City of San Angelo Health Insurance Update: Straight from ...

After meeting with Mayor Alvin New in April and discussing health insurance, I submitted questions to City leaders.  Public Information Officer Ty Meighan and Human Resource/Risk Management Director Lisa Marley kindly responded. Lisa's answers to my questions are below, after which I comment:

1. How much is the city projected to save from 192 people (employees, retirees and dependents) dropping coverage on January 1, 2011?

The City only saves contributions on the employees or retirees who dropped coverage all together. There is no savings when dependents are dropped (except for savings on any claims being submitted). There were 45 who dropped coverage altogether (37 active, 4 pre-65 retirees and 4 post-65 retirees). The annual savings in premiums for those 45 people is $189,603.96, which simply remains in the self-insurance fund and is used to either pay for claims or for new employees who enroll during the year.

Comment:  The City chose not to share any savings from experience in light of dropping 147 dependents. HR states the City is paying premiums to their third party administrator for people who aren't enrolled (by having the $190,000 remain in the insurance fund).  If this is happening, the City improved health insurance funding for employees remaining in the plan.

2.  How much Early Retiree Reimbursement Program (ERRP) funding does the city expect in 2011 and how much are they willing to apply to health insurance cost increases?

The estimates have not changed: low estimate is $91,217, high estimate is $383,915. All of the ERRP money will return to the self-insurance fund. HR will present the funds to City Council and the Council will determine how to use these self-insurance funds.

Comment:  City staff are yet to make a presentation on ERRP to City Council in a public meeting.  Given "the estimates" are from July 2010, a year's experience produced no new data.  After qualifying for ERRP last August, the City has been unable to file a reimbursement claim on its own. Other Texas cities received ample ERRP reimbursement.  COSA sought a bid for filing assistance from its third party administrator (BC/BS of Texas).  The contract may still sit in the legal department.  HR is silent on COSA submitting an ERRP claim., which it may not want to do, should it wish to switch health insurance plans.  This leads to my next question

3. From a meeting with Mayor New, I understand he has a different vision for health insurance,  It's along the lines of pension models, defined contribution vs. the current defined benefit.  I know Town & Country used what's known as a "mini-med" under Alvin New. Does the city plan on switching to a different type of health insurance plan for 2012?

An insurance review committee was appointed by the City Manager in January 2011.  They are working with the Holmes-Murphy Consultant to prepare an RFP that will go out for bids on health insurance on July 1. All plans/models will be considered based on the criteria that will be established by the Committee. RFP is scheduled to close on August 31, 2011. Following the September review of the bids, a recommendation will be made to Council in October, with open enrollment scheduled for November 2011.

Comment: The City sprung draconian health insurance increases for dependents on employees/retirees at the last minute in 2010.  They have a chance to make their thinking clear.  Let's hope leaders are more open and transparent.

4. What are the city's budget assumptions for health insurance for 2012?

Budgets for 2012 are still being prepared.  Nothing will be firm on health insurance until the RFP is completed.

Comment:  Nothing should be firm until City Council hears options, considers public input and makes a decision.   At least, I hope that's the case..