Agent says new County insurance savings claims are not accurate

8 months, 3 weeks ago by Bob Gough

New plan goes into effect on Saturday

Adams County failed to give its current insurance carrier notice it was dropping them within the 90 day window as stipulated in a contract and the man who was seeking to keep the County’s insurance business says the County is switching to a plan that will cost taxpayers more.

John Ernst, who worked with the County on its health insurance business since 2005, says recent comments by Adams County Board Finance Committee member John Heidbreder that the bid the Committee accepted last week would save the County $500,000 is incorrect.

Ernst said the County is going to spend about $2.14 million on its insurance this year, which is a far cry from the $2.84 million figure Heidbreder gave to the Quincy Herald-Whig in a story that ran on August 28.

When Adams County Board Finance Committee Chairman John Johnson was asked by QuincyJournal and WTAD News for figures last week, we were given no financials and Johnson said “We felt that they had a package that would be good for us as far as guidance in the future to make decisions as we move into the affordable care act."

“(Cottingham and Butler’s) proposal was proactive as opposed to reactive,” Johnson said. “But we’re in compliance (with the Affordable Care Act). (Ernst) led us through the last couple of years and, as far as I know, we’re in compliance.”

County Clerk Georgia Volm, who administers the employee benefits program through her office, said she has had no issues with the way the county employee’s claims had been handled.

Ernst said he submitted the same Blue Cross/Blue Shield proposal to the County that Cottingham and Butler and another agency, Fauble Insurance, did. Ernst submitted another proposal from Coventry Insurance, which he thought was a better plan with a fixed cost of $161,000 less than the Blue Cross/Blue Shield plan pushed by Cottingham and Butler.

Committee Member Duane Venvertloh had concerns with Coventry as it is in the process of being purchased by AETNA and its bond rating was BBB-. He said Blue Cross/Blue Shield has hundreds of employees at its Quincy office and this is a way to support a company that has committed itself to Adams County and Illinois.

“Blue Cross/Blue Shield will get us better discounts than Coventry when dealing with Blessing Hospital and Quincy Medical Group,” said Venvertloh. 

Venvertloh also said while past claims can be used as a barometer for future claims, it’s truly difficult to gauge claims, especially when you are dealing with self-insurance.

“Everybody who underwrites takes a number form past claims and tacks on 25 percent…Coventry tacked on 10 percent,” Venvertloh said. “They’re trying to buy our business. While we may pay more in fixed costs, if they manage their claims properly we’ll come out ahead. But we won’t know until the year is over.”

Venvertloh said Coventry was one of 11 proposals Ernst gave to the Finance Committee.

Ernst said the consulting Cottingham and Butler is receiving is $35,000 a year, which is double the amount of commission Ernst was receiving. He said that figure is nearly twice as much as his commission was. Cottingham and Butler's policy also has an automatic rollover unless termination notice is given by the County 60 days before the end of the policy.

Johnson said the County is paying Cottingham and Butler that money to “work with us as we move into further implementation of the Affordable Care Act.”

Ernst said the fixed cost for the county’s current plan of $281,000 and the County has also had $1.87 million in claims through August 22 of this year.

The county’s fixed cost renewal in Ernst’s proposal was supposed increase to $335,235 due to the reinsurance company’s view of the county’s potential large health claims for the 2012 plan year. The claims projection for the renewal on a maximum basis was $2.6 million.

Ernst says the Cottingham and Butler proposal has a fixed cost projection of $469,318.08 for the next plan year with a maximum claims projection for BC/BS of $2,408,720.

Ernst provided figures from three plans:

                      Ernst Renewal Current                 C&B  BC/BS                    Ernst Coventry

Fixed              $335,235.84                                  $469,318.08                   $308,076.96

Max                2,633,063.00                                  $2,408,720.16              2,110,671.84

Total               $2,968,298.84                               $2,878,038.24              $2,418,748.80

 

McLaughlin said he had stayed out of the issue because of a long-standing friendship with Ernst. He said he voted against giving the Finance Committee authority to handle the insurance issue without returning it to the full Board. 

As County Board Chairman, he said he signed the new contract with Cottingham and Butler as the Finance Committee unanimously approved it.

“I signed the thing against my better judgment,” McLaughlin said. “The bottom line is the bottom line. I don’t see where we’re going to come out ahead. I believe it’s going to cost us a lot more and any concerns with the insurance company they were looking at were not the issue.”

The County's old policy expires on Friday.