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Health insurance costs skyrocketing

SUMMIT COUNTY – Already grappling with budget constraints brought on by falling sales tax revenues, Summit County government now must find another $1 million in 2003 to cover the dramatically escalating cost of its health insurance.

In 2002, human resources director Scott Vargo estimates, claims will total more than two times the amount filed in 2001. He hopes this isn’t the start of a trend.

Vargo budgeted $1.9 million for health insurance claims this year and expects to be over budget by $500,000.



“We would hope the year 2002 would be something of an anomaly and 2003 would come back to normal,” Vargo said. “What we’re projecting right now (for 2002) is about 32 claims beyond $15,000, or about $1.2 million. In 2001, we had 18 claims beyond $15,000 – about $450,000.”

The county insures 840 people, 360 of whom are employees. The remainder are spouses and other dependents.



Vargo said he isn’t sure why claims have risen to the current level.

“The county is aging a little bit – certainly that’s part of it,” he said, “and health insurance costs are on the rise. A claim that two years ago may have been $12,000 is now maybe $16,000. But this ($1.2 million) still seems to be an excessive amount for whatever reason.”

The bulk of the claims aren’t for extremely expensive incidents but for what Vargo calls “mid-sized claims, between about $15,000 and $60,000.”

Those represent such medical procedures as knee surgeries or a birth with complications that requires a short stay in a Denver hospital.

Depending on which plan employees have, their out-of-pocket health insurance costs could rise in 2003. But some employees actually will see a decrease, Vargo said.

“The out-of-pocket costs, in terms of premiums, will really vary,” he said. “If you’re on the highest cost plan, your premium is actually going to be slightly lower. However, if you’re on the lowest cost plan, which was the most heavily subsidized county plan, that one is going to see a more significant increase.”

But the county isn’t letting its employees bear all the added expense, Vargo said.

“In an effort to keep premiums at a reasonable and competitive level, the county is picking up a greater share than we have in the past,” he said. “And even though we’re changing the design of the plan, there still is a great deal of protection there for people.”

Vargo doesn’t believe the changing health insurance costs will impact Summit County’s taxpayers, but it definitely makes creating the 2003 county budget an even more difficult task.

“(Increased insurance costs) are certainly an equal challenge to our declining revenue estimates,” said County Manager Ron Holliday, noting that county sales tax revenue estimates are down by about 9 percent. “You put those two together and we have a king-sized problem.

“When we’re trying to find some budget equilibrium, we’ve got to find over $1 million to fund the additional health costs.”

That amount of money, Holliday said, is about 5 percent of the 2002 budget. But health insurance isn’t something on which the county can skimp, he said.

“A reasonable health insurance benefit is one of those basics that we, as a 21st century employer, have to provide the work force,” he said. “So, we’re passing along a sizable chunk of that cost to each employee, but it’s a shared responsibility between employer and employee.”

Jane Reuter can be reached at 668-3998, ext. 229, or by e-mail at jreuter@summitdaily.com


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