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Municipalities in Pa. eye health-care savings

November 30, 2005|by DON AINES

chambersburg@herald-mail.com

CHAMBERSBURG, Pa. - After several years of double-digit increases in health-care premiums, several Franklin County municipalities are joining together with others in the state to spread the risk and bring those costs under control.

On Monday, the Chambersburg Borough Council approved an ordinance to join the Capital Region Insurance Trust (CRIT) and the Pennsylvania Municipal Health Insurance Cooperative (PMHIC) for the purpose of collectively purchasing employee health benefits. With the borough budgeting $2.1 million to provide health insurance to its 191 employees in 2006, joining the organizations is expected to result in savings between $94,000 and $350,000, Borough Manager Eric Oyer said.

Oyer said Waynesboro, Greencastle, and Washington and Antrim townships also are joining CRIT and PMHIC to bring their health-care costs under control.

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Through CRIT, the municipalities are participating in a self-insurance program, Washington Township Manager Michael Christopher said.

"We pay all the losses up to $25,000 for anyone who has a claim," Christopher said.

For catastrophic losses above that figure, claims are paid through a reinsurance program with PMHIC, he said. By participating with many other municipalities with thousands of employees, the boroughs and townships can purchase insurance at lower costs by spreading the risk, rather than buying coverage for a small group of employees, he said.

Christopher said the township has budgeted $330,000 for health insurance for its 28 employees in 2006, up just slightly from the $325,000 for 2005. The township expects, however, to realize savings of 10 percent to 20 percent with CRIT and PMHIC, he said.

Savings will, to some extent, depend on the number and severity of claims a municipality experiences, Christopher said. If the amount of claims paid out is less than what a township or borough budgets for the year, it will receive a rebate based on its experience and that of other municipalities in the group, he said.

Through a regular insurance plan, any savings would be pocketed by the insurance company, Christopher said.

Oyer said Chambersburg has for a number of years been self-insuring its general liability, workers' compensation, unemployment, and errors and omissions insurance at considerable savings. If the borough experiences the maximum possible savings of $350,000 next year, that is the equivalent of 2 1/2 mills of real estate tax, he said.

If that is the case, the borough's expenditures for health care next year would be roughly the same as this year, approximately $1.8 million, Oyer said.

Council President William McLaughlin said the cost of health-care premiums for the borough rose 12 percent in 2004 and 18 percent in 2005.

"It could be $50,000 to $60,000," Waynesboro Borough Manager Lloyd Hamberger said of the possible savings next year. The borough has budgeted about $600,000 in 2006 to cover health insurance costs for more than 60 employees, he said.

"With luck, we'll end up lower than our 2005 costs," Hamberger said.

The change will be seamless for most employees of the participating Franklin County municipalities. Oyer said benefits will remain the same for Chambersburg's workers and still will be administered through Capital Blue Cross.

Christopher said Washington Township employees will have to switch from Blue Shield to Blue Cross for the plan.

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