The time is nigh for the city lawmakers to vote on whether or not to pay the premium that renews the employees' health insurance coverage, but a few questions had to be raised before the aldermen agreed to sign-off on a more than $134,000 annual payment increase.
The main question at Monday night’s Board of Aldermen meeting was how is it going to be paid?
After an extended discussion, the aldermen voted unanimously to renew the policy because of the impending deadline, which is July 1, but still have to decide the best course for meeting the expense of their obligation.
On Monday, Mayor Steve Rosenthal asked, “How do we want to handle a $134,000 increase in expense? Are we going to take the whole amount and pass it on to the employees or are we going to take the whole amount and pass it on to the citizens? Where are we going to come up with an additional $134,000?”
Based on the disclosed agreement to renew, the individual cost per employee will rise from $356 per person, per month to $463 beginning the first of July. Currently, city workers do not contribute anything toward their individual premium and with 105 employees, that’s an additional $134,782 that was not budgeted that has to be offset by the city and thereby the taxpayers.
At the May 13 session, Rosenthal said, “This increase is based on what we’re already doing.”
He was alluding to the steps taken to reduce the city’s payout for the current fiscal year.
The lawmakers raised the employee deductible to $5,000 and used a secondary insurance carrier to subsidize the first half of that so the employee only has to meet a $2,500 deductible annually.
Since that meeting, Rosenthal met with the city’s insurance provider, Blue Cross Blue Shield, to find out what was driving the increase. He told the Aldermen on Monday that it was due to continual losses by the insurance carrier.
He said, “The reason for the increase is this past year we paid $436,000 in premiums, but the insurance company paid out $639,000 in payments, which is a total of $202,000 lost, which they had a substantial loss the year before.”
Rosenthal added that the city was lucky that the carrier was willing to continue to insure the workers. “There is no one in the insurance business that will take us,” Rosenthal said, “And from what our consultant says, the only reason they will even consider continuing service is because we’ve been with them for 10 years or better.”
Rosenthal said that although the insurance company has had some good years over the last decade it was not enough to make up for the more than $200,000 loss.
Alderman Ruben Woods denounced that assertion. “I feel on the average they made a profit off of the city, they don’t complain about the profit part, but the minute they have a loss they scream bloody murder,” he said.
Rosenthal indicated that he was in agreement, nevertheless he stressed that when it comes to covering the city's loss nobody wants to do it. He said the insurance company's loss ratio is 83 percent and that is one of the factors other insurance carriers ask about first.
Rosenthal said the majority of the loss is not from the group as a whole. “The bulk of the losses come from 10 employees out of 105,” said Rosenthal. He added that of the $639,000 the insurance company paid out, $531,000 went for 10 people.
Alderman Marvin Elder said that since the city was able to come up with money for other things, they should be able to come up with money for the employees. He speculated that a lot of people work just to make sure they have insurance.
Alderman Gary Fratesi reminded him of the existing millage already assessed against the citizens for the current health insurance and suggested that it is time for the employees to put “some skin in the game.” Fratesi stated, “I think it ought to be on a sliding scale if it's legal.”
Two mills were reportedly assessed against the citizens for the increase for last year's cost and this year they are projecting an additional three mills if the city leaders decide to take on the full amount.
Their dialogue included questions about whether the amount could be divided, with the city paying half and the other 50 percent being divided among the workers. Rosenthal said that any division could not be based on pay.
He mentioned categories and percentages that range from 25 to 50 percent with the higher-paid employees contributing near the 50 percent mark, but clarified that it would take a planned system.
In their discussion, the Aldermen insisted that it was not fair for a person who was a lower wage-earner to pay the same amount as a person earning higher wages.
Parks and Recreation Director Carolyn O'Neal asked about the cost of the new water meters, asserted that her department has not bought any new equipment in recent years and asked why the city couldn't use some of that money to supplement the health insurance cost.
Rosenthal defended by saying that although the water meters were costly, they would eventually pay for themselves.
Fire Chief Orlando Battle suggested that since it was just 10 people who were causing the problem why not let those 10 people take on the larger percentage of the increase. “You’re allowing 10 people to dictate the rest of the city,” he said.
Rosenthal explained that because of HIPAA laws the city officials don't know specifically who the 10 workers are, but added that diabetes medications are driving the numbers up more than anything else.
Battle then asserted that firefighters and police officers have to pass stringent health screenings and alluded to imposing health-screening guidelines on the other employees.
Chief Edrick Hall indicated a similar notion and asked what measures the city would take going forward to deter some of the health issues and surmised that there is little that can be done about the current workforce.
The aldermen are scheduled to present their proposals at the next meeting.