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Suffolk health plan savings lag

An agreement requiring Suffolk County unions to come up with $34 million in health savings over the last two years has fallen $19 million short of its goal, county union and Bellone administration officials have disclosed.

A review by outside consultant Lockton Cos., completed last month, found the expected savings from going to mail-order prescriptions and other steps cut costs by $15 million in 2013 and 2014, compared with the $17 million in annual savings required from 10 county unions under Suffolk's self-insured employee health plan.

Suffolk County Executive Steve Bellone and union officials blame the problems on San Diego-based prescription manager, OptumRx. The company was hired in 2013 but pulled out of its contract just before it was to take over, forcing the county to rebid the contract and delaying savings efforts by 18 months.

Officials said Suffolk now is on track to achieve $17 million in savings this year. They said the county has made a new agreement with unions to bring in $5.5 million in extra savings in 2016, beyond the $17 million required. They say they expect to make up all lost past savings by the end of the current contract in 2020.

"Everyone is working together to ensure the savings for the taxpayer that we agreed upon will be achieved," Bellone said.

Republicans called the savings shortfall further evidence that county finances are in disarray. They said Bellone has failed to close the county's structural deficit -- the difference between recurring revenue and expenses -- and expressed concern that promises of future savings will not materialize.

"This just underscores the fact that they make assumptions based on wishful thinking rather than reality," said Legis. Tom Cilmi (R-Bay Shore).

"It's doom and gloom for county finances," said James O'Connor, Bellone's GOP county executive foe, who on Tuesday called for creation of a financial control board to oversee county finances.

Bellone called the GOP criticism "the typical campaign rhetoric," that "disparages the credibility" and "challenges the integrity" of every county union worker.

Bellone's proposed 2016 budget, released last week, made no mention of the $19 million shortfall. His budget narrative only refers to "a historic agreement" with unions for the additional $5.5 million in savings projected for next year.

Despite the purported savings, Bellone's proposed budget estimates health insurance costs will climb to $387.5 million in 2016, compared with $361.5 million this year.

Bellone aides say the savings requirement is based on county forecasts of $392.9 million in health insurance costs for the coming year, not this year's spending level. They say savings measures are aimed at keeping health costs from going even higher. "The challenge is to limit the growth and find savings wherever we can," said Deputy County Executive Jon Schneider.

The insurance plan covers 20,800 county workers and retirees, and 25,700 dependents.

Noel DiGerolamo, Suffolk Police Benevolent Association president, said unions "understand our obligation and have every intent of fulfilling it."

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