Employee health insurance crisis averted

Ten months ago, the Pine Knot News reported on concerns Carlton County officials expressed about the potential for runaway health care costs for county employees starting in 2025.

A high number of claims had forced the county to use 5- and 10.5-percent caps on premiums in 2023 and 2024, with the county facing an uncapped future.

At risk was a higher tax levy and the hard decisions that could have resulted from trying to contain other costs.

But based on what transpired Aug. 13 during the county board meeting in Cloquet, it’s safe to say, “Crisis averted.” At least for now.

The board unanimously approved a move to the Minnesota Healthcare Consortium, one of seven carriers that responded to the county’s request for proposal.

“I feel much better than I did a year ago,” said Gary Jackson, human resources manager. “I expected our last, best, final offers to be across the board in double digits. To get three carriers in single digits is shocking, based on our claims experience. Insurance carriers are losing money on us.”

The consortium, which pools public employers throughout regions of the state, offered a 4-percent increase on premiums in 2025 and a 14.5-percent cap in 2026. Blue Cross’ proposal was 9.5- and 14.5 percent.

“For some reason, our numbers, the size of our pool of employees works within their math,” Jackson said after the meeting. “That’s insurance math, actuarial math. I don’t pretend to understand it. A lot of it is proprietary.”

The county was with the consortium as recently as three years ago, until switching to Blue Cross Blue Shield. The consortium uses Medica, which Jackson said offers a comparable plan to what county employees were currently using.

Still, there’s trepidation, to hear commissioner Tom Proulx say it. “It’s going to create all kinds of anxiety,” he said. “It already has.”

Jackson acknowledged disruption any time there’s a switch in providers. In addition to Medica coverage, employees will be offered a cheaper “narrow” choice that limits employees to using Essentia Health providers.

“St. Luke’s or Mayo would be out of network,” Jackson said of the narrow choice. “People were getting confused thinking that they had to move from the current plan to the narrow network, and not understanding that it was in addition to the [Medica] plan. What we’re giving them is more options; what we have to do is educate them.”

Board chair Susan Zymslony further explained the narrow network option.

“We could have one person in the county take it, or 100,” she said. “It’s their own personal choice.”

Carlton County’s employee insurance pool features 929 enrollees — employees, family members, retirees and some others based on post-employment insurance eligibility, and former spouses covered by state law. Last year, 244 met the out-of-pocket deductible, while 725 did not.

“I wouldn’t say we’re unhealthy,” Jackson said. “You can have a small number of overall people that drive up the claims.”

In the last three years, Blue Cross Blue Shield has paid more for the service than what the county has, between 100- and 130 percent annually. In 2024, that figure so far is 113 percent, meaning Blue Cross Blue Shield has not profited from insuring Carlton County.

It’s hard for officials to gauge just why. “For whatever reason, we’ve been a bad bet since Covid,” Jackson said. “The data is somewhat limited, because it’s all privacy-protected. If we ran a self-insured model, you’d have the granular detail, because you own it.”

But the county is too small to afford going it alone. The benefit of the consortium is that it pools the county with other jurisdictions to help drive down costs.

The county has insurance funding available to enact wellness programs, and holds events, such as an employee health fair and wellness challenges, to address employees’ health.

But the issues faced by Carlton County are not theirs alone.

“It’s a national problem,” Jackson said. “Everybody out there struggles with this — public sector, private sector.”

Health care providers and pharmaceutical companies are inflating costs at 7 percent and 12 percent annually, Jackson said, outstripping roughly 3-percent wage increases.

The county consulted with Arthur J. Gallagher & Co. of Bloomington, Minnesota, to help secure its newest rates, including a 10-percent annual rate cap on dental insurance premiums with Delta Dental.

Jackson said Delta Dental, while expensive, was the gold standard for dental care, and the only carrier that had access to providers in the Barnum area.

“If we went with a different option, we’d leave out everyone who gets service in that part of the county,” Jackson said, later praising Gallagher. “They’re the consultant we use to contain these costs. They’re able to broker a better deal; they’re really good to work with and help us keep these rates down.”