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High-dollar medical claims hurt Dayton’s budget

The city of Dayton has seen a more than 23 percent increase in the cost of health insurance claims this year, driven almost exclusively by a spike in high-dollar claims, officials said.

The big bills have been frustrating for the city since it has taken multiple steps to try to hold down health care spending.

But about 20 employees submitted claims that combined ran about $4.4 million, said Ken Couch, Dayton’s director of human resources.

In comparison, about 846 city of Dayton employees turned in zero Anthem health insurance claims over a 12-month period, he said.

City officials, however, say that’s just the nature of health insurance — it’s unpredictable and there’s some things that are out of the city’s control.

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The city of Dayton recently said it would increase its health insurance transfer rate by 24 percent this month to cover increased health insurance claim costs.

Health insurance costs include medical claims, pharmacy claims, stop loss reinsurance, the cost of the clinic and administrative fees, city officials said.

Medical claims are experiencing the largest increase while clinic and administrative costs have grown less than 1 percent, officials said.

The city is increasing the employer contribution to pay for the higher costs. Employees’ contributions are fixed by contract.

The city predicts the increase will cost the general fund budget an additional $1.2 million this year alone, officials said.

Health insurance claims through June cost the city $12.4 million, which was up from $10.1 million during the same time frame last year.

The city, which is self-insured, is responsible for paying health insurance claims up to $200,000.

The city buys stop-loss insurance from Anthem to cover what sometimes are called “catastrophic” or “unpredictable” expenses beyond that.

Costs weren’t a problem last year until the last quarter, when there was a spike in large claims, said Diane Shannon, Dayton’s director of procurement, management and budget.

“The bottom fell out in the fourth quarter,” Shannon said.

Large claims tend to be related to chronic and acute medical problems, such as cancer, heart conditions and open heart surgery, the city said.

The city has tried to hold down health insurance costs in a variety of ways. This includes opening an employee medical clinic and wellness center in late 2016.

The clinic offers preventative care, healthy-lifestyle coaching, general medical check-ups, office visits and other services.

Preventive care visits are free, and non-preventive care visits at most cost $20 per visit, the city said.

The city hoped to avoid big medical bills down the road by catching and treating health problems earlier on.

After 18 months of operation, the clinic has provided a good return on investment, officials said. The city says that for every dollar spent on the clinic it has avoided spending $1.19 through Anthem.

The city also has tried to hold down rising costs by going to a high-deductible health plan. The city requires workers’ spouses with insurance through their job to select that as their primary coverage.

MORE: City of Dayton, largest city union pass new contract. What’s in the agreement?

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