Mayor: health care costs may increase

Posted: Sunday, January 23, 2011

Despite the U.S. House of Representatives repeal of the Patient Protection and Affordable Care Act Wednesday, public administrators are still calculating -- and accounting for -- the impact the health care reform law will have on local government funds.

Kenai Peninsula Borough Mayor Dave Carey said that because of changes the borough had to make to its employee health care coverage, costs are estimated to increase $230,000.

"We had to by Jan. 1 have any dependent less than 26 (years of age) added on," he said. For the borough that meant 35 new people covered under it's self-insured plan.

Before the national health care reform legislation passed, dependents up to the age of 19 could be covered by their parents' insurance and if in college could stay enrolled until age 23.

The new legislation requires insurance companies to allow dependent children to stay on their parents' insurance policies until age 26. The children can't have jobs that offer insurance, and they must be claimed as dependents on their parents' taxes.

Adding those newly covered dependents as well as additional changes to the insurance co-pay, caused the increase in borough's health care expenses.

"There are a number of services that now we pay totally where as in the past we paid part of them," he said.

Carey said the increase in costs would have to come out of the borough's fund balance, which currently sits at nearly $20 million.

Calling the health care reform law an "unfunded mandate," Carey said the government is requiring the borough to fund coverage for a bigger group of people and having to pay for it with no additional federal funding.

This estimated increase is in addition to the already rising insurance costs for the borough. Last year borough costs increased to some $19,000 per employee from roughly $15,000 per employee in 2009.

The same thing is happening to the Kenai Peninsula Borough School District, where insurance costs are estimated to increase by about $1 million.

"We added 154 new people, young adults up to the age of 26," said district Superintendent Steve Atwater. "With all these new dependents on the bill it's probable it will increase the costs."

Recently the district had to raise employee contributions to health care because of the rising costs of health care.

"We exceeded what we expected so we had to raise the premium this year in response to that," he said.

Atwater said that in order to fund the increase in costs caused by the health care reform bill, the district might have to raise the employee premium again.

"We would have to; that's the only way we can go," he said. The district would pay half the costs and the rest would fall on the employees, Atwater said.

"That's why it's problematic," he said. "Where's the money going to come from?"

LaDawn Druce, the president of the Kenai Peninsula Education Association, said that even though the district's health care costs and employees' contributions could increase, it's a good thing.

"We want what's best for our employees and their families, so, in one way, we're probably happy about that because we want people to have access to coverage," she said.

Druce said she has two sons under the age of 26 but their jobs provide health care so they do not count under the new law.

Although the bill's repeal process is under way in Washington, Carey said that he's unsure what is going to happen at the federal level.

"We're already required to spend this money even though we're only 20 days into the New Year," he said. "Even if they rescind it we're still out the money."

"It's just part of the world in which we live," Carey added.

Brielle Schaeffer can be reached at brielle.schaeffer@peninsulaclarion.com.



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