Self-funding health insurance becomes popular option in budget-strapped Pa. municipalities

As Pennsylvania municipalities face increasingly tight budgets, a unique arrangement that can cut health care costs is becoming more popular.

Since 2012, the Pennsylvania Municipal Health Insurance Cooperative has added about 60 members. Pottsville in Schuylkill County is one of the latest to commit and is set to join members — including Lower Merion Township in Montgomery County — next year.

The cooperative allows cities, townships and boroughs to self-fund their health insurance. That means if employees use fewer services in a year compared to what a municipality budgeted, it can actually get money back.

“Self-funding can be very risky because large companies have large, large reserves to bank to pay the claims as they come in. We’ve developed this model and by bringing all the groups together, we can do this safely for them,” said Fred Bean, a vice president at Benecon, which runs the cooperative.

Membership has grown from 90 when it started in 2006 to about 260 now.

“The hallmark of our program is that we hardly ever lose a group. Since the program started, we have a retention rate of about 99 percent,” Bean said. “So, from the standpoint of the actual employee, the only thing they see is a Capital Blue Cross card or Highmark card.”

Since 2006, the cooperative has returned nearly $118 million to municipalities, he said.

Well known in central Pennsylvania, the cooperative has been adding municipalities near Pittsburgh.