Clarke County and its employees will both benefit from a 4.3% health insurance premium decrease in the coming year. The reason for the decrease stems from the good health of county employees.
Anthem Blue Cross and Blue Shield representative Thomas Anthony told the Joint Administrative Services board on Monday that the decrease in premiums occurred largely because Clarke County employees did not file in large local medical claims.
The premium discount provides a small ray of sunshine in an otherwise depressed budget situation.
“The premium for fiscal year 2012 goes down 4.3% and the employer-employee shares stay the same, so both employer and employee will see a 4.3% decrease in premium if the rates are adopted as presented” Joint Administrative Services director Tom Judge said. “The County will save on next year’s (fiscal year 2012) budget. The savings have already been built in.”
Clarke County participates in a self-contained health care plan for county employees established by the Virginia General Assembly in 1990. The plan, referred to as “Local Choice”, includes approximately 50,000 employee and dependent participants.
County employee insurance premiums range from $363 for a single person with a “high deductible health plan” ($980 per family) per month to $511 for a single person ($1,380 per family) for “key advantage expanded” coverage. Local Choice Health projects $2.8M in income from Clarke County from July, 2011 through June, 2012, with $1.6M in projected medical claims. After adding in the costs of insurance and drug programs, Clarke County’s medical costs totaled only 95.7% of the projected revenue, hence the 4.3% premium discount.
But while an insurance rate decrease is a welcome event given current budget challenges, county administrators aren’t assuming that the lower costs will remain permanent.
“Part of what’s going on here is that the state is using its reserve to decrease people’s premiums” Judge said. “Could we still see a big rate increase in the future?”
“It could go either way” Anthem’s Anthony replied. “The state decided that it had an adequate reserve in its health care fund and since it’s a not-for-profit entity it decided to give the savings back to its participants. Your premium is partially based on your own local pool of users.”
Anthony said that coming changes initiated by federal health care laws could have an impact on health care premiums.
“On July 1st 26-year-old dependents will be allowed to re-enroll in the county’s health care insurance” Anthony said. “The dependent age adjustment is the first big change. The next big changes will come in 2014 when individuals are mandated to have health care coverage or pay a fine and waiving of all pre-existing conditions with regard to health care coverage.”
“So this 4% decrease is a ray of sunshine that may not last?” Judge asked.
“That’s right” Anthony replied. “You’ve had a better than average year. Even though the Local Choice plan rates are more stable than in the larger market, the average increase across the board this year is 3% – 4%. I tell my clients to budget for a general trend of 12% annually. Anything under 10% is very good in today’s market.