HomeMy WebLinkAbout1998-10-21 PACKET 02.A.REQUEST OF CITY COUNCIL AGTION COUNCIL AGENDA
MNEETING ITEM #
DATE 10/21/98 �
PREPARED BY Administration tviichelie Wolfe
ORIGINATING DEPlS,RTt�IE�f I STAFF AUTNOR
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COUNCIL RCTION REQUEST
Presentation: Status of Medical and Dental Insurance
BUDGET IMPUCATION
BUDGETED AMOUNT ACTUAL AMOUNT
SUPPORTING DOCUMENTS
� MEMO/LETTER: fNemo from Michelle Wolfe dated October 16, 1998
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
❑ OTHER:
ADMINISTRATORS COMMENTS
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City Administrator Date
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COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER
F'.\GRQUF'S\PER EC:,ON\MRVJ�98vouch`.Medicai & Dentai �Status Caver-Or,t 98.dac
City of Cottage Grove
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To: Honorable Mayor and City Council
From: Micheile A. Wolfe
Date: 10/16/98
Re: Presentation: Status of Medical and Dental Insurance
BACKGROUND
In 1995, the City left an insurance pool and changed to HaaithPartners as the
single provider of inedical and dental coverage. At that time, the premium rates
decreased. In April 1996, one year after the change, premiums increased $40
per mo�th for family coverage, or 7.5%. In 1997, HealthPartners was going to
raise the rates 12%. However, the City modified tne medical plan to include a
$10 co-pay. This change reduced the amount of the premium increase to 5.6°/o,
which represented a$15lmonth increase for family coverage. The reason cited
for increases both years was high claims. Our claims were high in general, and
our incidence of catastrophic ciaims was higher tnan average.
in Aprii 1998, HealthPartners indicated a rate increase that would have increased
family coverage by almost $100 per month. So, staff worked with employees to
make some additional changes to the plan that could reduce premiums. We
increased the co-pay to $15, and eliminated out-of-network coverage. The result
was a 15% increase to premiums, or about $50 per month for family coverage.
DISCUSSION
Because of the large increases the past few years, staff initiated some efforts to
address the problem:
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✓ When it appeared that claims were finaliy decreasing a bit in late 1997 and
early 1998, we felt it was a good time to go out for new proposals, to see if we
could get better rates. Last week, our insurance broker, Johnson McCann
Benefits, presented the City with the new proposals.
✓ A Weilness Committee was created about one year ago. initiaily, some
programs were developed to address health-related issues of interest to
empioyees. However, in the past six months, a renewed importance was
placed on this committee, and we began working with Partners for Better
Heaith, a division of HealthPartners specializing in preventive care.
Employees were asked to participate in a Risk Assessment survey, the
results of which will be used to develop future Wellness Programs. Therefore,
we can focus programs on the areas where we have historically experienced
higher ciaims, or on areas that are seen as high risk for future claims.
✓ It appears the addition of co-pays may have affected utilization. It is hoped
that ongoing awareness and education will help employees make smarter
choices regarding use of health care. We are promoting the idea that
employees are responsibie for being smart consumers of health care, so that
we can positively affect health claims and therefore the cost of premiums.
The result of the decreasing claims and the institution of Weliness Programs is
that HealthPartners is proposing NO INCREASE for 1999 medical and dental
premiums. Dental premiums at current utilization are worth a value of $29,152.44
annually. The value of inedical premiums is $448,647 per year. This is a very
significant expense that is cost-shared by the City and the employees. The
renewal rates for 1999 premiums will not increase from the current rates.
The City received proposais from other companies through an RFP process.
Tnere is only one proposal that would provide a lower-cost program than
HealthPartners' proposai. Staff will be working with emplayee groups to
determine if this is a viable alternative. For example, since it would mean
changing to another provider, it may decrease the number of physicians used by
City employees who are in the network, We are in the process of more closely
evaluating this proposal to determine if it is a possibie change. This will be
discussed with employee groups in the very near future.
CONCLUSION
As many of you know from reading the newspaper and from personal
experience, health costs are of national concern. The past few years have seen
significant increases in premiums nationwide. The incidence of claims amongst
our employee population directly affects the premiums, so there are no
guarantees for next year. However, staff feels that we are moving in the right
direction to try and control these costs.
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Tim Dunleavy of Johnson McCann Benefits will be present at the City Council
meeting on October 21 to briefly describe the experience of the City since he
began working with us in 1995.
ADDITIONAL NOTE REGADING THE WEILNESS COMMITTEE AND OTHER
BENEFIT PROGRAMS
The Weliness Committee wiil be officially adopting a name, logo, and mission
statement. This will be announced at the All-Employee meeting on October 29.
Final details about the meeting are being finalized, and will be announced in
Monday News. An empioyee contest was sponsored by the Committee to choose
a name and logo for the committee. The winners of the contest will be
announced at the October 29 meeting.
Mr. Dunleavy worked with the City last year to obtain proposals for life insurance
coverage. We were abie to change to Fortis life insurance at lower premiums,
with a resulting cost savings to the City and the employees. Currentiy, we are
looking at the rates for long-term disability coverage, and think there may be
opportunities to decrease those rates as weli.
MAW
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