Howell seeking ways to rein in health costs
BY TOYNETT HALL Staff Writer

HOWELL - The cost of health insurance is rising in Howell, just as it is almost everywhere else.

Members of the Township Council discussed the issue recently and said that since February, the municipality has experienced a 12.5 percent increase in the cost of its health benefits.

According to information provided by township officials, a year ago Howell paid $2.6 million for health insurance. This year the township will pay about $2.9 million. The current contract will expire in January 2009.

Officials said the municipality's current health-care provider, Horizon Blue Cross Blue Shield, raised the rates because the township had a negative medical loss ratio. The ratio compares the premium paid to the claims that are paid out to participants in the plan.

According to StuartMigdon, director of employee benefits for the Business and Governmental Insurance Agency, Woodbridge, the negative medical loss ratio stems from medical inflation and the fact that "the amount of claims were high compared to the premium paid to Horizon."

"For every dollar the township paid to Horizon Blue Cross Blue Shield, 95 cents went to cover claims for members who were participating in Howell's plan," Migdon said. "What cost $1 today will cost $1.11 a year from now, based on medical inflation."

With the exception of new hires, Howell pays 100 percent of its employees' health benefits. The municipality has been a customer of Horizon Blue Cross Blue Shield since February 2006.

Migdon presented the information to the mayor and council members on April 8. He was the broker who was hired to manage the increase as best as possible. He was also charged with finding a health-care provider that would be able to offer Howell employee benefits that were equal to or better than the services being provided at the present time. Migdon said he analyzed the present provider, Horizon Blue Cross Blue Shield, with a goal of reducing costs.

According to Migdon, his firm conducted a search of health-care providers that would be able to provide equal or better service than what Howell is receiving now. He said Horizon Blue Cross Blue Shield was the only provider to meet the criteria. He said other health-care providers declined to participate because of the noncompetitive nature of the situation.

C

ouncil members were dissatisfied

with Migdon's report.

Mayor Joseph DiBella, who works as a health-care benefits consultant for Commerce Insurance Services, directed Township Manager Helene Schlegel to seek proposals from other firms.

Schlegel said she would do so, but she suggested that Howell's request for proposals be primarily about service and not cost.

Councilwoman Cynthia Schomaker asked about the possibility of having employees contribute to the cost of their health benefits.

Schlegel said the payment of healthcare costs by municipal employees would have to be part of collective bargaining agreements with the four bargaining units (unions) Howell deals with.

DiBella expressed his displeasure with Migdon's presentation and made some suggestions of his own. He said township officials need "to renegotiate our plan designs, change the level of benefit provided for employees" and require a reasonable amount from employees, "in essence, share the same expense."

DiBella also suggested that municipal representatives look into health insurance funds.

Health insurance funds are a way for different public entities to come together and purchase different components of insurance as one group. However, because health insurance funds are self-insured, the involved parties bear all the risk. According to DiBella, a health insurance fund could help Howell officials negotiate a better deal.

The mayor recommended that municipal officials look into collaborating with the Howell K-8 School District to create a health insurance fund with its employees, when the claims experience improves.