Garland County’s plan to self-fund worker health insurance advances

HOT SPRINGS -- A budget amendment the Garland County Quorum Court Finance Committee advanced Monday appropriated $1.3 million for the county's transition to a self-funded employee insurance plan.

County Judge Darryl Mahoney said employees with spouses and dependents can't afford coverage under the county's fully insured plan with Arkansas Blue Cross and Blue Shield. He said many employees previously insured by Medicaid have joined the county's plan.

"So many people have been pushed off Medicaid this year that it's caused a lot more of our employees to pick up our insurance," Mahoney told the committee. "This was the only way we could keep our employees from being subjected to about a 15% increase for their spouse and family insurance. If you're paying $1,000 a month for family, 15% is another $150, which would basically negate the cost-of-living increase we gave."

The county pays the full premium amount for individual coverage, about $700 a month per employee, Mahoney said. The 2024 budget the committee endorsed Monday appropriated $3.4 million for employer contributions to the self-funded plan the county will begin next year. Mahoney said the county would have paid more than $3.8 million under a fully insured plan.

"Each year when Blue Cross and Blue Shield would come up for a renewal the first thing they would hit us with was a 20% to 30% increase," he told the committee. "We're spending about $3.5 million a year right now. When you start seeing a 20% increase, that's devastating. We had to move away from it."

Mahoney said the county will have a maximum claims exposure of $4.5 million under the stop-loss policy he entered into with UnitedHealthcare. Coverage will kick in when total claims exceed that amount. He said the plan will also use the UnitedHealthcare provider network. United Medical Resources will process claims as the plan's third-party administrator.

Mahoney said prescription drugs accounted for most of the largest claims on the fully insured plan. The self-funded plan will include a pharmacy benefits manager that Mahoney said is contracted to negotiate at least $800,000 in savings next year.

"Our highest claims last year were pharmacy related," he said. "That tells us it's not procedural. It's pharmacy we're having an issue with."

The $1.3 million appropriated from the general reserve fund has been building for several years, with the county annually setting aside $475,000 since 2021. The money initially helped employees pay their deductibles under the Arkansas Blue Cross and Blue Shield plan the county began in 2021. The $115 million 2024 budget the committee advanced Monday included $85,000 for deductible assistance and another $475,000 for the employee insurance fund.

Mahoney said many cities and counties that switched to self-funded plans have had positive claims experiences, retaining surplus employer/employee contributions instead of paying them to an insurance carrier. Several years of surpluses in the city of Hot Springs' self-insured plan have built up a more than $8 million balance, according to the city's October financial report, and allowed the city to budget two months of premium holidays next year.

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