The Bainbridge City Council unanimously approved a proposal to enter into a joint insurance plan with the Hospital Authority and the Decatur County Board of Commission.

“The plan is to have three identical plans,” City Manager Chris Hobby said. “The hospital has been subsidizing a higher percentage of their employee insurance plan than the city and the county have. We are going to have to work through that.”

The new plan will have three different levels of insurance protection opposed to the two levels under the current city plan. The first level is the deductible level, which will be separate for each entity. Employees will pay a monthly premium and a portion of those funds will go into their employer’s deductible pool. The current plan includes a $75,000 deductible per employee. All medical expenses up to that point are paid out of the citywide pool.

Under the new combined program a new captive level will be added. It will work in much the same way as the deductible level except it will be a joint pool that employees from all three entities will pay into.

“We are all three sharing risk together,” Hobby said. “

By adding the captive level of protection the hope is that it will lower reinsurance costs. It will lower the risk to the reinsurance company, Forsyth Insurance, by raising the amount that is covered.

“That’s the bet you are making,” Hobby said. “I could have a great claim share, the county could have a great claim share, but the hospital has a terrible claim share we all share in that. The risk is right her in this captive layer. Whatever this number ends up being it will be how much risk we are willing to share.”

The goal of creating the combined plan is to lower administrative and reinsurance costs. Saving that will then be passed down to the employees.

“The reinsurance rates will be cheaper because we are asking them to assume less risk,” Hobby. “Right now we have three different companies administrating those claims. The new plan will have one company administrating claims for all 900 people or so and we think there is economy of scale.”

The new plan will also be fee based instead of commission based for the broker. Under the current plans that each entity has the broker is paid a commission based on a percentage of the reinsurance rate.

The new plan will instead pay the broker a flat fee, which removes the temptation for the broker to keep reinsurance rates high.

“It is counter intuitive to rely on a commission driven system,” Hobby said. “You are trying to get your reinsurance rate as low as you can possible get it, but if the agent is paid based on a percentage of the reinsurance rate it benefits him to have it higher. So we are going to cut commission out. We are going to negotiate a fee.”

As part of the new plan Hobby said that they will work to negotiate a discounted rate for city employees at Memorial Hospital in return for encouraging employees to use the local hospital.

“The third thing will be major steerage to the hospital,” Hobby said. “Say to the hospital we’re going to steer our folks to you and cover their claims 95-percent or something, but in return we need our discount instead of being 35-percent to be 45-percent.”

The contract that was entered into Tuesday will allow Forsyth Insurance to access insurance records that will be used to perform a feasibility study on the combined plan.

The results from the feasibility study will be used to design a plan and determine the level of risk assumed by the entities in the captive level.

The Hospital Authority unanimously voted to sign the proposed contract Tuesday during its meeting. The Decatur County Commission is expected to vote at its meeting next Tuesday. The new plan will go into effect July 1.