Finance Director Expects Savings

On Health Plan Proposals

By John Voket

The one positive aspect introduced at Tuesday’s special Board of Finance meeting concerned probable savings on the town’s municipal and education health plans. Finance Director Ben Spragg told the board of finance that initial estimates for increases to those plans were being reduced for several reasons.

He clarified in a subsequent interview that, provided the town did not make further significant health-related claims before the end of the fiscal year, increases already budgeted might be reduced more than $120,000.

During Tuesday’s meeting, Mr Spragg told the finance board that original increases for the Board of Education were budgeted at 29.5 percent, and 24.8 percent for the town. The difference between the board of education’s increase and the town’s is justified because the school district has more than double the number of insured employees as the town, he said.

As the end of the fiscal year grows closer, however, those estimates are being driven down as the town shops for bids on a new carrier. As of Tuesday, the town’s health plan brokers were estimating increases at 21.8 percent for the schools and 19.1 percent for the town.

“On the town side, that means a savings of more than $60,000,” Mr Spragg said. “Since the school district has twice as many personnel, their savings should be substantially more than $60,000.”

First Selectman Herbert Rosenthal, who worked in the insurance industry prior to his current official service, said that the municipal broker’s goal is ultimately to keep Newtown’s account.

“If the broker wasn’t out constantly getting updated quotes, they wouldn’t be able to show these savings. It’s important to remember that the increases are all based on claims,” Mr Rosenthal said.

But Mr Spragg said he encouraged the brokers to negotiate further discounts based on the fact that the town is currently facing an unusually high number of what the industry calls “shock claims.”

“Currently the school district has 13 of these ‘shock claims’ and the town only has three,” he said. He said “shock claims” typically compensate costs for unanticipated, catastrophic-level occurrences, and that it is highly unlikely the level of current claims will be repeated in the coming fiscal year.

While the municipal budget will likely be approved and passed weeks before the June 30 end of the fiscal year, the town’s insurance carrier can adjust rates and increases up to the last day of the fiscal cycle, Mr Spragg said. This means the actual savings compared to earlier estimates might not be realized until the final hours of June 30.