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HomeMy WebLinkAbout11/09/1998 BAKERSFIELD Alan Tandy, City Manager Patricia J. DeMond, Chair Staff: Alan Christensen Mark Salvaggio Jacquie Sullivan AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, November 9, 4:00 p.m. City Manager's Conference Room- 1. ROLL CALL Call to Order 4:00 p.m. Present: Councilmembers Patricia J. DeMond, Chair; and Mark Salvaggio Absent: Councilmember Jacquie Sullivan 2. APPROVAL OF AUGUST 19, 1998 MINUTES Approved as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS None AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, November 9, 1998 Page -2- 6. NEW BUSINESS A. HEALTH INSURANCE RENEWALS - Hayden Human Resources Manager Carroll Hayden stated that the health plans were marketed a year ago and contracts were put in place. Buck Consultants, the City's health care consultants, have negotiated renewal rates with the companies. There are rate increases in most programs, and rather considerable increases in the preferred provider programs. The current agreements have caps that limit the percent of annual rate increases. Blue Cross is exercising the entire cap percent allowed by the agreement for the PPO programs. The Insurance Committee has reviewed the 1999 health plan renewal'information and increases. Ms. Hayden introduced Tim Beck and Mark Orzechowski from Buck Consultants, who gave an overview of the adjustments in rates as outlined in the handout in the Personnel Committee packet (attached). The overall renewal increase for 1999 for all health coverages is 20.2 percent. Overall medical premiums are increasing 24.7 percent. Dental premiums are decreasing while the vision and mental health premiums are not changing. The Blue Cross PPO plan increase is 38.6 percent (includes both actives and retirees added together). The Blue Cross HMO is increasing 8 percent. Kaiser HMO is increasing 11.9 percent. Secure Horizons HMO is increasing 10.5 percent. Dental Indemnity is decreasing 3.8 percent. Dedicated Dental, Pacific Dental, Medical Eye Services, and PacifiCare Behavioral Health have no changes to their current rate structures. Buck Consultants is projecting for the Blue Cross PPO and Dental Indemnity plans a 1998 year-end deficit of just over $700,000, which includes a deficit of $597,450 for the active medical PPO plan, a deficit of $156,787 for the retiree medical PPO plan, and a surplus of $52,687 for the dental plan. The existing agreement states that the deficits, which are the result of claim costs exceeding premiums, are the responsibility of the City. The deficits will be reduced gradually over time as premiums are generated in excess of claims costs. Blue Cross 1999 renewal adjustments overall for Medical PPO/Rx are 44.1 percent for actives and 28.4 percent for retirees, and a 3.9 percent decrease for dental. Buck Consultants prepared an analysis, independent of Blue Cross, evaluating the renewals that generated percentage increases just slightly higher than Blue Cross. The large increase is due to premiums having decreased over the past three years, . while expenses increased. In answer to a question from Committee Chair DeMond, as the renewal requests are based on claims experience, it is highly unlikely that other companies would be able to be more competitive at this time. Buck Consultants reviewed the increased claims history and will do further analysis on AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, November 9, 1998 Page -3- utilization factors, including prescription drugs, to determine the specific reasons for the increases. This adjustment in rates represents an approximate $1.2 million annual increase for the City in calendar year 1999. Assistant City Manager Christensen stated there are funds available in the current budget to absorb the City's contribution increase for the first six months of 1999, which is about $455,000. These funds are available in the health insurance budget because of prudent estimates made during budget preparation. Our estimates of cost assume that a higher number of employees will participate in the most costly medical programs than actually do. The premium increase of about $745,000 for the last six months of 1999 will need to be addressed in next year's budget. Mr. Christensen gave an overview of the rate summary information (attached) showing the cost to individual emPloyees/retirees. The new rates will become effective December 21, 1998. The Committee approved staff's request to forward the Health Plan Renewal and rate-increases request to Council at the December 9, 1998 meeting. Committee Chair DeMond requested that the consultants be available by phone for questions from Councilmembers and Councilmembers-elect. (Tim Beck or Mark Orzechowski are available at (310) 282- 8232.) 7. ADJOURNMENT The meeting was adjourned at 4:50 p.m. Staff present: Assistant City Manager Alan Christensen; Human Resources Manager Hayden; and Deputy City Attorney Andrew Thomson. Others present: Tim Beck and Mark Orzechowski from Buck Consultants; Gary Shaft; Margaret Ursin; Scott Monroe; Richard Watkins; Chuck Waide arrived at 4:10 p.m; Clay Koerner arrived later. cc: Honorable Mayor and City Council AC:jp