HomeMy WebLinkAbout08/19/2004 B A K E R S F I E L D
Staff: Carroll Hayd~fi Irma Carson
For: Alan Tandy, City Manager Mark Salvaggio
AGENDA SUMMARY REPORT
SPECIAL MEETING · PERSONNEL COMMITTEE
Thursday, August 19, 2004, 4:15 p.m.
City Manager's Conference Room, Suite 201
Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA
1. ROLL CALL
Called to Order at 4:16 p.m.
Present: Councilmembers Harold Hanson, Chair; Irma Carson; and Mark Salvaggio
2. ADOPT JUNE 18, 2004 AGENDA SUMMARY REPORT
Adopted as submitted.
3. PUBLIC STATEMENTS
4. NEW BUSINESS
A. Review of 2005 health insurance plan rate quotes
Human~ Resources Manager Carroll Hayden introduced Tim Beck from Mellon,
the City's health insurance consultants, to provide highlights of the presentation
that was given to the Insurance Committee.
Mr. Beck gave an overview of the plan performance for Blue Cross PPO and
Dental Plans from 1997 to present. For 1997 and 1998 there were losses of
-$385,273 for 1997 and -$339,694 for 1998. Mellon (formerly Buck Consultants)
was retained by the City in August 1998 to provide health consulting services.
For calendar year 1999 the loss was reduced to -$32,048. There was a gain in
the plan of $321,399 in 2000. The gains in 2000 and 2001 offset all prior losses.
Starting in 2001 there were gains in the plan each year with a reserve/surplus of
$408,474 in 2001~, which has been built up to an estimated $538,917 for 2004.
Agenda Summary Rep9
Personnel Committee Meeting
Thursday, August 19, 2004
Page - 2-
Since the Personnel Committee meeting on June 18, 2004, regarding projected
increased renewal premiums for 2005, the consultants have met with Blue Cross
and were able to negotiate the following:
Medical Renewal Proiections for 2005 Premium-~
For Actives with Blue Cross PPO the initial quote was for an increase of 17.59%,
which has been negotiated to an increase of 8.60%. There was no increase for
Retirees.
For Blue Cross HMO (CaliforniaCare) the initial quote was an increase for
Actives and Retirees of 21.30%, which has been negotiated to 10.50%.
Kaiser was very aggressive and kept their projected increases Iow. The Active
and Pre-65 Retiree quote was for an increase of 1.60%, which the consultants
felt was acceptable with current trends. The Senior Advanced Retiree quote was
actually a decrease of -13.50%.
The projected dollar increase for medical premiums for calendar year 2005 is
$902,859 over calendar year 2004.
PacifiCare Secure Horizons Plan will not renew. There was one person on the
plan and it is not cost effective for PacifiCare to renew.
The consultant explained the Blue Cross plan has been building a surplus. Blue
Cross has had 5% retention margins in the plan. The consultants have been
looking for an opportunity to get those build-in margins taken out. It is a function
of underwriters when you reach a sufficient surplus if they feel it is adequate to
handle adverse claims, there is an opportunity to do that. Blue Cross was
convinced to take out the 5% retention margin. Using the surplus was the most
significant change that allowed lower premium increases than first quoted for
2005.
PBH, Dental, and Vision Renewal Proiections for 2005 Premiurrm
For PacifiCare Behavior Health (PBH) the quote was for an increase of 2.00%.
The projected dollar increase for behavior health premiums for calendar year
2005 is $6,906 over calendar year 2004.
For PPO Dental the initial quote was an increase of 30.68%, which has been
negotiated to an increase of 10.00%. The quote for Pacific Union Dental was an
increase of 4.00% and Dedicated Dental an increase of 5.00%. The projected
dollar increase for dental premiums for calendar year 2005 is $84,296 over
calendar year 2004.
There was no increase projected for the vision plan.
Agenda Summary Re
Personnel Committee Meeting
Thursday, August 19, 2004
Page - 3 -
Based on the current negotiated quotes, the total overall projected increase for
calendar year 2005 medical, dental, vision, and PBH premiums is $994,060 over
calendar year 2004.
For the dental plan when the City changed from Kern County Network to Prudent
Buyer Dental, this was expected to have a positive impact on claim experience
utilization and it did not. The consultants began discussions and in May of this
year discovered that the Plan had been incorrectly implemented. The City was
not getting the benefit of the contracted rates as expected. This has been
remedied and any employees that were affected will be credited. Correcting how
the plan had been implemented allowed the significant decrease in the initial
quoted PPO Dental premium increase for 2005 from 30.68% to 10.00%.
The consultant reviewed a list of possible alternative plan design changes that
might produce cost savings, such as to possibly add a $75 emergency room
copayment. The Insurance Committee will be meeting one more time and will
review plan design changes for their recommendation to the Personnel
Committee.
Chuck Waide commented that he had been critical of the lack of information
presented to the Insurance Committee by the consultants. He expressed that he
is very happy with this report and the negotiated downward spiral of the projected
rate increases, and all the information that had been requested by the Insurance
Committee has been provided.
5. ADJOURNMENT
The meeting was adjourned at 4:55 p.m.
Attendees: Assistant City Manager Alan Christensen; Deputy City Attorney Alan
Daniel; Human Resources Manager Carroll Hayden; Ginger Rueben, Human
Resources Benefits; John Patterson, Craft Worker II (CCAPE/Miscellaneous); Mary
Ellen Gonzales; Scott Monroe, Paul Smith and Joshua Yates, Fire Department;
Chuck Waide and Pete Rodriguez, CCAPE; and Tim Beck from Mellon
S:'~,C\04PersonnelCom m ittee\PO4aug 19summary