A while ago, I wondered here if anybody had done the math to determine whether eliminating buybacks would save our cost money.

I presume that the city spends less on each buy-back than on supplying health insurance for that individual. There is also, I think, an incentive to keep double insurance coverage, and I'm having a hard time thinking that people will give it up for nothing in return.

In principle, this seems great, but If everyone who is now getting the buy back takes the insurance, the city will lose money. Or am I missing something here?

Did Warwick figure out how many people would have to forego the buyback before they come out ahead? I hope so!

Thomas, Yes, Warwick did, but I snipped out that part of the story. Here it is:

The question was posed to the council as to whether or not the action would actually cost the city money because those people who are currently not taking health insurance would then take it.

But Steven Merolla (D-Ward 9) said that was an unlikely scenario. In most cases, the people who opt out of the health insurance policy have a spouse who also has the city’s plan. Because the city is self-insured, its costs wouldn’t increase.

“Why would someone take a health insurance policy they didn’t need? For spite,” asked Merolla.

Merolla also said there won’t be many whose spouses would opt out of a company health insurance plan in favor of the city’s who haven’t already done so.

“I don’t think there are many companies that are offering the Cadillac of all health care plans for an $11-a-week co-pay,” said Merolla.

If the city is self-insured, it costs no more to have everybody on the health plan. Benefit costs will be the same either way. The only additional cost will be for the administration fee. At $75/person/month, that's $900. If having double coverage provides a higher level or better (more costly) benefit, there may be an extra cost for that. I don't know if that is the case in Warwick or anywhere.

If the buyback costs more than $900, there should be savings, so let the employee have their own plan!

Marc,

Thanks for the quick answer! I have to say, though, that I'm stunned by one part of it, and confused by another.

Councilman Merola says " the people who opt out of the health insurance policy have a spouse who also has the city’s plan."

HUH??? In every case where a city employee opts out of the insurance, the spouse is also employed by the city? That's amazing! How many people is that? If it's more than a few, maybe Warwick's biggest problem is really nepotism. If it's only a couple, the response to Warwick's "reform" might be a yawn.

2. Are you saying that under Warwick's self-insurance plan, the costs are not related to the number of people insured? (As Ben says, "it costs no more to have everybody on the health plan"). That seems strange to me. Unless, again, the number insured doesn't change because they're all members of the same city-employed families.

3. “Why would someone take a health insurance policy they didn’t need? For spite,” asked Merolla

Maybe this doesn't apply to the Warwick situation, which still confuses me, but there is good reason to have double coverage. My spouse and I have health insurance through our respective employers. Her employer allows her to waive the insurance and recieve cash in return. (This is a PRIVATE company). I'd like the cash, but keeping the double coverage gets us more benefits (double the payment for kids' braces, for instance). We keep both coverages because it's rational to do so, not out of spite.

Hmmm.. oh yeah, this too....

If keeping everyone on the insurance roles doesn't increase the cost, how could keeping the double insurance be "out of spite"?

Curiouser and curiouser....

OK, this is embarassing, but I now see Merolla said, "most cases", not "every case". I was careless. My point remains the same, however.

In the real world, where employees make reasonable contributions to the premium, the copay creates a financial disincentive to take an unnecessary insurance policy

Tom,

I would say keep the double health insurance coverage and keep fingers crossed that you’ll never need to use the double coverage. Also goes for crossing guards.

Rhode Island is ranked (44 out of 50) as one of the top 10 sickest states (tracking just 7 diseases) in the nation by a recent Milken Institute “An Unhealthy America: The Economic Burden of Chronic Disease” study of all 50 states. Maybe this is also why healthcare cost so much in Rhode Island.

http://www.milkeninstitute.org/

Thrash- Of course there is no incentive to have an unnecessary policy. That's what unnecessary means. Your point seems to be that our premium shares should be raised to the point where it's not cost-effective for us to have both policies. Fine, but that's a political or economic argument, not an argument about the "real world".

Why not just say, "In the "real world" employers don't provide health insurance at all"?

Ken- That's a pretty interesting stat regarding the health of Rhode Isanders If true, I wonder why that would be so. (FWIW, I prefer Thomas here. There's another Tom and it keeps things clearer,)

I think employers should be legally mandated to supply homeowners and auto insurance policies as well.

Thomas,

New England is the birth place of the industrial revolution!

Problem is our forefathers did not really know everything about the chemicals and compounds created when mixed! They just dumped the waste in the waters, ponds, streams, pools and ground to rid themselves of unwanted byproducts!

In Massachusetts, just North of Hopkinton, there is the first mill fabric dyeing and related unwanted byproducts dumping site documented in the US known to be directly causing population medical problems including early adult deaths (1-2 documented) of teens that swam in the mill pool waters.

RI has a superfund toxic cleanup site plus many other smaller sites.

We are living on historical industrial revolution unwanted byproduct waste!

Check the National Cancer Foundation map for cancer types. New England just glows with numbers!

I'd really like to bite on that, Greg, but I think I'll just wait to see what Marc (or anybody who knows) has to say about why Warwick's city employees are all related to one another.

"You can become a crossing guard at 18, work 5 hours a week (with full health benefits), retire after ten years at the ripe old age of 28 and carry your crossing guard health benefits for life. Gotta love it."

For a "position" that since the invention of the automobile has been filled by volunteers of all ages.

In a state that specializes in the waste, fraud and abuse approach to the spending of tax dollars, this level of compensation for crossing guards take the cake.

Thomas,

If your family has lived in RI for a great number of generations, it’s all about family.

Missed my point Thomas. The unreal world I refer is the unions where employees are normally not required to pay for a portion of their insurance.

In the other world, where most employees do pay part of the premium, the employees don't take two policies because they would be paying 2 copays. If it is unlikely you would need them both, why pay?

You are the only example I have ever heard of someone taking two policies in the private market. How much is the copay for each? And you are also the only person I have ever heard of mention a private sector employer that pays a buyback – might be too much for coincidence – strains your credibility.

For many years my wife and I opted both for family medical plans and then would compare benefits of each plan for the year till both of our plans matched benefits. Then it was comparing co-payment costs.

I eventually opted out of employer family medical coverage because my wife’s plan was superior to mine.

The so called buy-back was actually the 2.5% of my payroll that was automatically withheld as co-payment returned to me at end of year (was great for Christmas shopping!). My employer was able to invest my 2.5% contribution for 11 1/2 months and keep the interest. Multiply that by all employees contributing.

So if Warwick wants to do away with the buy-back system, they should first check how they are financially doing business.

Thomas,
What nonsense is this?: "I'd like the cash, but keeping the double coverage gets us more benefits (double the payment for kids' braces, for instance). We keep both coverages because it's rational to do so, not out of spite."

You don't get paid twice for the kids braces. The dentist will only submit the claim once, or he is committing fraud.

You are a joker. It makes no sense to keep anything but the best policy. Furthermore, you have be a liar when you have to answer those questionaires to your health insurance provider which asks if you have other coverage; because believe me they will all fight to have the other one pay the claim if you tell the truth.
Maybe its people like you who are driving these costs up.

It seems like maybe it's time for someone who's actually WORKED in the medical insurance field to pipe up here instead of watching the rest of you bounce off the walls of inaccuracy.

It is NOT unheard of for a family to have two healthcare plans. It used to be more common when they were cheaper, but it still happens.

Why?

Because if you have an 80%/20% plan and your PRIMARY insurance coverage pays the first 80%, you can then submit the remaining 20% bill to your SECONDARY coverage and they will pay it. Not illegal. No fast ones. Perfectly normal. No fighting among insurers.

Please return to your normal spouting off with no knowledge.

Thank you, Greg.

Oh, and thanks to Ken also.

Ken's post, however, makes me realize that I may have mislead people here, and I may have been confused all along about the city worker buyback program. If so, I apologize.

Do the city workers get MORE than their premium co-share back if they waive insurance? That's all my family gets back. So, perhaps it's not really a "buy-back" for us, it's just that we get to keep the money that we would have paid in premiums if we took the insurance. I thought that's what happened in Warwick.

If the city workers actually get back more than their premium contribution, I am surprised and apologize again for my confusion.

However, the question still remains whether it's rational for them to give up the insurance and how many will do so, and how much the city will save. It still might be rational for the city to pay them off to waive the insurance, but that depends on the economics of it, which it seems I don't really understand.

What's really sad is a Democrat council ahead of the curve while a "Republican" mayor bends over for the union slime. He shouldn't even THINK about running in a primary. We might as well turn it over to Looney Left Liz or Sissy and let them take the heat as the state collapses like an airless balloon.
I will state right now-if he is the November candidate I vote Democrat.

If he is the candidate in November, no matter who you vote for you'll be voting Democrat.

If the Laffey crowd is already entering conniption, Avedesian's doing something right. The thought of all these conservatives planning to vote for, say, Ciccilline makes me chuckle.

How about the city council people that serve 3 terms and get coverage for life? The city council people don't want the tax payers to know they go to two meetings a month get paid and they pick on crossing guards that work part-time. Isn't their job part time and now we should look into cutting their benefits.
Jo

I hope these comments keep on rolling