The City of San Angelo's draft budget calls for a 7.25% cut in direct employee-retiree health insurance costs for the coming year. The draft budget shows $6.6 million for the current year falling to $6.1 million for 2013-2014. This would be the third out of the last five years where the city would spend less on health insurance than the prior year.
The potential problem with this trend is a federal requirement that came with Early Retiree Reinsurance Program money. The City qualified for ERRP funding in August 2010. Three years later, it's not clear how much of the $343,000 in ERRP reimbursement the city has been able to utilize.
City employees know deep inside if the the city fulfilled their ERRP promise to make health insurance "a better benefit or their premiums can be lowered." How many employees and early retirees recall the draconian dependent premium increases foisted on them in Fall 2010? Paid city leaders were well aware of the certainty of federal ERRP reimbursement, yet refused to inform City Council or recommend mobilizing a single ERRP penny to break crushing premium increases. Nearly 200 people fell from the rolls of City sponsored health insurance that dark January 2011.
The one stipulation for employers accepting ERRP funding is they maintain their level of contribution to employee health coverage.
The city's move to repeatedly cut health insurance funding since August 2010 imperils federal money intended to help early retirees keep coverage. Federal money cannot supplant local funds in this regard.
How might the misuse of ERRP funds make health insurance more expensive for employees and early retirees in the future? I didn't think that question was possible in November 2010. Yet, it's the reality today as painted by the City's draft budget.
Update: HR's Lisa Marley told council her group would have new numbers next week, i.e. the week of August 20, 2013
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