This May the Mayor came before the Tax Board to announce the City’s intention to switch to self-insured medical insurance. He brought in several experts on self-insurance, a representative of the insurance business itself, and the City team that put together the plan.
For your understanding, a normal insurance plan is based on premiums.
Regardless of your health, you pay a fixed premium every month along with deductibles and co-pays. A self-insured insurance plan is based on services rendered. We pay the insurance company every time someone uses a medical service. The same deductibles and co-pays apply. However, if a perfectly healthy person doesn’t use any medical services then there is no charge. Here is where the savings are reaped.
This meeting also happened to be our final 2011-12 budget meeting so it was well attended by the public. Breaking with usual protocol, the chairman of the Tax Board invited the public that was present, as well as the members of the Tax Board, to take as long as they needed to ask questions about the new plan and its ramifications for the City.
We were happy to see a lot of questions come forward, many from the public. It was also good to hear from several members of the public who were already working for someone who offered a self-insurance program and that they were happy with it. After this extensive question and answer period, the meeting was recessed in order for the members to meet with each other and with the experts to fully examine our options.
The Tax Board voted unanimously, that night, to adopt the new self-insurance plan because it was already being used very successfully by other municipalities, it provided the opportunity for the City to realize a huge annual savings in premiums, and it guaranteed that our city employees, including the school employees, would continue to receive their same benefits, uninterrupted, and unchanged.
In fact, we were unable to find any downside to the plan.
We won’t know, for a few years, exactly how much we will save in the long run because those long-term savings come to us when our average yearly expenditures become less than our current yearly premiums.
However, the City and the Schools are keeping a close watch on the new plan and we’ll have our first real look at results when the budget rolls around again in early 2012. I think we are going to hear good things!
The writer is a Republican running for re-election on the Derby Board of Apportionment and Taxation.
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