Chippewa County’s self-funded employee insurance plan has had a pretty good track record, but it’s hit some tough times. The insurance fund dropped so low that the County Board on Tuesday had to transfer $1.7 million from the county’s general fund to bail it out.
The county’s health insurance plan and what to do about it in the future will be the subject of a special board meeting Tuesday, Aug. 21.
A self-insurance plan is a substitute for a county buying health insurance from a private insurance company and paying its premiums. The county collects revenues from employees through premiums, but the vast majority of the funds in the program come from tax money.
The county pays employee health insurance claims itself, using a hired company for administration. Many organizations find self-insurance is more cost efficient than paying ever-rising health insurance premiums.
County ordinance calls for the county’s insurance fund to have a minimum balance of $300,000 and a maximum balance of 125 percent of the current year’s health insurance fund budget, which for 2012 would be $1,651,329.
Over the years, it worked pretty well. From 1993 to 2011, the county has had to transfer from the general fund to the health insurance fund about $1.08 million when claims were higher than expected. However, because claims were sometimes lower than anticipated, over that same period the county transferred from the health insurance fund to the general fund about $1.6 million.
Then the hard times hit. In 2010, the county ended with a loss of $273,839 and 2011 ended with a loss of $550,137. That reduced the fund balance to $811,211 at the start of 2012.
This year, utilization of the plan has been abnormally high.
The reason is likely Act 10, the state law that virtually eliminated collective bargaining by public employees and entirely removed health insurance as a negotiating point. That allows the county to make whatever changes it wants to the health plan without consulting the employees after the expiration of current contacts.
That creates uncertainty about the future among employees.
“They are trying to get as much done now as they can under a plan they know and is practical,” said County Administrator Frank Pascarella.
The trend projects a negative fund balance by the end of the year.
Transfers from the general fund require a super-majority of the board to approve, so 10 of 15 votes were required for passage of the transfer resolution.
“We do have an obligation to pay these claims, so we really don’t have any alternative but to approve this resolution,” Pascarella said.
The resolution passed 11-3.
The county may or may not continue its self-insurance plan and is likely to make changes to it. That will be the subject of Tuesday’s meeting.