Town Explores Other Health Insurance Options

By Larissa Lytwyn

The Board of Finance heard February 23 from town government insurance brokers Mary Griffin of TR Paul, Inc and Steve Ribeiro of Aon Consulting that the town was currently soliciting bids for health care coverage as a result of the estimated 26 percent rate increase of current town and school board insurance provider Anthem Blue Cross/Blue Shield.

Last year, the Board of Education lowered a 17 percent increase in medical benefits to 15 percent, illustrating the ability to negotiate rates slightly lower than initial trend estimates.

In its approval of its proposed budget on February 9, the Board of Education lowered Business Director Ron Bienkowski’s 22 percent rate increase estimate to 20 percent.

First Selectman Herb Rosenthal introduced Ms Griffin and Mr Ribeiro’s presentation with some brief words about his own background in finance.

“I was involved in the insurance and investment industries for 35 years,” he said. “I still hold all of my licenses.”

In addition, he said, he formerly chaired the Board of Education. TR Paul, Inc’s Ms Griffin, he noted, has been the school board’s broker for approximately 30 years.

TR Paul, Inc is a diversified, full-service employee benefit consulting organization that works to ensure the best vendor rates for its business and municipal clients. Mr Rosenthal made clear that he had no personal interest in either the brokers or the benefits because he is not covered by the town’s health insurance.

Mr Ribeiro explained that while the national trend for Preferred Provider Organizations (PPOs) anticipates an approximate 13.6 percent increase, Anthem’s increase is at a considerably higher 16.6 percent.

He also discussed “shock claims,” which represent the approximate 13 claims the school board is currently handling and the two the town has incurred, each in excess of $50,000. One school claim was $336,000, another $180,000, said Mr Rosenthal.

In all, Anthem insures about 750 school and town employees.

Mr Ribeiro and Ms Griffin are trying to get Anthem to discount the large shock claims from the rate increase because several of these claims were exceptional and did not require long-term treatment.

Mr Ribeiro said that during the past two years, Anthem had a 90 percent loss ratio.

With consideration to the recent claims, “They should be at a 75 to 80 percent loss ratio, so their 90 percent is 15 percent higher than expected,” said Mr Ribeiro.

In light of these various factors, Ms Griffin said, the town is currently “putting to market” bids from other insurance providers including United Health Care, Cigna, Health Net, and Aetna. Ms Griffin said that she expected a clearer idea of where competitors stood in what they could offer within the next one to two weeks.

Finance board Chairman John Kortze asked Mr Ribeiro and Ms Griffin why Anthem’s rates were so high.

Ms Griffin explained that approximately 96 percent of Connecticut’s municipalities are insured by Anthem, making bargaining more of a challenge.

“They have a real lock on the market right now,” put in Mr Ribeiro.

Mr Rosenthal said another concern was the specificity of language in the Newtown Federation of Teachers’ 2004–2007 contract, which stipulates that health insurance benefits must be “substantially equivalent” to their current provider. Other contracts use the more flexible language of “comparable” benefits, he said.

For its premium fees, Anthem maintains one of the most comprehensive health provider networks in the nation. Finding a competing vendor with benefits that would generally match up to Anthem’s could be difficult, Mr Rosenthal said, considering the teachers’ contract’s precise language.

When the finance board pointed out the possibility of a self-funding program, Ms Griffin reflected on the unpredictability of the program from the school board’s experience in a partially self-funded insurance program managed by Anthem that was implemented several years ago.

She suggested that, in the long run, savings were more substantial and trends more predictable when clients stuck to a PPO or even Health Maintenance Organization (HMO) insurance plan. HMOs were also discussed as an alternate option town and school employees could choose in lieu of a PPO.

Mr Ribeiro and Ms Griffin said that the benefits of HMOs were similar to a PPO. HMOs are generally less expensive, though exact figures depend on the carrier.

School board Secretary Andy Buzzi said that the bottom line was that he wanted town and school employees to “have options.”

Ms Griffin and Mr Ribeiro will be speaking about the insurance process further with the Board of Education during its next regularly scheduled meeting on March 1 at 7:30 pm.