County must pay Blue Cross $1.8 million Workers worried about layoffs submitted more health claims

August 18, 1993|By John Rivera | John Rivera,Staff Writer

Shortly after County Executive Robert R. Neall announced that he would reorganize county government to eliminate contractual employees in spring 1993, health insurance claims skyrocketed. Now, the county has to come up with $1.8 million to cover what it underpaid Blue Cross/Blue Shield.

"'I think that's what started it: . . . not knowing what was going to happen," said Donald Tynes, county personnel officer.

County officials said employees facing the prospect of losing their health benefits figured they had better take advantage of them while they could.

Union officials agreed. "This is nothing new," said Helen Simpson, president of the American Federation of State, County and Municipal Employees Local 2563, which represents the county's secretarial and clerical workers. "It's something that happens with the knowledge of a layoff forthcoming."

The county must make the payment to the health insurance carrier by Oct. 30. County officials said they will come up with the money, despite a tight budget.

"It's going to challenge us," said Thomas Mullenix, a budget analyst. "I think it's doable."

He said the county could use part of its budget surplus from the fiscal year that ended June 30 to make up the difference. However, that figure will not be determined for several weeks.

Under the county's arrangement with Blue Cross/Blue Shield, the insurer provides an estimate for health care costs for the year and the county prepays 87 percent of that amount, then settles the difference at the end of the fiscal year.

The arrangement usually works to the county's advantage, because it can keep the remaining 13 percent of the estimated cost in an interest-bearing account.

Last year, the county received a $415,801 refund, which it placed in a reserve account and will use as partial payment for the current underpayment.

Mr. Mullenix said the actual claims usually come within 2 percent or 3 percent of the estimate. In the fiscal year just ended, the estimate was $16.1 million, but the claims reached $17.9 million, a difference of 11 percent.

"This is extraordinary, not only in the amount, but in the percentage difference as well," Mr. Mullenix said.

Even ignoring the jump last year, the county's share of health care costs has risen steadily over the last five years, from $9 million in 1988 to $13.6 million in fiscal 1992.

The county pays 90 percent of the cost of health insurance and employees pay the other 10 percent, an arrangement that is more generous than those in other counties or in the state government, Mr. Tynes said.

He added that officials will have to re-evaluate the county's financial position next spring before deciding whether to retain the current arrangement or increase employees' contributions to 15 percent or 20 percent.

If the county tries to increase employee contributions, it can expect a fight. "Health care is very near and dear to everyone," Ms. Simpson said.

"We have not had [cost-of-living allowances] in three years," she said. "With the federal government looking into health care reform, it may be a bad time to look into health insurance. We should wait to see what the federal government does first."

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