The Unified Government Commission gave the go-ahead on Thursday evening to financing for a new medical clinic for UG employees.
The resolution was passed unanimously at the UG Commission meeting Thursday without discussion. Later, a meeting of the UG’s Public Building Commission approved the financing resolution unanimously, said Ken Moore, interim chief counsel.
The resolution stated the UG will establish and fund the medical clinic at 800 Ann Ave. at a cost not to exceed $1.83 million in revenue bonds.
Cerner will be the provider for the health clinic, UG officials said at a Sept. 14 committee meeting. An estimated $1.4 million would be spent on acquisition and site improvements, and the rest for equipment and furnishings.
At the Standing Committee meeting, Joe Connor, deputy UG administrator, said the clinic would not only provide health care for employees, but also include a wellness component.
“The ultimate goal is to lower our costs of health care,” he said at that meeting. The clinic is expected to begin operating next year. The UG expected to see savings in the second to fifth year of the program.
Employees could have to pay more in health insurance costs
Before the 7 p.m. meeting, the UG’s health insurance situation was discussed at a special session by Doug Bach, UG administrator, and Connor.
They said high costs for health insurance was a common situation with other governments and also in private business.
Since 2009, the fund handling employee health benefits has had more expenses than revenues, Connor said. Expenses exceeded revenues by more than $11.2 million in the last six years, he said. The fund balance is not sustainable through 2016, he added. Also, contributions were not increased significantly since 2008.
Currently, the health care claim costs in 2016 are predicted to increase 9 percent over 2015, Connor said. The UG, based on an estimate from experts, is projecting a deficit of more than $5.6 million if no changes are made for 2016, and the fund balance would not cover it, he said.
He said the UG has already made plan design changes to encourage better health, including an annual health risk assessment incentive, free flu vaccinations, high deductible health plans, and changes to co-pay and deductibles on emergency room usage and nonpreventive medical care.
“One of the challenges we have with our population is they just go wherever they want and we just pay the bill,” Connor said. He added he would like employees to be more aware of what the costs are at different levels, such as emergency room vs. doctor’s office, and who charges more for services.
He said he would like to encourage employees to select the high-deductible health plan and health savings account. Last year was the highest participation in that plan, at 315 employees out of about 1,900, he said.
Some changes were proposed to the employee benefit fund, and the UG Employee Benefits Committee, with employee representatives, recently agreed to only one of the changes, he said.
The only recommendation they agreed on was to increase contributions by 14 percent, Connor said. That is a cap placed by union groups and is in their contracts, according to UG officials. It would raise about $3.59 million.
Other recommendations to adjust plan benefits were either voted down by the Employee Benefits Committee or received no formal motion, Connor said.
Bach said the recommendation from the committee doesn’t cover the deficit the UG has going into 2016. The future focus will be to try to get people to move to the high-deductible plan, he said. That sort of move is being seen in other municipal governments and private business, he said.
About 40 percent of employees would bear the burden of the 14 percent increase, according to Bach, as they are the ones who are carrying family insurance. The largest amount paid would be $2.8 million by the UG itself in contributions.
The major plan change, Bach said, would be an increase in the preferred provider organization (PPO) coinsurance, where once the employee meets the deductible, he would receive 90 percent coverage in network as opposed to 100 percent currently. Coverage would be 70 percent out of network. This change would generate $2.37 million.
With the two plan changes, and one increase in revenue, that is a projected about $6 million to cover the $5.6 million deficit that is expected, Bach said.
Connor said the UG’s actions are in line with the other municipal governments in the area, that are all struggling with the same issues.
“One area we are a little unique in is we haven’t raised our premiums since 2008,” Bach said. Others have raised theirs 3 to 5 percent annually while the UG held its rate stable, he added.
Commissioner Brian McKiernan said it’s the same health care gap that every company, not just every municipality, is finding itself in. He said he agreed these steps would close the gap for the UG, at least for now. He said the solvency of the fund needed to be assessed for the long term.
“This will stabilize us in the short term as we can assess long-term solvency of the fund,” Commissioner McKiernan said.
Mayor Mark Holland said he was concerned about the $2.37 million coming from payout from families after they reached their limits. He asked how many would contribute to that fund.
According to UG staff, about 60 percent would contribute to total increased contributions of $446,000, while an estimated 20 percent would reach their maximums.
“Would it be more fair to increase the amount that everyone pays a little bit rather than saddling the people who have the greatest health care needs with the highest amount of payout?” Mayor Holland asked.
According to UG staff, an average family might pay about $3,000 a year in premiums in the PPO plan. Under this proposal, there is a maximum cap on the out-of-pocket amount a family would pay of $13,700.
UG staff said the maximum out-of-pocket cap on the high-deductible plan was $4,600 for families.
Commissioner Mike Kane said he believed the proposed changes should have approval through negotiations with the unions.
“The increase in the premiums, which the Employee Benefits Committee recommended, is one we could impose up to 14 percent,” Bach said. “We don’t have to go back to the table for that.”
Any design changes the UG makes to the plan don’t have to go back to the table either, Bach said.
He said any of these proposed changes could be made administratively without going back to negotiations. The changes would apply to all employees, and employees would have the right to either choose the PPO or high deductible, he said.