Healthcare cost limbo for Arrowhead ProCare members

November 30, 2016 GMT

GRAND RAPIDS — As cities across the Range finalize their budgets for next year, those who participate in Arrowhead ProCare — a self-funded insurance pool for local governments — will have no certainty about their insurance premium costs.

Anticipating closure on ProCare’s recent letter of intent to increase premium rates for members by 7.4 percent, ProCare’s most recent board meeting was well-attended by concerned city officials and community members.

However, the board made no clarification on when the increase would occur, or whether it would be more than the projected 7.4 percent.

“We are in this little bit of never never land, or unknown known land, if you will,” said Pat Medure, management representative for the Arrowhead ProCare board of directors.

Part of the delay is due to the impact of Itasca County’s decision to withdraw 160 retirees from the ProCare pool at the beginning of next year.

Initially the board projected a 2 percent increase for the coming year. After they learned of Itasca County’s decision, they built the 7.4 percent estimate on claims — data from last year minus the 160 retirees.

David Kuschel, a senior account manager with Blue Cross Blue Shield, said, “We priced it with them for a 10/1 renewal and without them for a 10/1 renewal, and that is where you had a no-rate change versus the 7.4 percent.”

The board will not be able to analyze the effect of Itasca County’s withdrawal until mid-April, according to Kuschel, and even then it would be a conservative snapshot of the effect those retirees have once they leave the pool.

“So do you do a small increase if you need one, and then maybe another increase at renewal, or just ride it out as it happens and maybe do a bigger increase on renewal?” Kuschel said. “We don’t know,”

Because of this, cities that are members of Arrowhead ProCare will have to finish their budgets for 2017 with an unknown factor in their expense sheet.

“This was kind of a surprise,” said Nashwauk Mayor Ben DeNucci. “It created a bit of uncertainty and has become an unforeseen expense that we have to meet.”

In Nashwauk, they are going to plan for a worst case scenario and hope that it doesn’t come to pass, DeNucci said.

Typically, the city sets a preliminary levy in order to look at budget expenses. As the deadline nears for budget approval, that levy is often whittled down in order to meet essential costs.

Often a proposed 10 percent levy increase will become a 3 percent or less increase, DeNucci clarified.

This year may be different.

“Thus far our budget provides for the essentials,” said April Kurtock, Nashwauk City Clerk. “There are not many items that could be cut. The city may be facing a higher final levy increase than last year, but every effort will be made to avoid that.“

Member cities of Arrowhead ProCare include Calumet, Eveleth, Keewatin, Marble, Tower and Hoyt Lakes, among others.

For the City of Calumet, the ambiguity around this put their budget up in the air.

“Our levy is already set, and we will have to look elsewhere in the budget to pay for the changes,” City Clerk April Serich said.

According to Serich, city employees with also feel the strain.

Employees pay 20 percent of healthcare premium costs, which is not uncommon among other cities in the membership pool.

For both the cities and the Arrowhead ProCare board, the increase was a surprise and a hurdle.

“All parties are in a tough situation that require well thought out decisions” said Kurtock.

Medure echoed her thoughts.

“We just have to get through this,” he said. “I think that seven years ago, when we started in self-insured, that it has worked really well for us. Hopefully, we will continue to have it working in the same way by having it benefit us by staying all together.”