Back from a much needed week in the warm Florida sunshine. Keeping on with last week’s theme of looking for positives in a negative climate, one of the first things I picked up on was the announcement of a plan to consolidate individual municipal health care programs into a larger self funded group program called the Enhanced Municipal Employee Health Insurance Plan. I haven’t seen all the details of the plan but it seems to be targeted and well suited to small to medium sized towns since some of the larger cities may already be operating under a large self funded program.

The April 2^nd press release indicated that a town of 1,000 employees counting teachers might expect annual savings in excess of $700,000. That’s impressive—and important given the spiraling costs of health care and other municipal budget pressures. Let’s try to put that figure in perspective.

If I eliminate the 50 largest communities in the state—again, many of the larger communities may already have the critical mass in their current plans to benefit from better rates through self insurance—that still leaves up to 120 towns that could conceivably participate. The 120 smallest towns spend over $2 billion on education. They spend 14-15% of that amount on employee benefits, about $280 million. I don’t know for sure, but would estimate that about 2/3 of that amount is for health benefits—maybe more since the state pays the teachers’ retirement contributions on towns’ behalf. Health costs have got to be the lion’s share of benefits in school districts.

Two-thirds of $280,000,000 is about $185 million. If the Enhanced Plan saves 5%, that could means as much as $9 million in savings statewide. Ten percent savings would mean $18 million. Put another way, each 1% reduction in costs could mean about $2 million in savings—or resources that can be put to use elsewhere in school budgets. If anyone knows more of the detail about the new plan, I would love to hear from you. I will try to track down some additional facts as well to see if any aggregate savings estimates have been computed by the planners. Meanwhile, hats off to the Comptroller and the leadership of small towns for coming up with a great way to stretch municipal resources. It couldn’t be better timed.

And anyone who would like to sound off on some other regional or statewide partnership—where pooled resources might yield a more economical or more effective service—please speak up. You may have the next great idea.