‘Obamacare’ reforms result in $60,000 tax increase to county
by Ryan R Rees
The board of commissioners learned the health care reform act, or so-called Obamacare, is going to cost the county about $60,000 in the coming year for new taxes on health insurance.
Matt Bidwell, an insurance broker, outlined the changes to the county commissioners during his overview of their insurance options at their work session last Thursday.
Two new taxes associated with the health care act will be enforced on whichever insurance company handles the county’s health insurance.
One of the new taxes – the health insurer fee — represents 2.5 percent of the county’s premium, or about $36,500 next year. That tax money goes to the federal government to help subsidize individuals buying health insurance premiums, Bidwell said.
The second tax — the transition reinsurance contribution — adds $75 per person per year. That tax will add $23,000 annually to the county’s insurance cost.
Both new taxes will be applied to future county health insurance plans.
The county currently is reviewing insurance options for its employees because the current insurance is due for renewal July 1.
Bidwell presented the commissioners with plans from three different insurers — Blue Cross/Blue Shield (the current carrier), Signa Insurance and United Health Care. Blue Cross proposed an 18 percent premium increase, Signa 23 percent and United almost 37 percent.
The county has not made a decision on which carrier to use, but the commissioners leaned toward renewing with Blue Cross.
Another reason for some of the increase is attributed to increased loss claims by the county last year, according to Bidwell.
“You had a loss ratio of 87.95 percent last year. You had seven large claims that resulted in $600,000 in claims, almost half of your total claims,” he said.
It was 62 percent the previous year, according to Bidwell, which resulted in part of the increases this year.
Bidwell also explained that the county currently is billed $1.470 million by Blue Cross for county employees who contribute $376,000. That leaves the county with a net cost of $1.9 million for health coverage.
Bidwell outlined some of the other major changes to the Blue Cross plan, including an increase in individual deductibles from the current $750 to $1,500.
“In talking with the employees, they said they’d rather have less insurance but not pay more for it. ‘Raise my deductible but don’t make me pay for it’, most said,” Bidwell said.
That will be the major change for employees, who will not see an increase in their benefit costs.
The maximum out-of-pocket cost would go from $2,500 to $6,000 under the Blue Cross plan.
Bidwell also added the proposed new plan mirrors the state employee insurance plan. He explained the new plan would go from an HMO plan to a point of service plan (POS) to accommodate mandated changes in the computer program Blue Cross uses for reporting to the federal government. Some county employees already are on a POS plan.
He said one advantage to that change is that employees could see a Blue Cross/Blue Shield doctor or facility in any state because they would be considered in-network with the county plan.
Bidwell encouraged the commissioners to look at their insurance costs over a five-year period, not yearly, and expect a 5 percent annual increase, which he claimed is acceptable within the insurance industry.
“Obamacare has not been kind to the insurance industry lately,” Bidwell said.
However, BOC Chairman JC Sanford pointed out, “Our employees haven’t had a pay raise in five years. Increasing their health insurance 5 percent is like a 25-30 percent decrease in their income. But I don’t see any options, any alternatives.”