In a recent press release, Middle Township Committeeman Mike Clark has made the claim that “he” saved the township $500,000, by switching to the NJ State Health Benefits Plan in 2019. Clark has made this assertion a cornerstone of his campaign for re-election, an example of his leadership. He said “Republicans” opposed the switch.
I’m not sure why Mike Clark chose to attack me in the same release, in the Sept. 25 issue of the Herald. He’s not running against me, but since the “Republican” he refers to could only be me, I’m compelled to set the record straight.
I did not favor the switch. Why? Because, in the long term, this move will end up costing the township hundreds of thousands of dollars in lost dividends, and reduce the control we have over future healthcare plan decisions.
In the Fall of 2018, as the time came for the township to review our options on healthcare, a State Health Benefit Plan (SHBP) was put forward that would save the township approximately $500,000 versus renewing our existing plans through the Southern Coastal Regional Employee Benefit Fund (also known as the HIF).
Middle Township had left the SHBP in 2012, after being accepted into the HIF. The switch has saved the township hundreds of thousands of dollars over a seven-year period. Mayor Clark was immediately in favor of the move to the SHBP.
I preferred a slower approach, (we had several months to make this decision) offering the HIF an opportunity to provide comparison plans and costs. I believed it was a smart move to use the SHBP rates as leverage in getting the best plans, at the best price, for our employees and retirees, by creating a competitive environment for both entities seeking our business. I convened several meetings to review all of our options and carefully calculate the real costs of switching providers.
By the time the vote on the healthcare switch was taken in November 2018, the plans (and the costs of those plans) offered by the HIF were virtually identical to the SHBP proposal. Bottom-line, Middle Township would have saved approximately $500,000 whether we switched to SHBP or stayed in the HIF.
All of the other towns in the HIF were offered the same SHBP in an effort to persuade them to switch providers. Only one member, Middle Township, took the bait. All other members thought the move to be ill-advised.
Mike Clark’s claim that he saved all this money by switching to the SHBP is misleading, at best. The move actually cost the township money (in both the short and long term), and gave us much less control and input in our healthcare decisions going forward.
Here’s why:
- In order to leave the HIF, the township was required to pay a one-time penalty for our prescription plan of over $86,000.
- As a member of the HIF, Middle Township received an annual dividend from the group. In 2019, that dividend would have exceeded $300,000. The SHBP offers no such dividend. We lost that $300,000 and will continue to lose a comparable dividend each year going forward.
- Over our seven-year membership in the HIF, the township accumulated nearly $1,000,000 in the surplus/dividend fund. Since the town is no longer a member, we must wait six years to gain any access to those funds, ending our ability to use the dividend to defray rising healthcare costs.
- The just-announced HIF rates for Medicare Advantage are set to drop nearly 40% in 2020. This would have meant major savings for our taxpayers and our retirees next year and made the HIF plan even more attractive, when compared to SHBP.
- Beyond the monetary considerations, the switch from the HIF to the SHBP means Middle Township will have little input going forward on the healthcare plans we are offered, the membership of the group, or the day to day operation of the fund. In the HIF, Middle was a big fish in a small pond. Our Township Administrator served as one of the HIF Commissioners. We had a say in crafting health plans, determining the use of the fund surplus and dividend and input on the admission of new members to the HIF. Only municipalities and school boards with histories of low risk and a record of financial responsibility are considered for membership in the HIF. The SHBP is required to take all comers, forcing Middle Township to share risk with the poorest performing towns in the state. The SHBP can change the plans offered on a year-to-year basis, with no input from its member towns.
So, yes, Middle Township did save about $500,000 in healthcare costs in 2019. Mike Clark got his headline, but by grasping for the brass ring so quickly, the Clark-lead Democrat majority made an ill-timed and ill-advised decision that will cost the township for years to come. That’s the real headline here. Facts can be stubborn things.
Tim Donohue
Mayor
Middle Township, NJ
Ordered and Paid for by Cape May County Regular Republican Organization, PO Box 1069, Wilwood, NJ 08260.
