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Campaign Updates

Increasing benefit costs puts pressure on Aiken County finances

Aiken County Human Resource Director Gayle Wolman’s recent presentation on county employee health benefits sent mixed messages. Speaking at the County Council work session on Oct. 18, she pointed out that the county’s new benefits system saved money this year and is popular with employees.

However, Wolman noted that claims are up and costs are rising. This will result in higher expenses for employees and further complicate Council’s twin goals to increase pay while holding the line on taxes.

Enacted in last year’s budget, Aiken County’s health benefits bypass the state’s Public Employee Benefit Authority system and are managed in conjunction with the Gallagher Group, a third-party provider.

According to Wolman, this move saved the county $880,000 and provided better care at a lower cost. These savings helped Council balance this year’s budget without a tax increase.

But claims for this calendar year are projected to hit $6.8 million, or $1 million more than last year’s claims. This increase reverses three consecutive years of claims reductions.

Why? Wolman speculates that the new health benefits are more affordable than the old plan, which incentivizes more employees to see the doctor. This, in turn, leads to more health issues being diagnosed and addressed, leading to greater claims.

Claims exceed the forecasted rates built into the current premiums. Next year’s medical premiums will grow 13 percent, with the county shouldering most of the burden and the employees paying the rest. And county employees will absorb a 15 percent increase in dental insurance premiums.

To contain this cost growth, the county will pursue several paths. These include emphasizing wellness programs, increasing employee contributions, utilizing telemedicine, and adding a lower premium but higher deductible “Healthy Incentive Plan” to the range of options.

The immediate impact is on the 800-plus county employees electing these benefits. With the average full-time employee making $38,000 per year, these added premiums will hurt. This will impact their pocketbooks, morale and retention.

The long-term impact is on the County’s budget. Council has recently avoided tax hikes by relying on one-time revenues to bridge the annual budgetary gaps. Council also contained expenses by eliminating employee cost of living increases several times over the last decade.

This strategy works reasonably well if one-time revenues continue materializing – deus ex machina - and as long as county employees willingly trade relatively low pay for benefits. These benefits include the medical and dental plans, and participation in a defined benefits pension program.

But now Council must traverse a narrow path with gaping, fiery chasms on either side.

On the one hand, if expenses rise faster than the tax base and one-time revenues fail to magically appear, then the temptation is to further squeeze the work force. Wages will remain unchanged, and benefit costs will take larger bites out of their stagnant paychecks.

But what’s the cost of converting the employees’ “good benefits but low wages” win-lose compensation package to a lose-lose “poor benefits and low wages” structure? The results won’t be pretty for Council, their employees and the taxpayers.

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