- Campbell County is moving to a self-funded health insurance model for fiscal court and detention center employees, meaning the county will directly pay health claims instead of using a traditional insurance carrier.
- The change comes as the county faces rising renewal rates and fewer competitive insurance options, with quotes dropping from five or six carriers to just two in recent years.
- Officials say self-funding could reduce projected cost increases to 3–9% compared to 13–14% under a fully insured plan, though it carries more financial risk and will include stop-loss coverage to limit exposure.
Campbell County is moving to self-fund its health insurance for fiscal court and detention center employees.
For an entity to self-fund its benefits and health insurance means the organization takes on the responsibility and financial risk of paying for its employees’ health claims directly, rather than paying a third-party insurance company to cover them.
The fiscal court discussed the matter at its Oct. 15 meeting.
“The reason I think it makes sense to do this now is that we’re big enough to absorb that risk,” Campbell County Administrator Matt Elberfeld said.
Elberfeld said that historically, the county has been fully insured for its medical coverage through various carriers, but over time, the fully insured market has contracted.
He said the county used to receive five or six quotes from Aetna, Anthem, Cigna, Humana, United Healthcare, among others. In the last two or three years, Elberfeld said the county has received only two quotes, and they haven’t been very competitive because there’s not much competition in the market.
The other reason for this move, he said, is the renewal rates. Elberfeld said that when they have a really good year claim-wise —for example, if they have a 65% to 70% loss ratio, which means for every dollar in premiums the county pays, the insurance company pays out 65 cents —the county is still getting hit with 10%-15% renewal increases. On the flip side, he said that when the county doesn’t have a great year, they also get rate increases of 20% or higher.
“As the market has evolved, it’s really started to feel like we give away the upside, because we don’t get great renewals when we have a great year, and we keep the downside, because when we do have a bad year, we certainly pay for that,” Elberfeld said.
For the first year of the county moving to the self-funded model, it will still work with United Healthcare, its current insurance provider, and do what is called an administrative services only plan. That means the county will pay United Healthcare a monthly fee to use its insurance network for claims billing. Elberfeld said employees shouldn’t notice a difference. They will still have a United Healthcare card, and the rewards are all valid; however, United Healthcare will bill the fiscal court for the incurred claims, and the fiscal court will then pay them.
To create the self-funding model, the county will need to acquire stop-loss insurance on the back end to cover significant claims. Elberfeld said that it should go before the fiscal court for a vote in November. He said they have already faced more competition with eight stop-loss carriers to choose from and received four to five quotes back, compared to the two quotes they got from insurance companies.
“Right now, it’s projected that if we were to be fully insured with our latest experience, it would have been a 13% or 14% increase, and depending on what level of stop loss deductible we settle on in our risk tolerance, it could be anywhere from a 3% to a 9% projected increase,” Elberfeld said.
The keyword, he said, is “projected” because with self-funding, you don’t have a guaranteed spend.
With the way the insurance market is moving, Elberfeld said it is not uncommon for counties to move away from a fully insured model.
“In general, whatever you do, you’re going to pay for your losses over the long haul, whether you’re in a fully insured program or one such as this,” said Campbell County Judge/Executive Steve Pendery. “Just take a little more chance to save money out of this one if you’re financially capable of taking a little more risk.”
