By James Lomuscio
A benefits consultant tonight gave the Westport Board of Education and Board of Finance good news, saying the school system has bucked regional trends by keeping health insurance costs down, most notably saving $700,000 by switching insurance carriers last year.
Robert Pernicka: good news on insurance costs. WN photo
Robert Pernicka, senior vice president for The Segal Company, which has worked with the school system for the past 12 years, said the board has “done the right thing,” keeping medical cost increases at 1.2 percent over the prior year.
“We’ve looked at the average trend in the Northeast, and you have beaten the trends which are 8 percent,” said Pernicka.
The school board had invited the Board of Finance to the meeting to scrutinize health insurance costs for the system’s 875 employees, plus retirees.
Medical benefits are among the many line items the Board of Education has focused on to keep costs down for the 2012-13 academic year.
The finance board is closely watching Schools Superintendent Elliott Landon’s proposed $100.54 million budget for next year, a 2.5 percent increase over the current budget. About 82 percent of the money is earmarked for contractual salary and benefits obligations.
“It’s nice to come with positive news,” began Pernicka, noting that the school board’s decision to change carriers from Anthem Blue Cross and Blue Shield to Cigna in 2010 resulted in a 7 percent savings totaling $700,000.
“We knew that Cigna would provide the same level of benefits for a better price,” Pernicka said.
In addition, he said the school board moved some of its retirees, all former certified employees more than 65 years old, to a Medicare drug plan lowering costs.
Pernicka also said the Board of Education “is a leader in municipalities for co-pay,” adding that there is a $10 payment for generic prescription drugs compared to $45 for brand names. He also pointed out that a number of prescription drugs come off patent, “you will see more generics.”
For example, the patent for the cholesterol lowering drug Lipitor, which cost the board $83,000 in prescriptions lat year, expires in June.
“You’ve clearly taken steps,” Pernicka said, adding that luck has also played a role in keeping costs down.
“Part of that luck is that you haven’t had those catastrophic claims,” he added, noting that no one can predict high cost medical claims.
That prompted a discussion on stop-loss insurance policies, ones designed to limit claim coverage losses, be they specific or numerous ones known as aggregate stop-loss claims. The latter protects employers against higher-than-expected claims, via insurance carrier reimbursements.
Members of the school and finance boards discussed increasing the stop loss amounts from $175,000 to $225,000.
“Take things slowly,” Pernicka said, advising an increase to $200,000. “Next year at this time increase it another 25 and take those steps. I would feel more comfortable. Customarily I have done $25,000 increments.”
“You can over insure and waste money,” agreed Donald O’Day, school board chairman..
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The presentation received a nod of approval from Avi Kaner, finance board chairman, who lauded the school board for “being able to keep these benefits in check.”
“It was a very courageous step to change carriers,” Kaner said. ” …On behalf of the Board of Finance, I’d like to thank you for your hard work.”
