Health care fees may push Kane County to self-insure
Kane County might decide to self-insure its 1,250 employees to avoid health insurance cost increases partially related to the Affordable Care Act. But the numbers show it'd be cheapest for taxpayers if the county dropped any insurance coverage for employees.
County board members reviewed a plan Tuesday afternoon that showed $1.7 million could have been saved if the county began self-insuring its employees five years ago.
"That is a lot of money," said county board Chairman Chris Lauzen in an interview. "It protects us from hurting people with their property taxes."
Lauzen said he is leaning toward an exploration of the self-insurance option because of the expected ability to save tax dollars. Going forward, part of the potential savings comes from self-insuring to avoid taxes and fees related to the implementation of the Affordable Care Act, better known as Obamacare.
The county's health insurance brokers told county board members they are looking at a 9.2 percent increase in premium costs in 2014 if the county continues its insurance plan through Blue Cross Blue Shield.
That's a $1.3 million impact on the budget and would push the county's taxpayer-funded employee health care costs to about $15.5 million in 2014.
The majority of the $1.3 million increase, about $796,000, is related to overall health care inflation. The remaining increase, about $512,000, stems from Affordable Care Act taxes and fees.
Health insurance cost increases related to Obamacare are not new to the county, but 2014 will mark the largest impact yet. The costs are related to mandated expansions in coverage for dependents up to age 26, women's preventive care services, elimination of lifetime maximums and wellness visits.
In 2011, the county's health insurance costs rose 1 percent because of new Obamacare fees. In 2012 and 2013, costs rose 0.5 percent.
But in 2014, the impact is a 3.6 percent increase. That's because several new fees come onto the books in 2014.
The big fee for the county is the health insurer fee. That new annual fee is designed to pay for the implementation of health care reform. The fee will rise with the growth in premiums, but it is expected to be about 2.5 percent of total premiums in 2014.
Insurers, like Blue Cross Blue Shield, are expected to pass that fee through to employers, like the county.
The other new fee with a notable impact on the county in 2014 is the transitional reinsurance fee. That new fee will last for three years and fund the state-based insurance exchanges where individuals can find coverage.
The fee begins at $63 per insured member in 2014. The county has about 1,150 members using the insurance it offers.
Lauzen said the county board will take a hard look at the self-insurance option in October as it finalizes the budget for 2014. Pressure to save on insurance may become more of a factor as union contract negotiations conclude.
Money for employee raises has not yet been included in any version of the county's 2014 budget. Lauzen has committed to keeping the county's portion of the local property tax bill flat.
"I'm just looking at will we save money," Lauzen said. "We've got these great benefits that few folks can enjoy. Those are important, but we also have to live within the expectations of the property tax levy, that freeze."
If push comes to shove on that expectation, the county's insurance brokers showed the cheapest insurance option for the county is to simply not offer insurance coverage through the county and push all county employees into the new insurance exchanges.
Not offering insurance would trigger a federal penalty of $2.4 million for the county. Paying that penalty instead of funding an insurance plan for employees would save about $13.1 million.
Lauzen said he recognizes the county's insurance plan is important to the county's employees and a major draw that keeps workers from taking private-sector jobs.