Baum: Open the books on insurance; Middletown's health-care strategy must be examined

The following Op-Ed was written by Middletown Democratic Candidate for Township Committee Linda Baum. The Op-Ed addresses the high cost of Middletown's "double-platinum" self-insured health care plan that has an average cost of $31,000 per beneficiary (under a family plan) enrolled.

The Op-Ed appeared in Wednesday's printed edition of the Asbury Park Press and online HERE:


Middletown’s $9.3-million tab for health benefits has drawn attention recently, following a decision by the township to reduce hours for 25 employees who otherwise would have qualified for future health benefits under the Affordable Care Act (ACA).

Linda Baum

My research shows that Middletown’s cost for medical benefits has risen 50 percent in the last decade. Prescription payouts have risen 100 percent during that time. Steady increases long pre-date the ACA, to which officials are pointing as a cause.

Failure to address this issue falls squarely on the shoulders of our local government. Township Committeeman and current Mayor Gerry Scharfenberger, a Republican, has been in office since January 2005 and has had ample time to do something about this.

Former Committeeman Sean Byrnes, a Democrat, had proposed forming a task force of medical and insurance professionals to review and make recommendations with respect to the township’s health coverage, but the administration’s Republican majority rejected the idea.

Further, the township will not say who’s enrolled for benefits, another thing that needs review in order to get costs under control.

Knowing the names is not just a matter of weeding out people who should not be covered. We should be able to determine, for example, if retirees are properly categorized as retired vs. actively employed to ensure proper coordination of coverage. The information recently released by the township — minus the names — shows at least one person listed as “active” who is living across the country.

In July, a lawsuit was filed in state Superior Court to obtain the names of those enrolled for health benefits with Middletown Township, which claims that as a self-insured entity it is not required to release the information. Other local governments disagree. Earlier this year, Wall Township and the Wall Board of Education, both self-insured for health benefits, released the names of enrollees. And just recently, Monmouth County, which also is self-insured, did the same.

Middletown officials claim that they save money by self-insuring for health coverage, but it’s not clear how that was determined. A health insurance cost comparison prepared by the township compares Middletown’s cost of medical and pharmacy claims — self insureds pay claims rather than premiums — to the premium for a comparable plan through the State Health Benefits Program.

The comparison is faulty in that township enrollees who have other than single or family coverage — the two middle tiers are “employee and children” and “employee and spouse” — are dumped into the higher-premium family coverage bucket in determining the SHBP premium.

This improper distribution of enrollee counts inflates the estimated SHBP premium.

In addition, the analysis doesn’t reflect that one third of enrollees are retirees, for whom premiums are lower if Medicare is primary. Again, the effect is to inflate the estimated premium for the comparable coverage. The township’s self-insured cost would look better in comparison.

The poor math could easily result in an inaccurate conclusion about which insurance option is less costly for taxpayers.

Also, it is important to recognize that comparison of plans and plan costs should be done separately for medical vs. prescription coverage. The best insurance option for one may not be the best option for the other, so we should shop for these coverages separately. Wall, for example, self insures for medical benefits but has private insurance coverage with Medco for prescription benefits.

Because substantially similar benefits can vary widely in cost, it’s possible to achieve significant savings for taxpayers while still providing excellent benefits to township employees, including the 25 who would have qualified under the ACA.

Certainly, given the magnitude of the expenses we’re talking about, this is an area that deserves thorough review.