Several Large Insurance Claims Will Increase Cost Of Health Insurance For City, Employees
City of West U. employees insuring themselves and their families may see rising health insurance costs, which council hopes will be offset by a $1,500 cost of living salary increase due in September. Council anticipated a 10 percent increase in costs, but it looks like the increase to the city’s cost will actually be around 15 percent.
Several large, ongoing medical claims by West U. employees decreased the amount of health insurance carriers that submitted proposals for coverage, and increased the cost of those that did. The city received two proposals – one from Aetna and one from the current carrier, United Healthcare. Blue Cross Blue Shield submitted a letter to the city, declining to participate because their rates would be more than 50 percent higher than the current cost.
“Underwriters were having a difficult time figuring out how they were going to make money,” said Bob Treacy, C-CCBS benefit consultant, who presented the options to council at tonight’s special council meeting.
Council will vote July 14 on approving United Healthcare’s Option 9, as well as changing from a two-tier structure to a four-tier structure. Currently, city employees can chose to insure themselves as an individual, or their entire family. Individual coverage is covered 100 percent by the city; employee plus family is covered at 80 percent. The new structure will provide for employee, employee plus child, employee plus spouse and employee plus family.
Individual employees would see no change – employees plus family could pay an additional $125 a month for coverage. The coverage itself would change as well – although Treacy said the out-of-pocket expenses versus deductible would essentially be a wash with the current coverage. The co-pay for visits to specialists would increase from $25 to $40, which Treacy said is standard for the industry.
Costs are expected to go down next year, as the wave of high-cost claims goes down.
“We are having a spike this year in those large dollars, the admits (to the hospital), the whole nine yards,” said Treacy. “What you have to hope for is for these large claims to regress back to the mean…I think we have some good news on the horizon.”
“I guess the kicker that we need to mull over is that it actually decreases our benefits,” said Mayor Bob Kelly. “Is it going to be significant impact to the employees, the way to coverage has changed?”
“Ninety-three percent of your membership will not be impacted from the standpoint f the deductible itself,” said Treacy, who also said the structure would increase the burden on the 7 percent of employees who use the insurance the most, and away from those that do not.
City Manager Michael Ross told council that Option 9 would be on the July 14 agenda for council’s consideration.