Township Switches Health Insurer for Savings

At Monday night's special Haddon Township commissioners meeting to appoint a health insurance vendor, the Southern Jersey Health Insurance Fund (HIF) recommended by representatives of the municipality's appointed brokerage firm Conner Strong & Buckelew was approved by votes from mayor Randall Teague and commissioner James Mulroy, with commissioner Ryan Linhart, who seconded the motion to approve HIF, ultimately abstaining.

HIF will become the town's health benefits plans adminis trator beginning Sept. 1, with the understanding that it is a three-year plan with a 90-day termination clause wherein either party could opt out of the contract with proper notice for any reason whatsoever. Conner Strong & Buckelew underwriter Tammy Brown said the three-year arrangement is due to "stability of funds" and wanting clients who believe in the concept of health insurance funds. "We have not had a lot of groups that have taken advantage of that, but we have to give our clients the opportunity to opt out for whatever reason," Brown stated.

Insurance Design Administrators (IDA) CEO and general counsel Daniel Roslokken, the township's third party claims management and payment administrator since 2015, gave a presentation since neither he nor any other IDA representatives were at the June 17 commissioners meeting when the public conversation began, as was previously reported in The Retrospect's June 27 issue. Linhart insisted that IDA attend the special meeting.

Roslokken discussed the self-funding plan proposal, which he described as having three main components - the town's retention of unspent claim dollars, stop-loss insurance to protect from larger claims, and flexibility and control. "In a basic sense, this is a pay-as-you-go plan," Roslokken said. "If those on plan are so blessed to not be in need of medical services, there are no claims that come in, and the claims cost is down. But, if there is an incidence of use or severity of the cost of use, that's where reinsurance (stop-loss coverage) comes in," he said.

According to Roslokken's packet, which he provided the governing body and public, stop-loss coverage, for both specific and aggregate situations, pays when claims for any one person or the whole group exceed a set dollar limit during the plan year, enabling the maximum cost to be known and locked in for the year.

In contrast, the HIF is a joint fund, with 52 New Jersey municipalities and municipal utility authorities enrolled, and was created by Conner Strong & Buckelew in 1992. The advantage of the HIF, collectively, is that if one town has worse claims in a year than another, there's a sharing of the benefits and a sharing of the losses, as The Retrospect previously reported in the June 27 issue. According to the fund's website, the HIF includes nearby Barrington, Collingswood, Haddon Heights, Haddonfield, and Oaklyn as members.

Roslokken explained that the only cost changes that would come in for a renewal with IDA would be claims costs, which is based on a trend estimate of a 9.25 percent increase through a report auditing the state health benefit plan, and Roslokken described it as "the component none of us have any control over, how sick or how well anyone on the plan would be".

Mulroy asked if "accepting the risk and hoping for the reward" is an accurate summation of IDA's self-funding proposal, referring to the fact that the town could receive a better deal one year due to the possibility of fewer claims, but would also need to be aware of greater costs if there are more or higher claims than expected in a year, to which Roslokken agreed.

"It's like anything. You hope for the best and you plan for the worst," Linhart added. A proponent of the IDA plan, he pointed out that the community can benefit from it because if the township takes on the risk and plans accordingly, it can "ride out the ebbs and flows". Linhart also noted, "The money that's budgeted is simply saved in our bank accounts, as opposed to just cutting a check for the HIF, in which we would not see a return." Linhart stated that he thinks the risk with leaving the IDA plan and going with HIF is that the township will lose its flexibility to manage costs through savings acquired throughout the years. "I think the issue that I have is telling taxpayers that while right now this HIF is a great proposal, I understand that it's a business model and that this proposal is essentially throttled to be more appealing for us to join the HIF. I don't see it as a sustainable number at the bottom line." Mulroy said, "The question is whether we're both willing and financially able to absorb this risk. In my experience, large corporations and municipalities opt for the self-funding plan because they have the financial resources to cover a bad year. In my opinion, small municipalities like us should not engage in making this type of bet, especially since we saw it happen," Mulroy was referring to the $589,000 shortfall the town was subjected to in 2022. This deficit was the only one from 2019-2025 according to the Haddon Township Self Insurance Budget to Actuals History of that same timeframe Teague commented on the original annual IDA proposal from last year, which projected roughly $2 million, and is now at about $2.35 million (due to increased claims) with an approximately $2.37 million max cost. The best guess at renewal costs with IDA is about a $2.5 million projected annual expected plan cost with a $2.9 million max cost, and the HIF proposal is for about $2.1 million (sans the $168,000 penalty fee to IDA, according to Conner Strong & Buckalew's analysis and "no matter who is [the new] carrier" confirmed by Teague).

Teague inquired why there is a $300,000 to $400,000 difference in estimates, and an actuary with Conner Strong & Buckelew, Matthew Rudman, explained that it's common for there to be disagreements between estimates, but ultimately, professionals are providing a best estimate based on the most up-to-date information that is available.

"My concern is that we have a $300,000-plus difference in proposals. One HIF is guaranteed that we're going to have that $300,000 plus savings and the other one IDA could be less, and we could reap some rewards. However, it's not guaranteed. It's hard for me to justify going to the taxpayers and saying that we're going to forgo $300,000 plus savings and we're going to gamble. This year, we're already $300,000 more than what our IDA premium proposal was from last year. We're already over $300,000 that we've gambled and we're going to have to make up for," Teague stated, per the numbers provided by IDA and Conner Strong & Buckalew.

The HIF plan provider will remain AmeriHealth, but the drug benefits program will change from Optum to ExpressScripts, according to Brown.