Published: July 11, 2008 01:02 pm      

Commissioners: Consortium best for county

As Cambria County commissioners, we are compelled to respond to Chris Gleason’s July 7 editorial comments saying the county’s work in creating a health care consortium is a bad idea.

What’s bad about building an organization that has the power to be heard in rate negotiations regarding annual renewals, rather than standing alone against whatever the billion-dollar enterprises wish to impose?

What’s bad about an idea that promotes utilizing the most fiscally responsible means possible of administering employee health care without paying for layers upon layers of service providers whose fees add 1 to 3 percent to health care expenditures?

What’s bad about a concept that allows all local governments to attempt to protect themselves as a group from the past high spikes in their annual renewal rates?

We are sure the county taxpayers appreciate such efforts.

The county has worked on many of the items included in Gleason’s negative review of the health care consortium.

Since January 2008, we have run our own wellness initiatives, provided our own employee customer service, and evaluated our own medical loss ratios and monthly utilization reports directly with the carrier in conjunction with the county’s Health Care Committee.

We are just days away from launching our own employee health club network comprised of more than a dozen locally run health clubs in a three-county area. We don’t think the added expense of a middleman is prudent, when we have the expertise in-house to accomplish these goals.

Gleason says that past intergovernmental groups dealing with health care have failed. However, the wave of the future is the consolidation of resources.

The Washington, D.C.-based Government Finance Officers Association (GFOA), in its 2004 report on recommended practices for health care cost containment, cites that, “In order to obtain better pricing and market leverage, governments should evaluate whether to aggregate their purchasing power. This includes (where allowed by law) formation of health care insurance pools, intergovernmental agreements for procurement of prescription drugs, partnerships with private sector organizations, or local government participation in state master agreements.

“Aggregation can also be achieved simply by using fewer insurance carriers or vendors to deliver benefits.”

In the same report, the GFOA outlines that failure to curb health care inflation with efforts such as this “… hampers the ability (for governments) to provide other compensation (e.g., ability to provide salary increases) and other retirement enhancements that employees value.”

In other words, failure to take creative approaches to health care cost containment will result in all excess income of local governments going to fund health care and health care alone.

Gleason indicates that a consortium would disenfranchise hundreds of insurance agencies from doing business with the municipalities and the county. Nowhere in the consortium guidelines does it say that local governments who participate must drop their broker or agency. It merely says that the local government may retain them, but their fees will not be included in the premiums that the county will negotiate on behalf of consortium members.

Why is that a bad idea?

Local governments may continue to pay their brokers, but now their fees would not be hidden in the health care premium, as they have always been in the past.

How does this disenfranchise any of the brokers or insurance agencies?

If they are performing a value-added service, we are sure they would continue to be retained. If not, they won’t. But that is the local government’s call.

Gleason’s own firm, in 2007, as the county’s agent of record, delivered only six insurance carriers interested in bidding on the county’s health care plan. Of those, only three opted to be interviewed, and of those, only two offered quotes. That’s a far cry from hundreds.

Gleason, as Cambria County’s past broker of record until yearend 2007, knows what the county has done on cost containment and employee premium cost sharing. Last year, in conjunction with the county’s unions via the county Health Care Committee, we created increased competition among the insurance carriers that resulted in a 5 percent renewal bid.

In addition, we cut an additional 11/4 percent from the overall premium impact by eliminating $135,000 in broker-related fees, as well as administrative fees of $220,000, thus creating a minimum savings of $350,000 taxpayer dollars for 2008 alone.

All of these, and the new consortium concept, would mean something both short and long term for taxpayers and local government employees. Are all of these bad ideas, too?

This consortium is the local government’s next strategy tier in approaching the purchasing of health care in new and innovative ways.

We anticipated that there would be those who wanted to stop the process before it ever got started. Why does Gleason think the consortium is a bad idea?

Not because it was bad for the county or local governments, but because it is perceived to be bad for his business and that of his associates.

He should have taken the time to look at the consortium guidelines that address issues such as adverse selection before he wrote his July 7 article.

From his article, Gleason sees the only solution to the unrestrained rise in health care costs as reducing employee benefits. He never mentions addressing unnecessary third-party costs, or using economies of scale to more effectively administer programs so that everyone saves.

And he believes increasing local government’s power in negotiating rates is a bad idea.

The end game, as he sees it, would be to sit back, do nothing and continue to engage in the current failed process without even attempting to change the dynamics among the insurance companies, their surrogates and health care consumers.

This past approach would continually put all employers, both public and private sector, in a position where their only alternative is to reduce all levels of coverage under their current plans in an attempt to offset uncontrolled health insurance costs.

Now, that’s what you call a bad idea.

We are grateful to our Union Healthcare Committee for its hard work and cooperation, as well as our human resources directors.

Under any circumstances, Cambria County’s priorities are determined by what benefits our constituents and employees, and that is always a good idea.



The writers make up the Cambria County Board of Commissioners.