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Boroughs, townships consider coalition

November 26, 2003|by DON AINES

chambersburg@herald-mail.com

Municipalities facing another year of double-digit increases in health-care premiums are considering banding together into a benefits consortium to give local governments a better bargaining position with insurance providers.

Representatives from Franklin County and seven boroughs and townships recently met to discuss forming a consortium, according to Waynesboro Borough Manager Lloyd Hamberger.

The subject will be discussed again today at a meeting of the Franklin County Council of Governments, which includes most of the 22 municipalities in the county, said County Commissioner Bob Thomas, who chairs the council.

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"With the increases we had this year, we will spend about $1.4 million for employee health care in 2004," Chambersburg Borough Manager Eric Oyer said.

By comparison, the entire budget to run the fire department - excluding ambulance service - is about $1.3 million, he said.

The borough has a two-year contract with Capital Blue Cross that caps basic health-care coverage for its 185 employees at 12 percent through next year.

The cost of prescription drug coverage, however, went up 70 percent, Oyer said.

"The larger the number, the better we can spread the risk and perhaps negotiate better terms," Hamberger said. He said Waynesboro is looking at a 20 percent jump of $72,000, to $425,000, next year.

Washington Township, Pa., Manager Mike Christopher said the goal of a benefits consortium is to maintain the current level of coverage at a lower cost, or at least a lower rate of increase. The township budgeted $240,000, an increase of 33 percent or $60,000, for coverage in 2004, Christopher said.

The current plan with Highmark Blue Shield went into effect Oct. 1 and included a 23 percent increase, Christopher said. The budget anticipates another big hike Oct. 1, 2004, when it is time for a new contract.

If a consortium were formed, 2004 premiums would not be affected, Christopher said. With the new year weeks away, most municipalities are signed up with insurers.

"Our insurance, unlike some municipalities, does not renew at the first of the year," Greencastle Borough Manager Ken Myers said. When the borough renewed its policy in April, Myers said it went up 34 percent, to $115,000, for about 18 employees.

"Historically, our plan has been a very good one" through the Pennsylvania Builders Association Benefits Trust, Myers said.

"Obviously, if we can get a better deal, we'll take a look at it," he said.

Collectively, the county and municipalities could bring together more than 1,000 employees, Christopher said. That should provide a better negotiating position than would be faced by a township or borough with a few dozen employees.

"There are economies of scale," Christopher said.

There are community-rated groups, like Chambersburg, and experience-rated groups, according to Oyer. Experience-rated often takes in larger employers whose premiums are based on previous claims for medical services. Community-rated groups' rates are based on actuarial data that looks at an entire community, not just the insured group.

Franklin County, which has more than 600 full-time employees, experienced a more manageable increase in health-care premiums at 9.35 percent for 2004, according to figures from the county's Human Resources Department.

Franklin County Commissioner Cheryl Plummer said not all employees are covered by the county, since some opt to be on a spouse's plan. She said health-care costs next year are projected at about $2.2 million, including employee contributions.

The county covers individuals without an employee contribution. Basic dependent health-care coverage for two people is $88.58 per pay period, or once every two weeks, an increase of $7.22, according to department figures.

A family policy is $101.11 per pay period, up $11.39, according to county figures.

"We don't make our employees pay for their insurance," Hamberger said of Waynesboro. It also is completely paid by the employer in Chambersburg, Washington Township and other municipalities, according to municipal officials.

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