The Town’s anticipated health insurance rate increase is primarily attributed to a rise in high-cost medical claims, representatives from Health Trust reported at the Town Council’s Nov. 14 budget workshop.
The Town’s guaranteed maximum rate for FY17 is 15.5 percent, double the rate increase the Town had anticipated.
“We’re definitely seeing it’s twofold – the frequency of access, where employees are accessing more care; and they’re accessing more expensive care. There are more payments with higher than average claims costs for more intensive treatments,” Benefits Coordinator Debie Clayton said.
In the last two years, the Town’s reported medical claims have increased $1 million.
An indicator Health Trust’s Board considers when setting rates is loss ratio, a calculation of the claims being paid out to the premiums earned, with 85 percent or lower being considered “good.” Londonderry’s loss ratio is at 122 percent, according to Clayton.
She noted the Town would have seen higher rate increases if it weren’t in a pool with other towns that are performing better.
Councilor Tom Freda asked if Londonderry is filing more claims than other members of their risk pool.
Clayton said when they drilled down into the Town’s claims, they found the top five drivers of increases in cost were claims for non-lifestyle related health issues that cannot be avoided.
Health Trust Interim Executive Director David Frydman said the keys to managing the health care increases the Town is seeing are to use the company’s online “smart shopper” program, which helps employees shop around online for the most affordable providers when scheduling expensive procedures, and employee participation in Health Trust’s Wellness Program, which offers incentives to employees who maintain a healthy lifestyle.
When asked if it would be possible for the Town employee pool to partner with the Londonderry School District, Clayton said they think it would be possible for the two entities to combine under the Town.
State Sen. Sharon Carson, R-Londonderry said there doesn’t appear to be any language in the State statutes that would prevent the Town and School District from combining.
Clayton noted in cases where there has been discussion of combining two risk pools to set a rate level, if the merger didn’t result in a substantial adjustment, or it was a dramatic adjustment for one party, the conversation usually ended.
“The most difficult part on the school side would be we would need their claims experience to generate a rate for them to combine,” she said.
Frydman noted a larger risk pool doesn’t always necessarily mean a lower rate – it depends on the claims experience of both pools combined, and it’s always better to have lower claims experience.
The Council directed the town manager to speak with the superintendent of schools to discuss the potential for merging the two risk pools, as well as to speak with Clayton about other towns in New Hampshire that have combined their school district’s risk pool.