After just two years of handling its employees' insurance claims in-house,
Touted as a cost savings measure, self-funding insurance removed the middleman and allowed the city to pay out its own claims from premiums it collects from employees. But it added risk by requiring the city to cover medical expenses should employees need more care than city officials predicted.
In the first year of self-insurance, the city paid out more than
That prompted Lent to pull the plug.
"I felt it was a vulnerability that we couldn't sustain and we needed to have a buffer," Lent said.
Officials had hoped to develop a reserve account that would withstand bad years. The state
For 2017, the city signed up for plans that will cost about
By self-funding, entities essentially trade having to pay for an insurance company's overhead and profit margin in exchange for assuming the risk those companies take on. That could backfire, but it could also save money in the long run, she said.
"Realistically, we're just one catastrophic claim away from disaster," she noted. "But overall we are pleased with decision (to switch)."
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