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Council hears new health insurance proposal
By Kenny Green, kgreen@acnpapers.com
The Mesquite City Council received a presentation Aug. 2 regarding the proposed health care changes for the upcoming fiscal year during its regular work session.
The new proposal included the first rate increase to the city employees in three years.
“We have had some very good years since 2000,” said George Mones, director of human resources and civil service. “We had good news the last three years by not having to raise rates. Unfortunately this is not going to be one of those years. It has finally caught up to us.”
The city did not put out maximum effort to seek a replacement because they were waiting to see what the MISD decided to do with its health care plan.
“Fortunately they decided they are 100 percent committed to the clinic and pharmacy,” Mones said. “This is perceived as an ongoing commitment.”
The changes being made to the PPO under the proposed plan include increasing the out-of-pocket maximum to $4,000 and changing the retail co-pays to co-insurance for prescriptions filled outside of the MEHC pharmacy.
“This will provide greater incentive for employees to use the MEHC pharmacy,” Mones said.
The proposed plan also would convert health reimbursement to a health savings account.
“Under the change the deductible increases from $1,200 to $1,500,” Mones said. “This provides a long-term savings vehicle for employees and encourages employees to use the on-site clinic and pharmacy. You don’t have to pay a deductible when you go to the clinic.”
Mones indicated the city would also remove the HMO plan under the changes recommended in the new plan.
“The plan benefits are too rich,” he said. “This shelters employees from the true cost of health care and there is no incentive for wellness.”
“I appreciate the task force for doing this,” said Bill Porter, Mesquite Mayor Pro Tem. “It was not an easy job. They have done a good job with what they had to work with,”
One factor that has necessitated a rate increase this year is the rise in the amount of large claims. If the city remains on its current trend, it will end the fiscal year with approximately $3.2 million in claims.
“The largest claims that we have are two premature infants and two cancer cases,” Mones said.
Hospital costs are also up over previous years.
“Hospital rates are going up because the intensity of services is higher,” Mones said. “They are doing more in a day and charging for it.”
A fact that doesn’t sit well with some.
“I am disgusted with these big increases,” said Dennis Tarpley, Mesquite Deputy Mayor Pro Tem. “I still don’t understand the relationship with Cigna and the hospitals. I thought there were contracts with hospitals.”
Due to requirements created by the federal health care reform legislation, the city will change the dependent coverage age from 25 to 26 beginning with the 2010 fiscal year and will be covering 100 percent of preventive care beginning in January 2011. The city will remove the lifetime maximum benefit in the 2011 fiscal year.
The city will change health care plan administrators under the proposed plan. They will begin using TML instead of Cigna.
“The fees are lower and is the same network as we have now,” Mones said. “Their discounts are right in line with Cigna.”
Mones estimated the cost savings as a result of the switch would be around three percent. If the proposed plan is adopted, the city will increase its contribution to the health care program by $900,000. The funding includes $250,000 from the water and sewer fund, $250,000 from the general fund and $400,000 from the general fund reserve.
“We have the lowest cost, highest value for employees in the Metroplex,” said John Monaco, Mesquite Mayor.
The city will not be increasing the contribution to the retiree health care plan due to budget constraints.
Due to the lack of increased contribution, retirees will face an increase in the cost of their health care plan. The rates have been fixed since 2004. The increases would include an $88.42 uptick for a single individual under the HSA1500 plan and a $203.32 increase to include a spouse. Under the HSA500 plan, the individual plan would increase by $146.73 and a $330.42 increase to include a spouse.
“There is a fear that some retirees may have to drop the plan entirely,” Mones said. “Another option is a $2,500 deductible plan.”
The council instructed Mones to bring them the information on the proposed HSA2500 plan so they can see the cost associated with adding it.
“It may be attractive for retirees,” Mones said. “I will develop a chart for that.”
The city is trying to position itself for the impact that the Obama health care legislation will have on its health care plan.
“The great unknown is the effect of Obamacare,” Monaco said. “Everybody in the nation is frustrated with the lack of hospital info. The apparent solution appears to be legislatively”
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