Texas County Faces Health Insurance Nightmare

A Texas county is facing a financial decision – continue their self-funded group medical program and go broke or discontinue it. Claims and expenses exceed funding by over $1 million per year. The county refuses to fund more into their plan and instead has bid out the contract hoping to get lower rates/costs. That won’t happen.

This problem is real simple: if funding cannot be increased to cover expenses and claims, then the county needs to spend less on expenses and claims. It is that simple.

If claims are averaging 250% of Medicare or more through their PPO network,  then why not pay just 100% of Medicare? After all, the local hospital relies on Medicare patients. Hospitals do not have to accept Medicare, but most do since they make money doing so (despite protestations otherwise from distraught hospital administrators seeking competitive advantage when negotiating PPO contracts).

So the solution is simple: pay providers less and let the county employees fight  balance billing that is sure to occur. At least that is better than having no insurance at all. Squeezing blood out of a turnip is a hard thing to do.

The county would be wise to offer two plans – one tagged at 100% of Medicare and the other using a traditional PPO network. Employees could buy up to the vaunted PPO – no balance billing plan but would pay a premium price for the privilege. A Cost Plus reimbursement approach would also solve their  financial woes but that would require a strong political backbone.