High deductible health plan for Hoboken?


Frequent City Council commentator (and lightning rod for controversy) Donna Antonucci has done some analysis on how the city may save money on skyrocketing Health Insurance costs. In Donna’s model, the city could theoretically save nearly seven million dollars in costs. I’m sure you can appreciate her efforts enough to present a topic for discussion, but be reminded that it’s just one person’s opinion which may or may not even be possible to implement. Keep in mind the city can’t do anything unilaterally, and that in the State of New Jersey the public employees union negotiation system is rigged in favor of the employees. Arbitrators often block efforts to reform things like employee benefits plans.

First, Donna’s view followed by a counterpoint from a health insurance expert (after the break):

An ambitious plan indeed

hoboken-health-care-deductibles.jpg“The town can save $6.8MM over 2007/2008 levels by going to a High Deductible Medical Plan (HDMP) and asking for reasonable contributions to premiums that are on a scale based on pay. Per a commercial insurance broker, their are towns that are asking employees to contribute to premiums and he strongly recommended that we do it as a percentage of premiums rather than a flat fee. He indicated that contributing to healthcare changes people’s behavior 1) by seeking reasonable cheaper choices like the generic over the name brand drug 2) becoming more healthconscious.

For example, some organizations differentiate between smokers and non-smokers. Smokers have to contribute more. There will be some who quit smoking as a result which is good for everyone.

A HDMP also allows the enrollee to get a Health Savings Account (HSA). This is an account that works like a Roth IRA. Contributions are tax deductibe, and the account grows tax free and money comes out tax free.”


(High deductible, continued…)

stethoscope.jpg“Attached please find a white paper that I gave to the Uniform Police Rep (Vince Lombardi). I do think that because of the time value of money, this can be very meaningful for our more junior employees. It allows them to have some money in their own name rather than solely relying on the pension. Per Paul Zane Pilzer, author of The New Health Insurance Solution, the average 35 year old today, will need $200K for his retirement for un-reimbursable medical expenses. In my example it shows how someone who joins the Police or Fire department at age 35 can accumulate $150K by retirement. Just think of what that can be if they start at 25.

Also attached is my analysis on how this can benefit the tax payers and how I arrived at the $6.8MM savings.

These changes in our health plan offering plus the MANAGEMENT cuts suggested in my Police and Fire layoff EXAMPLES comes to over $14.7MM in ongoing savings. Judy has eliminated approximately 82 positions through normal attrition, provisional worker cuts and disciplinary actions. I do not know how many of these are from the Police and Fire management ranks, i.e., those that were counted in my layoff EXAMPLES but if you conservatively assume 50 do not overlap at average total cost including pension and healthcare costs of, let’s say, $90K that’s an additional ongoing savings of $4.5MM. All 3 items together is $19.2MM. Remember, we need about $25MM in cuts to get back to 2007 tax rates.

We can also trim the recreation program by using volunteers as referees and coaches and asking participants other than those whose household income is less than $40K (half the median income of $80K for Hoboken) to pay a small fee to offset costs. The recreation budget is $9.2MM. I am sure we can cut that in half by doing what is suggested above and I believe that is conservative. That’s an additional $4.6MM or $23.8MM.”

Baby steps?

Hoboken411 ran Donna’s analysis past someone with more experience in the field, who pointed out there was no benefits plan design included in the analysis, and that the suggestions made are covered by labor negotiations and can’t simply be implemented immediately like in the private sector. That is a huge barrier to entry for such a proposal.

Our expert also noted HSA’s use the stock market to grow, and in case you haven’t noticed it hasn’t been growing much lately. They added that this plan is likely too big a jump from the “all that and a bag of chips” plan the city employees have now, and that there are intermediate steps that can be taken that would also save significant money that may actually be able to be done now without the firestorm of inevitable pushback that Antonucci’s suggestions would invite.

What do you think? Figured it’d be a good idea to put this out there to spark discussion, so please comment below.

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46 Comments on "High deductible health plan for Hoboken?"

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Judy has eliminated 82 positions? Please be specific on this because I have no knowledge of same. Can this be verified and by whom?


I just implemented a high deductible plan at my job we had to cut costs there was no choice. Funny had to cut costs at work but the town I live in just spends and spends…guess someone thinks the people here are recession proof.


[quote comment=”143603″][quote comment=”143598″][quote comment=”143593″]P.S. Union membership has dropped everywhere except the public sector because unionized companies by and large can’t compete (either on a price or quality basis)!!! Basically unionized companies make products that just plain suck.


gotta love opinions stated as facts….[/quote]

Unionized companies make great products, you just have to pay a whole lot more for them than those made by non-union companies. That is why the average GM car costs almost $2,000 more than a comparable Toyota car built in this country (fact provided by GM – and backed up by just about any article you read on the topic – not even the unions dispute this fact)[/quote]

sure, it has nothing to do with the idiocy in charge at the company:


[quote comment=”143672″]Check out Paul Zane Pilzer’s “The new health insurance solution”. He stated in there. Also read his book called the Wellness Revolution. He talks about education and well healthcare. It was also presented to me as an employee of American Express when they had to make what felt like dramatic changes to our healthcare – i.e., when they first offered the HDMP, started charging more for dependents than employees. There are also studies that were done on some European countries that offer universal healthcare. Since you have to wait unless it’s an emergency many people try to stay healthier. There are also moras that influence people’s behavior. Ever notice there are less obese people in Europe? It’s gross to be obese. You would never eat bread with pasta as those are two starches. The autobon doesn’t have fast food at rest stops as it’s just not considered food. Unbeknowced to many, many europeans still have private insurance which they consider very expensive. Many do this just in case they need to cut the line. It’s inexpensive in comparison to our but they foot the whole bill.[/quote] some Europeans supplement their provided insurance with some private insurance. there’s studies and reports that say that it is still cheaper than what we pay as americans for our healthcare. as for bread with pasta – i was in all parts of italy, and i can assure you they eat their bread at dinner. they just eat fresh food without all the garbage… Read more »

[quote comment=”143671″]I think private companies should have different classes of employee based on risk, and push the higher premiums on those that smoke or overweight or other controllable issues. Deductions to those who workout and can prove a certain level of general health (using blood tests showing ok cholesterol etc). That would have the side effect of encouraging people to be healthier AND reward those who do so.[/quote]

that gets pretty slippery though. should people who live in NYC pay more than people that live in upstate NY? i’d love for them to be able to do some things to improve, but it gets dangerous fast.