With the rising cost of health care set to have a major impact on the Kenai Peninsula Borough budget, Mayor Mike Navarre has made it one of his top resolutions to address in 2015.
Navarre has introduced an ordinance to appropriate $200,000 to hire consultants to help the borough determine the best course of action to reduce health care costs for its employees and protect the borough’s interests in its two hospitals. The ordinance was on the consent agenda for the Jan. 6 assembly meeting and will be up for public hearing at the Feb. 10 meeting.
The borough estimates in fiscal year 2016, it will spend $24,384 per covered employee and $22,316 per school district employee, according to a memo from Navarre to the assembly.
Navarre said long term planning for health care funding needs to start now.
“It is a huge cost not just for the government and borough but the public as well,” he said. “(Health care costs) are complex with lots of special interests with lots of money in it so it’s a big thing to tackle but we have to do it. It’s the biggest issue we have on our horizon.”
Increased health care costs have also driven up the cost of Public Employees Retirement System (PERS) and the Teachers Retirement System (TRS). Navarre said any ways that can help reduce the cost also could benefit borough residents.
The borough assembly appropriated the same figure in 2011 to go toward health care consultants, but Navarre let the funding lapse at the end of FY 2014.
Navarre said because of the uncertainty of the future of the Affordable Care Act depending on the outcome of the 2012 presidential election, if the act would have been repealed, the money would have been spent for no reason.
Now in his second term, Navarre said his focus is on how to save costs on health care.
“We need to take a more proactive role in looking at health care,” he said. “My plan is to develop a task force and evaluate how the hospital delivers care and what the borough can do to help reduce the cost.”
The consultant’s goal will be to identify ways to reduce health care costs of borough and school district employees using economies of scale or by determining commons costs between the two borough-owned hospitals, according to the memo.
Navarre said he intends to form a working group made up of consultants, business owners, health care providers and various borough personnel to review the issues and develop recommendations for the assembly.
Assembly member Kelly Cooper of Homer said she has already volunteered to be on a group committee.
She said she expects the assembly will support the ordinance when it is up for public hearing at the Feb. 10 meeting.
Cooper, who has seven years experience with the South Peninsula Hospital operating board, said the borough has a lot of employees between the two hospitals and the school district, which makes it critical to reform how health care is administered.
Cooper said all budgets have been monthly over budgeted because of health care claims. By bringing in a professional the borough can look at ways to minimize the cost while maximizing the coverage, she said.
“It may seem like a lot of money but when you add up all the claims of employees, ($200,000) is nothing,” she said. “To get a professional in here to help bring the cost down is worth it. No point trying to reinvent the wheel.”
Next month Cooper and assembly member Blaine Gilman of Kenai will participate in the 28th Annual Rural Healthcare Leadership Conference Feb. 8-11 in Phoenix, Ariz.
Cooper has attended the conference in the past as part of the SPH operating board but this will be her first time as a borough assembly representative.
She said the conference is full of great information for small hospitals that face the same cost problems.
“This is the year of health care reform,” Cooper said. “We have a new governor and senator in Washington, D.C., and with reduced oil prices we have a lot of wants to accomplish with no budget. We have to figure out how to be more effective with less money.”
Dan Balmer is a reporter for the Peninsula Clarion He can be reached at email@example.com.