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Insurance change will cut expenses: Program puts more responsibility on city employees to control medical expenses.
[November 23, 2008]

Insurance change will cut expenses: Program puts more responsibility on city employees to control medical expenses.

(Pharos-Tribune (Logansport, Indiana) Via Acquire Media NewsEdge) Nov. 23--In a move to save costs, the city of Logansport has announced it will switch its health care provider to Anthem health savings accounts.

Mayor Mike Fincher announced the change at a board of works meeting this month. He indicated that he didn't want to make the change, but felt it was necessary as the city dealt with reductions in revenue.

"We've got a very good insurance program where we're at, but the problem is we can't afford it," Fincher said. "We're doing this to try and save money and save jobs."

This week, Fincher attended information sessions held to help city employees make the transition to the new plan. Representatives from Anthem and Security Federal Savings Bank, who are working with the city to provide health savings accounts, were also available at the sessions to answer questions and concerns.

In its agreement with Anthem health savings, employees are enrolled in a health savings plan, a tax-exempt health savings account that works like a bank account. Under the plan, the city will contribute $1,500 to an account for single employees, and $3,000 for families in the first year. All employees are required to pay $1,500 if they're single, or $3,000 for a family, to reach the deductible amount required by the insurer. Any medical costs in excess of the deductible will be fully covered. Employees are offered a choice of taking a payroll deduction to meet their contribution to the plan, or they can deposit money into the health savings account at their own discretion. These deposits will be eligible for tax credit.

The savings plans are also structured so that if the money in the account is not used during the year it rolls over to the next. City employees can also use the money for other needs.

Lynne Ness of Security Federal said that health savings plans, like the one being adopted by the city, are becoming increasingly popular among businesses and municipalities throughout the country because of their lower operating costs.

The payments of $1,500 and $3,000 being made by the city to employees opening a health savings account have come from the 22 percent the city has saved by adopting the new plan.

Paul Bittimien, a consultant who has been working with the city on the transition since March, said the plan has given individuals more responsibility over a larger deductible and greater control over where their health insurance can be spent.

Many city employees, however, are not happy with the terms of the new plan.

Mike Rush of the Logansport Fire Department said some firefighters would prefer to pay a little more to keep the old plan.

"It just depends on who you are," he said. "If you're young and healthy and you're not going to use it, you're going to save. But if you are going to use it, it's going to cost a lot more money. There's about a 40 percent margin of people in between that it's probably not going to help."

Rush believes the plan is not bad for all city employees but thinks that many will police their health and health care costs more as a result.

"You're going to be taking more responsibility for your insurance," he said. "It will keep people from wasting money because they won't be visiting the doctor as much.

"For me, I used to order prescription medication every three months by mail. But now that is going to cost too much so I'm going to be going to Wal-Mart, Walgreens and CVS to check on the costs of prescriptions and will be getting the cheapest one I can get. It's putting the responsibility back on the person."

Fincher has defended the plan by reassuring employees that they're still getting a good deal on their health insurance policy. He has also compared the situation in Logansport to other cities.

"Everyone we have spoken to outside of Logansport has said that we've been generous to offer the equity that we have," he said. "We're not the only ones who are suffering here; it's everywhere. And most places don't do that. I felt like we needed to do something to help employees so they wouldn't take it on the chin so badly."

Fincher said that changes to the health insurance policy were only the first of many alterations to city wellness programs planned for 2009.

"This is the first step of a lot of changes," Fincher said. "We're planning on increasing our wellness programs including running smoking classes, obesity classes -- all things that cause problems for insurance companies."

Kevin Smith can be contacted at (574) 732-5148 or via e-mail at [email protected]

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