Wednesday, November 17, 2010

San Angelo's ERRP Remains Cloudy

Standard Times reporter Kiah Collier followed up with Human Resources on ERRP funding.  She wrote:

The city HR department says it simply does not know yet how much it will receive in reimbursements from that program.

Estimated ERRP reimbursements come from Holmes-Murphy, the City's health plan consultants.  They used prior claim experience for their calculations.  This is like projecting future tax revenue based on prior collections.   If the City applied the same logic on taxes or expenditures, the Finance Department couldn't prepare a budget.

Kiah continued:

It (City of San Angelo) does have a projected or estimated amount, but even if it does end up receiving anything, it will likely use those reimbursement to offset any increases in the 2012 health insurance plan - not the 2011 (upcoming year) plan.

I just called Veronica Sanchez with the HR department and she said, "Because there's so much uncertainly with it, we hate to count on that reimbursement prematurely."
The City is eligible for federal reimbursement for retiree claims as of June 1, 2010.  The first reimbursements to sponsors, like the City, were expected to be deposited in October.  That's last month.  Has the City or Blue Cross/Blue Shield gotten an ERRP check yet?

Program funding is expected to last two years.  When the city is ready to share any savings with retirees, ERRP will likely be out of money.

There is no uncertainty in reimbursement under ERRP.  Early retiree claims between $15,000 and $90,000 after June 1, 2010 are reimbursable. Checks for 80% of those costs will be cut.  The question is how much?

The City was accepted in the first round.  Why hold onto 18 months of reimbursement, before sharing a nickel with plan participants?  ERRP's aim is to keep insurance affordable, especially for retirees.  Hewitt Associates projected a 25 to 35% savings within any retiree healthcare program.  That's $2,000 to $3,000 per early retiree.

I spoke to Veronica several times on this issue.  The numbers changed each time.  Local data doesn't align with national projections.  I'm sure much of it is explainable.  However, for citizens to understand, the city should share their ERRP application and Holmes-Murphy report.

City leaders have been evasive and nonforthcoming on this issue.  That should concern citizens, as well as retired and current employees.  The Standard Times is in a position to press leaders to be more open and accountable.

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