Council Shops Like A Business

September 3, 2008
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GRAND RAPIDS — Having a third-party benefits negotiator that can cut the cost of an entity’s health insurance has become more vital to an organization that wants to attract new employees and retain valuable ones while premiums continue to rise and budgets get tighter.

And not just in the private sector, either.

The Grand Valley Metro Council is the latest local governmental entity to undertake the search for one. It is the second time that the council has gone shopping for a benefits manager, and the outcome of the search resulted in the council changing managers for the second time in a few years.

“They looked at the needs of the organization. They looked at, most importantly, the demographics of the organization and tried to put all those pieces of the puzzle together. That’s what we’ve done over here,” said Don Stypula, GMVC executive director.

The “they” Stypula referred to is Hantz Financial Services, a division of the Hantz Group that is based in Southfield. Hantz Financial Services administers group benefits, including health insurance plans, from its 44th Street office in Grandville. The council went with Hantz earlier this summer.

Stypula said a change was necessary because he felt the council’s previous benefits manager wasn’t providing much in the way of service to the organization. Stypula said he contacted that individual this past spring, a few months before he put the council’s annual budget together, and asked him to evaluate the costs and coverage of the various health insurance plans in the market. But he said what he got in return was a lot less.

Stypula said his manager only looked at what the council was paying its provider, Priority Health, and then gave him a new and higher Priority quote for the coming year. Stypula expected more.

“There was no real effort that we saw in trying to help us evaluate what are the best choices. We’re at a stage right now where we have been with Priority for probably about six years. I’ve been here only five, so we’ve been with them long enough that we have somewhat of a long-term relationship with them,” said Stypula.

“But it also makes sense for us to do an evaluation, using this professional administrator to do that due diligence, as it were, to make sure that we’re getting the best insurance coverage for the most attractive rate that we can find,” he added.

The evaluation kept the council with Priority for another year.

For all but one of the past six years, the Metro Council had an average premium increase of 8 percent. GVMC, though, was able to chop its annual insurance cost by 15 percent three years ago when the industry moved to an age-based rating.

The council’s latest policy cuts its per-employee premium rate $130 a month because it gives workers an option to waive benefits and receive half the value of their premiums. About a third of employees went the waiver route, which lowered the average employee premium from $826 a month to $695. The council will pay $11,130 a month for employee coverage during the upcoming fiscal year, which begins Oct. 1.

But the new policy isn’t all good news, as the planning agency also will increase employee co-pays for office visits and prescriptions, lower the hospitalization and diagnostic coverage, and drop the vision coverage to make the policy fit its budget.

In other words, the council made all the health-insurance policy changes that small businesses have to make.

“This place does operate like a small business. I have about 21 or 22 on staff here full time, and just like any small business, we have to be able to provide the best coverage we can and the best coverage we can afford without breaking the bank,” said Stypula.

“But I also want to have the ability to recruit new people and tell them that we’re going to take care of you, we’re going to provide you and your family with insurance coverage with some co-pays and some deductibles. But looking at the overall picture in West Michigan, we’re providing some pretty good coverage and we’ve been able to recruit and keep some pretty good people.”

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