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Consultant says employees, dependants use hospital too much

St. Croix County provides its employees with "rich" health insurance benefits, and significantly more employees and dependants get treatment for conditions such as obesity and depression than would be expected, reported a consultant last week.

Medical insurance costs have been a major obstacle during budget work for several years, and last Thursday the Finance Committee looked at the details.

Sara Hames of Frank F. Haack & Associates presented an analysis of expenses and offered a list of potential cost-saving strategies, including increasing the amount employees pay toward medical coverage and implementing a health savings account plan.

While different people account for the high-dollar claims each year, the county needs to develop strategies to alleviate large future claims, said Hames.

"Right now it looks like people are going in (the hospital) more often than is necessary," she said.

During the year from Nov. 1, 2005 to Oct. 31, 2006, 1,539 people -- 580 county employees and 959 of their family members -- were covered under the county's insurance.

Hames said the group's outpatient claims were 3 percent below the norm while inpatient admissions were 73 percent above the norm for Midwestern government-insured groups of over 200 people. That's not good, she said, because early use of outpatient services can prevent higher costs later.

Either the county's employees are sicker than most people or they prefer inpatient treatment, offered County Board Chairman Buck Malick in summary.

Hames said efforts to save county insurance costs can't just zero in on employees. She suggested that one strategy would be to encourage spouses to leave the plan.

While lifestyle-related claims amount to only a fifth of all claims, in theory they are costs that could be prevented, said Hames.

She said the analysis of claims showed that the number of group members treated for various conditions is above the Midwest norm in these areas: obesity, 167 percent above the norm; depression, 163 percent above norm; diabetes, 78 percent above norm; arthritis, 43 percent above norm; low back problems, 35 percent above norm; and cancer, 24 percent above norm.

The group is 26 percent below the norm for asthma and 3 percent above the norm for heart disease.

St. Croix County offers its employees "a very, very rich plan," said Hames, who offered a comparison to plans offered in Rock and Portage counties, both of which have higher deductibles and higher copays.

"We have virtually no incentive in our coverage to be a responsible user of health care services, and that needs to be addressed," said Supervisor Daryl Standafer, North Hudson.

Hames agreed, adding, "There's room to put some more cost-sharing in there."

"Nothing is going to happen until it becomes the responsibility of the individual to pay for health insurance," said Supervisor Tom Caflisch, River Falls. He suggested raising employees' pay and telling them to use the extra money to pay for their own insurance.

The statistic that jumps out at him is that 73 percent of the claims dollars are spent on 14 percent of the claimants, said Standafer. He wondered if there is a demographic reason or if some people are using the system irresponsibly.

The county seems to have more than its share of sick people on its insurance, but some of these people would have had less medical expenses if they had taken better care of themselves, replied Hames.

One possibility, she said, is to add a mandatory wellness plan with health risk assessments and follow-up coaching. Other cost-savings strategies are to discourage employees from including their spouses on their county plan or to offer monetary incentives for employees not to take county insurance at all.

Committee members asked Hames to proceed with recommendations regarding implementation of a health savings account plan and to add a prescription alternative that would encourage mail orders for drugs.

St. Croix County Health Insurance

Employees covered 580

Family members covered 959

In-network deductible None

Max. out-of-pocket $200

In-network office visit copay $10

In-network hospital paid 100%

Emergency room copay $50

Prescription copay $5/$10

Premium paid by employee 10%

Monthly premium/union employee $1,082

Monthly premium/non-union employee (family) $1,259