Floyd County faces another big health care cost increase

By Bob Steenson, bsteenson@charlescitypress.com 

Two years of claims significantly higher than premium payments will likely lead to another large health insurance cost increase for Floyd County, and county supervisors spent a good part of a meeting Monday morning discussing options.

Representatives of Holmes Murphy and Associates, the county’s insurance broker, had told the supervisors in August that claims this year were again running higher than premium payments, forcing Wellmark, the county’s insurance provider, to raise insurance rates by 26 percent for next year, on top of a 24 percent increase this year.

Not all of that cost is passed down to the county’s more than 100 employees, however.

The county has a self-insurance fund that pays part of the cost of deductibles and total out-of-pocket costs. Last year the supervisors agreed to absorb enough of the premium increase and other costs to keep the increased premium costs for employees to a little over 6 percent.

Doing that decreased the county’s self-insurance fund from almost $600,000 to a current balance of about $398,000, Cindy Hennigar, an account executive with Holmes Murphy, said Monday morning.

Various options discussed to buy down the cost to employees for next year could reduce that balance by another $200,000 of the fund, she said.

Drew Engebrecht, an employee benefits broker and consultant with Holmes Murphy, said Wellmark’s plan year runs from August to July.

For the first two months of this new plan year, August and September, the county paid Wellmark $230,000 in premiums, but Wellmark paid $340,000 in claims, he said.

Wellmark looks for a loss ratio of claims to premiums of about 80 percent, Engebrecht said, meaning it wants to pay out about 80 cents in claims for every dollar in premiums received.

“Your loss ratio is 147.9 percent,” he said. “If you get around that 80 percent you can expect a pretty decent renewal. Obviously, 148 percent, not as much.”

Looking at the last couple of years, the loss ratio has been 126 percent in 2016-17, 140 percent in 2017-18 and 148 percent in the first two months of 2018-19, he said.

“A couple large claimants are really skewing the numbers,” Engebrecht said, “but that’s the reason people have insurance.”

Hennigar said, “All of that really is leading up to the renewal that you’re getting that you’re not going to be happy about.”

The supervisors and the insurance representatives spent much of the time discussing ways to reduce the premium increase. Options included increasing employee deductibles and co-pays, making employees pay a larger percentage of the premium cost, changing prescription coverage benefits, changing to a health maintenance organization plan (HMO) and other possibilities.

The HMO plan would cover physicians and facilities in the state of Iowa, meaning it would not cover services at Mayo Clinic in Rochester, Minnesota.

It would be possible to offer the HMO as well as a different plan that would cover Mayo, with the understanding that the employee would need to pay the extra premium cost that would entail.

The supervisors didn’t make any decisions on changes to the county employee health care plans Monday, but will need to do so soon.

Also at the meeting, supervisors:

• Set public hearings for an amendment to the urban renewal plan for the Southwest Bypass Urban Renewal Area and for a development agreement with the Charles City Area Development Corp., for 9:15 a.m. Tuesday, Nov. 27.
• Briefly discussed renewing the agreements between the county and communities in Floyd County for the Sheriff’s Office to provide law enforcement service to the cities. The rate is $4 per capita in the towns, except for Nora Springs which is charged an hourly rate.

Two of the mayors at the meeting and Sheriff Jeff Crooks agreed the service was working well, and said that moving from an annual to a two-year agreement would be OK.

• Again discussed but took no action on a request by County Treasurer Frank Rottinghaus to create a new position in his office to replace a deputy who retired, and move a current employee into that position.
• Heard a brief update on the law enforcement center and courthouse update project from Supervisor Linda Tjaden. She said the county had received the hazardous materials report regarding three properties the county now owns that need to be demolished to make way for the project — two homes at 101 and 111 S. Jackson St., and the Davico parking lot and building at 109 Gilbert St. — and received an offer from the same company, Advanced Environmental Testing and Abatement of Waterloo, to remove hazardous materials from the three properties for a total of $6,628.