McHenry County's insurance move pays off

With health care costs dropping as much as $1.5 million from a year ago, McHenry County's decision last year to handle its employee medical insurance in-house is proving to be a wise one, officials said Tuesday.

A nine-month review of the county's self-funded insurance program show costs are projected to be $11.2 million for the first 12 months since going in-house, down from about $12.7 million the county would have spent had it renewed fully with its prior insurance carrier.

Subtracting about $1 million set aside as a reserve fund last year and other costs, the county expects to realize an actual savings of more than $400,000 on employee heath insurance.

"It's clearly a victory," said Marc Munaretto, chairman of the McHenry County Board's Finance and Audit Review Committee. "Our taxpayers win with $400,000 in savings."

The savings would be greater if not for an abnormally high number of large claims -- those over $75,000 -- over the past nine months. The county incurred about $2.4 million in large claims since going self-insured, compared to less than $500,000 the previous year.

Even so, the county appears to be heading toward long-term savings on its employee health coverage, said county insurance consultant Jim Cornelius.

"It is proceeding as we thought it would and it is saving you money," Cornelius told a joint meeting of the finance and human resources committees Tuesday. "The program is going to continue to save you a significant amount of money in coming years."

The county insures almost 1,100 employees through the program, in which it pays all claims itself through a third-party administrator, rather than the more traditional method of paying an insurance company premiums to pay for claims.

The savings come from not paying for an insurance carrier's profits and from paying only the exact amount claimed, rather than paying a premium based on estimated claims.