Continuously serving Kosciusko County since 1854
It's a case of "sometimes you win, sometimes you lose."
For the Warsaw City Council and Mayor Ernie Wiggins, it's a case of having to deal with some major losses in the city's health self-insurance fund.
For city taxpayers, it's a case of losing through increased taxes.
Wiggins directed all departments' supervisors last month to anticipate a 25 percent increase in their 2000 budget requests to replenish the health insurance fund balance, depleted by some major claims over the last several years.
"Our fund has been hit pretty hard the past few years and our balance was starting to be depleted," Wiggins said.
Wiggins said he hopes the 25 percent increase won't be necessary, and that a more modest increase of 10 to 15 percent will be enough to begin to replenish the city's insurance fund to acceptable levels.
"I'm anticipating being able to cut the increase back down to 10 or 15 percent," he said, while acknowledging the increase will have an impact on city property tax rates.
He said he and the city council will also look at increasing the costs borne by the city employees as well. Currently, city employees pay $1 per year for single coverage and $15 per month for family coverage, with $10 copayments for each doctor's office visit with physicians in the Lutheran Preferred health network. The employee is responsible for 60 percent of the bill for physicians outside the network. All other medical services have an 80 percent insurance coverage in network and 60 percent out of network.
Wiggins said he and the city council also will look into increasing the employee contributions for most other medical and psychological treatment services.
The history bears Wiggins out on the dollar amounts the city's self-insurance fund has had to pay over the last five years.
In 1994, the city's health insurance took in $187,346.06 more than it paid out, but 1995 and 1996 were hard years, with deficit balances of $129,858.18 and $151,307.53. In 1997, the city's fund was again in the black, with a modest $1,228.85 cash flow balance. The fund was again depleted in 1998, with expenditures $15,539.65 more than receipts. So far in 1999, the city's health insurance fund has spent $78,431.66 more than it has taken in.
"Over the long haul, it was the right decision for the city to go with the self-funded insurance," Wiggins said. "But it's a gamble, just like any other insurance. You can save money not having insurance, until you have a claim."
Warsaw's health insurance plan is similar to other Indiana cities and towns that have gone to self-funded insurance, according to Tom DeGuilio, town manager at Munster and an acknowledged expert in municipal self-insurance by the Indiana Association of Cities and Towns. DeGuilio conducts frequent seminars for IACT on the subject.
"We know more and more communities are going to self-coverage of health insurance," he said. "Self-insured is really a misnomer, however."
DeGuilio said the typical self-funded health insurance plan used by municipalities involves insurance coverage for claims over a certain amount. This "stop-loss" coverage entails individual and total city claims in excess of predetermined amounts. Once those levels are reached, the municipality is reimbursed through the insurance carrier for any expenditures over that amount.
According to Wiggins, the city's stop-loss levels are $50,000 for each individual and $600,000 for the city as a whole.
DeGuilio said Warsaw's experience of having higher-than-expected claims for several years is not unusual, and the best course of action is to stay with the plan, allowing the law of averages to catch up with the claims.
"The best thing for a city to do when it's hit with a bad stretch is to ride it out," he said. "As long as you have a good administrator, you can save money in the long run."
