The Leader tells us in the January 10 edition that the city of Pevely is dropping health insurance coverage for city employees due to a 49% increase in premiums. The city’s total cost would have risen from $378,000 to $567,000 to cover the 37 city employees that are not on Medicare.
The article does not suggest that Pevely considered any other options besides dropping coverage. Maybe they did, and the paper didn’t mention it. I have some ideas for the city, just like I did when they were cutting their budget:
- Pevely has been paying 100% of its employees’ insurance premiums. Why not cut this to 75% or 66%? If I worked for the city, I’d rather have to pay part of my premium than to have no insurance at all. Same with the city’s Medicare recipients: reimburse part of their premiums, but not all of them. Not many employers these days pay 100% of employees’ premiums.
- Convert to some sort of high-deductible plan (HDHP) with a Health Savings Account. This would reduce premiums and create incentives for shopping around and reducing expenditures. The article tells us that the Pevely employees are a “max-rated” group. This means they make a lot of claims. Is this because there are a few people on staff that are unhealthy, or have chronic conditions? This can’t really be controlled, but overall I suspect Pevely employees would be a little more judicious in their claims under a HDHP, and thus save a few bucks.
- Another option to consider might be self-insurance, although Pevely may be too small for this. Companies such as WellPoint, UnitedHealth Group, Aetna, and Humana will administer such plans, so the city need not take on that burden. The number of smaller companies self-insuring is small but growing. Such a system would allow Pevely s0me flexibility in coverage and exemption from some state regulations and taxes. It would also likely result in lower premiums.
I am always here to offer advice to the powers-that-be in Pevely. Call me!
Update: I suspect that Obamacare plays not a small role in this premium hike.