Cities look for way to stabilize insurance rates

Havre will participate in a study by the Montana League of Cities and Towns to investigate the possibility of a statewide health and dental insurance program for employees of participating cities.

The possibility of a study came up at a health insurance session at the league's annual conference in Billings last week. Havre Mayor Bob Rice and City Council members Jack Brandon and Tom Farnham attended the session, along with representatives from about 60 other Montana cities.

Alec Hansen, executive director of the league, a nonprofit association that includes more than 120 Montana municipalities, said today that if the program is found to be feasible, it will help stabilize insurance rates for municipalities by spreading risk among a larger pool of employees and reducing administrative costs by taking advantage of economies of scale.

Hansen said health insurance costs have been going up, and the idea is worth a shot.

"Hopefully this thing will work," he said. "It's a serious problem and maybe there's a way of dealing with it."

He said similar efforts have been tried successfully in California, and that the league will ask a California-based group, Legacy Insurance Services, to help set up the Montana program if it is found to be feasible.

Havre saw its insurance rates rise by 45 percent this year and is involved in a dispute with the union representing Havre police officers over how much of that increase the officers should pay for.

Havre, which runs its own insurance pool, would probably see insurance premiums drop if the league eventually formed the insurance pool, said Brandon, who chairs the City Council's Labor Relations Committee.

"It's an idea, and it's really well worth pursuing," Brandon said.

The only drawback he could think of, Brandon said, was that if the city were no longer self-insured, it would have less authority to make decisions about health insurance.

Rice said today the presenters at the session said the plan has been successful elsewhere, but added that he will not know if he supports the idea until he sees a list of rates to compare to what the city is now paying.

"They felt like from previous cities they've done it with, it's been very beneficial, but until I see something in writing I'm not going to make any judgment on it," Rice said.

Hansen said the league will begin by sending out a questionnaire to every Montana city asking for information about the number of employees and health insurance claims. That information will be collected by the end of 2003.

Then the league will analyze the figures and determine if the program is feasible. If it is, Hansen said, the league will spend the spring designing the program with the help of Legacy Insurance Services.

The costs will be divided among the cities participating, he said. If the program ends up being designed, it would cost Havre about $1,000, he said.

If the program is found to be feasible, Hansen said, the league will try to have it ready by July 1, the beginning of the next fiscal year.

Hansen said the league will have to solicit proposals for claims management services, and that it will try to make sure local insurance agents - like the one that runs Havre's insurance pool now - are not squeezed out.