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Morgantown's self-funded health plan shows volatility; council weighs options and cost-saving programs
Summary
Finance staff told council the city's self-funded health insurance plan required a $3.315 million transfer in Jan. 2025 and that pharmacy-management initiatives could save $700,000–$900,000 annually but six-month results are inconclusive; council discussed plan design changes, expanding the risk pool and exploring commercial alternatives.
MORGANTOWN, W.Va. — City finance staff told council on March 31 that Morgantown's self-funded health insurance plan has been volatile, that the city made a $3.315 million transfer to stabilize the fund in January 2025 and that several cost-saving initiatives are being monitored.
Finance Director John Ferguson said the city moved $3.315 million from a stabilization fund to shore up the life-and-health fund in January 2025. "Back in January 2025, I did come to city council requesting approval for a transfer from the financial stabilization fund of $3.315 million in order to make sure that we shore up our employees health insurance plan," he said.
Staff and a health-insurance work group have since implemented pharmacy-management programs through the city's administrators and pharmacy vendors. Ferguson cited an Express Scripts advanced-utilization-management program intended to steer prescribers to lower-cost alternatives and described projected annual savings of $700,000–$900,000 from that program if it performs as contracted. He cautioned, however, that six months of data do not yet show a sustained reduction in overall claim volatility and that the program carries additional monthly fees (staff cited an increase to the third-party administrator fee of roughly $12,000–$15,000 per month when the program launched).
Council members asked whether the city should remain self-funded or purchase fully insured coverage from a commercial carrier; staff said commercial insurance would transfer risk to the insurer but likely carry higher premiums because carriers price recent claims volatility into rates. Staff also discussed enlarging the risk pool with partner entities or pursuing plan-design changes to reduce utilization, and they said HR would assist employees navigating utilization-management steps.
No immediate change to the plan was adopted; the council asked staff to continue work through the health-insurance committee and to return with more data and options on plan design, market alternatives and the program's measured savings.
