County turns to self-funded insurance plan amid rising costs

MANISTEE COUNTY — During its regular June meeting, the Manistee County Board of Commissioners voted to switch to a self-funded health insurance plan for county employees and their dependents currently enrolled in the county's health insurance program.

Health policy information organization Kieser Family Foundation defines self-funded insurance as, "where the employer pays enrollees' medical claims directly, as opposed to traditional health insurance, known as fully-insured, where the employer buys coverage from a state-regulated insurance company."

The change is projected to save the county $85,000 annually while avoiding an 8% renewal increase that employees otherwise would face under the current plan.

For local governments, employee healthcare spending comes from the same pool of taxpayer dollars that fund other community services. When healthcare costs rise, dollars must be allocated from elsewhere.

"It's for us as being fiscally responsible not only for our employees' insurance, but also fiscally responsible for our tax dollars," said Eric Gustad, district 4 commissioner.

The county budgeted for a much larger healthcare increase at 15%, before receiving the self-funding proposal.

Representatives from the county's employee benefits consultant, Manning and Vance, answered commissioners' questions during the board meeting.

They said that renewal costs have been rising significantly, driven by increasing pharmacy costs and projected inflation for hospital services and doctor visits.

Officials expressed concern that premium costs would force higher employee contribution.

Manistee County Human Resources Generalist Julie Griffis gave her input.

"If you look at our renewal rates for the previous years, they were becoming astronomical ... We can't continue at this pace," she said.

Griffis added that the continuing rising costs of insurance were reducing employee wage increases.

One of the biggest concerns raised by commissioners was whether a bad claims year could increase costs for taxpayers.

Consultants explained that the county would be protected by stop-loss insurance that would cap liability at $125,000, limiting how much the county would have to pay if claims are higher than expected.

They reviewed the county's historical claims experience and said that Manistee County would be a good candidate for self-funded insurance.

The consultants discussed how the transition would impact employees.

New insurance cards would have to be issued, but the consultants said that employees' benefit levels are expected to remain the same and that they will not have to switch medical providers.

They added that employees may gain additional wellness and mental health program options through the self-funded plan.

Employee contribution rates would also remain flat through 2027.

Commissioners voted 5-0 to approve switching to self-funded insurance plans. Commissioners Karen Goodman and Janice McCrainer were absent.

The switchover will become effective on Oct. 1.

"We feel like we've done good by our tax dollars and by our employees," Griffis said.