Idaho Cities Pay Extra Into Pool Insurance Program

Nearly 40 Idaho cities are facing double-digit increases in health insurance premiums because a pool insurance program they joined earlier this year was hit with some unexpected early claims.

Cities big and small joined the Idaho Independent Intergovernmental Authority program in March, in hopes of lower annual insurance premiums. Cities signed up with the group program after leaving more traditional insurers like Blue Cross of Idaho.

But the newly formed group received 11 claims in the first 40 days of operation that were unexpected and not calculated into the first-year business model, the Post Register reported. As a result, pool members have had to kick in extra to shore up the reserve account.

Member premiums increased by 19 percent in September and will rise 36 percent in January, the newspaper reported.

“Basically the story is, we had more people who got sick right off the bat than we thought,” said Gary Marks, chairman of the pool’s board of directors and Ketchum’s city administrator. “We know it’s an anomaly because claims have receded down dramatically (since).”

There are 39 cities taking part in the pool, including Rigby, Blackfoot, St. Anthony, Ketchum, Hailey and Stanley.

In Rigby, officials dropped their city’s coverage with Blue Cross of Idaho this year because they thought they could get a better deal for their 20 employees by pooling coverage with the program participants’ 850 employees. But with the premium increases, the pool could cost Rigby significantly more over time.

City Clerk Dave Swager said Rigby received a quote of $9,904 per month from Blue Cross but will pay $15,662 per month through the pool once the 36 percent increase takes effect in January.

Swager said Rigby officials tried to back out of the pool once the problems hit but could not do so without paying a large financial penalty that includes one year’s worth of premiums.

At this point, Swager said he hopes the pool will be deemed insolvent by the state and liquidated so Rigby can rejoin Blue Cross.

“We’re definitely concerned,” Swager said. “We can’t afford $15,000 a month in premiums versus $9,000 in premiums.”

But some officials in member cities still see the value and potential benefits of the pool program. Even with the 36 percent increase, the pool will continue benefiting St. Anthony, City Clerk and Treasurer Patty Parkinson said.

Before joining the pool, St. Anthony employees paid rates adjusted for sex and age, causing the city’s insurance payments to fluctuate widely depending on the employee. As a member of the pool, the city pays a flat rate of $409.15 per month per employee, about $121 less than the age-variable plan under Regence Blue Shield.

“For us, it’s been a good thing because we’ve been able to maintain the plan we’ve always had,” Parkinson said. “It’s leveled out (our rates) and made it a little more predictable.”

Ammon Mayor Steve Fuhriman is optimistic that the increasing premiums this year and efforts to bolster reserves ultimately will save money for the pool and make costs for cities more predictable and affordable in the future.

“It’s in trouble, but it’s not insurmountable or impossible to overcome,” Fuhriman said. “Like any young business starting up, it has its challenges.”