Dunmore says health care switch saved $400,000

June 23--DUNMORE -- Changing the way the borough provides health insurance for employees held premiums down and resulted in more than $400,000 in rebates for Dunmore over the last two years, a consultant said.

Facing rising premiums, borough officials approved switching from Blue Cross of Northeastern Pennsylvania to a self-insurance approach several years ago but were worried about potential catastrophic claims wreaking havoc on their budgets.

Council approved joining the 250-plus-member Pennsylvania Municipal Health Insurance Cooperative in March 2015, in a move intended to reduce the risk of self-insurance.

Dunmore gets stop-loss insurance to cover catastrophic claims and pays a stable monthly rate based on conservative calculations by Benecon Group's actuaries, who analyze claims histories and workforce demographics of participants.

"You have done very well in this arrangement," employee benefits consultant Michael Cummings told borough council. "That is just a complete turnaround from (previous) continuous increases. ... You received $407,000 back in monies that would have just got to a carrier in terms of keeping their profits. But the money went back to you because it wasn't spent on claim dollars."

The alternative to self-insurance would be "just taking it from the carrier," Cummings said.

In addition to the rebates -- $190,511 for April through December 2015, and an expected $216,910 for 2016 -- Dunmore kept its health care spending relatively flat, council President Michael McHale said.

The borough budgeted $1.37 million for hospitalization and major medical claims in 2013, and five years later Dunmore budgeted $1.31 million for 2017.

Still, Cummings warned the results won't always be so good.

"I hope you continue to perform well," he told council. "That's not a guarantee. When you look over a seven-year period, you're going to have two really good years. You're going to have some mediocre years. You're going to have a bad year. It's going to happen. But use the monies that are returned, build up a reserve and when that bad year comes, you're going to be ready to fund that."

Contact the writer:

[email protected]; 570-348-9100, x5181;

@kwindTT on Twitter

___

(c)2017 The Times-Tribune (Scranton, Pa.)

Visit The Times-Tribune (Scranton, Pa.) at thetimes-tribune.com

Distributed by Tribune Content Agency, LLC.