being self-insured can offer significant savings if claims are low, but can be more expensive if they’re high. In a fully funded plan, the county wouldn’t be reimbursed if claims were less than the amount expended.

The county would have to pay more than $2 million annually for a fully funded plan, which likely would have worse benefits, compared to the current self-funded plan. Before last year, annual costs hadn’t topped $2 million.

Last year, the County Council implemented a new public-safety income tax at 0.25 percent, with the goal of shifting some Sheriff’s Department and 911 expenses out of the general fund — where insurance is paid from — to the new public-safety fund.

That move primarily was made to help stop the bleeding from the county’s savings caused by annual overruns in the health insurance budget.

Although the council has been hearing requests from Sheriff Doug Harp to use some of the new public-safety money to fund more deputies or upgrades needed at the Sheriff’s Department and county jail, Toles said that can’t happen while insurance costs are still out of control.

“That is my position, and I was upfront about that from the beginning. It wasn’t, ‘Let’s pass this so we can go out to do some Christmas shopping and wish-list shopping,’” Toles said. “(Relieving the general fund) was my position. It still is my position.”

Council hearings to plan the 2018 budget will begin in August, and the health insurance question is still a major storm cloud on the horizon.

At the council meeting in May, members briefly discussed whether additional hikes in employee contributions would be necessary or if other changes will have to be made in attempt to bring down insurance costs to a more manageable level.

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