Could Insurance Pools Save Counties Cash?

Could counties save money by joining other government jurisdictions in pooling public employee health care? Potentially yes, according to the National Conference of State Legislatures (NCSL):

Some public purchasers regularly try to lower overall administrative costs and negotiate lower prices from providers and insurers using their large numbers of enrollees as a bargaining tool. Health costs are controlled by using size, volume purchases and professional expertise to:

  • Minimize and combine administrative and marketing costs;
  • Facilitate negotiations with health insurers for more favorable premium rates and broader benefit packages; and
  • Relieve individual employers of the burden of choosing plans and negotiating coverage and payment details.

In addition to cost containment and simplification, multi-agency purchasing arrangements also can give employees more choices of health benefit plans.

Such pools can result in savings for administrative costs of up to 15 percent for smaller employee groups. Nearly half of all states authorized other government employees to join into state insurance pools in 2010, according to the NCLS report. New Jersey has one of the most extensive health insurance pooling programs – it’s State Health Benefits Program allowed local jurisdictions to join as early as 1964.

Relatedly, MACo is currently exploring options for counties to pool workers’ compensation insurance, and has issued a Feasibility Study Request for Proposals.