Rising health-care costs have caused St. Clair County’s health insurance fund to drop millions of dollars into the red, raising questions about what measures the county should take to prevent further debt accumulation.
By the end of 2017, the county’s employee medical trust fund had fallen $3.3 million into debt, nearly double what the debt was in 2016, according to annual audits. The fund hasn’t been in the black since 2015, when it finished off the year in a net position of $579,629.
County Administrator Debra Moore says costs of health insurance have “been escalating for years.”
“It’s hard to keep pace with an ever-increasing cost that we certainly cannot control,” Moore said.
Nationwide, annual spending on health-care costs are expected to increase 5.5 percent on average between 2017 and 2026, the Los Angeles Times reported earlier this year, citing a report from the U.S. Department of Health and Human Services.
Dale Holtmann, principal and accountant for accounting firm Scheffel Boyle, said the rising costs of health insurance “have been hitting the county hard.”
“(The county) needs to get out in front of this before it gets too bad,” Holtmann told County Board members at a Finance Committee meeting this week.
There are roughly 900 county employees, though not all of them partake in the county’s health-care plan, Moore said. County Board members are among county officials who are eligible for health benefits.
Last year, the county hired a consultant to review the county’s health-care costs and provide possible solutions for how to lower those costs, Moore said.
But the county is still working through potential solutions with Hays, the Minneapolis-based risk management and employee benefits consultant, according to Moore.
“We’re in the process of communicating with them now about strategies and options to us in our efforts to control cost and ensure delivery of quality health services for our employees,” Moore said.
The county increased revenue from employee premiums by nearly $286,500 from 2016 to 2017, but it wasn’t enough to make up for an increase in insurance claims and premium costs.
Expenses jumped dramatically from 2014 to 2015, audits from those years show. In 2014, insurance claims came in at $9.3 million, increasing to $12.5 million the following year.
St. Clair County isn’t the only unit of local government suffering from increasing health-care costs. A survey of more than 250 local governments by the University of Tennessee and the Center for State & Local Government Excellence showed health-care costs increased by 6 to 15 percent from 2009 to 2014 for most respondents. Increased claim costs, prescription drug costs and an aging workforce contributed to rise in expenses, according to the study.
Local governments found ways to contain those costs, with the solutions including:
- Increasing the share of premiums paid by employees.
- Establishing wellness programs.
- Increasing deductibles.
- Shifting employees to high-deductible plans.
It’s not yet clear if these will be among the solutions in St. Clair County to manage the growing health-care debt.
“We are monitoring very carefully and very closely those costs and doing everything we can to manage those costs,” Moore said.