As Hamilton County department heads presented their budget proposals, county commissioners were scratching their heads as to why health insurance costs for some were coming down.
“We noticed there’s a decrease in the medical insurance,” Commissioner Bill Hullander said last week as Clerk and Master Lee Akers made his budget presentation. “We’ve seen this with some of the other department heads.”
One reason? Divorce.
Mr. Akers’ chief deputy, Judy Hillyer, said the amount was smaller because of employee divorces, which led some workers to drop family insurance coverage and move to single coverage.
The clerk and master’s budget request was more than $17,000 less than the amount budgeted for the office last year. Nearly all of that reduction was a result of lower insurance costs.
Other offices that reported decreases in medical insurance costs included the district attorney, the register of deeds, the property assessor, the county clerk and areas of the Sheriff’s Office.
plan differences
County Finance Administrator Louis Wright said retirements were another factor.
“We’ve basically got two sets of insurance coverage,” he said.
The insurance offered to new hires is “a little cheaper because the benefit structure’s not quite as good,” Mr. Wright said, while longtime employees were eligible to keep a previous insurance package. So as people retire and others are hired in their place, the cost of coverage declines, he explained.
Mr. Wright also pointed out that coverage costs weren’t dropping for every department. The medical examiner’s office, the public defender and the patrol division of the Sheriff’s Office, among others, reported increases.
Likewise, Mr. Wright said, the decreases reported by some departments don’t paint the full picture because the budget proposals were put together using the current year’s insurance rates.
“We have not adjusted those rates,” he said. “We will be doing that before the mayor makes his presentation. We try to wait as late as we can to get the best information we can.”
consolidation considered
Officials raised the topic of insurance again Thursday after the Chattanooga City Council and the commission heard budget proposals from agencies they jointly fund.
Councilman Jack Benson asked Trustee Carl Levi, who’s in charge of collecting property tax for the county and several municipalities and was making a budget presentation to the County Commission, if he might consider consolidating tax collections in his office. That set off a conversation about other consolidations, specifically in the city and county health insurance plans.
Councilman Russell Gilbert asked if combining the plans is something officials could consider.
“If you have more people applying for the same thing, you get a better deal,” he said.
Mr. Wright said that has been discussed multiple times, but said it would be complicated to match up the benefits. He also expressed doubt that consolidation would create much savings.
“All we’re paying, in terms of something that we could really maximize on by having a quantity-type discount, is something that’s called ‘administrative services only,’ ” Mr. Wright said.
Administrative services only make up a small portion of the cost of insurance, Mr. Wright said. The largest portion of what the county pays is for claims, and those costs wouldn’t change even if the pool got larger, he said.
That’s because the county switched a few years ago from a fully insured plan to a self-insured plan, said Mr. Wright. The city’s also under a self-insured plan.
Under self insurance, an employer pays the administrative costs for coverage, but the employer pays for claims to avoid the built-in profit margin in insurers’ premiums.
savings for schools
Mr. Benson asked if a much larger group, consisting of the city, the county and the school system, might bring some cost savings.
Tommy Kranz, chief financial officer for the schools, said last week that consolidating their own plans might cut costs substantially.
“One of the options we’ve looked at is creating a base plan,” Mr. Kranz said. “We have been working both with BlueCross BlueShield and Cigna, who does our HMO, as well as the county and Erlanger, to see what are the possibilities out there.”
Mr. Kranz said the Hamilton County Education Association would have to approve such a change.
Rhonda Catanzaro, liaison for the Education Association, could not be reached for comment.
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