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HomeMy WebLinkAbout06/18/2004 B A K E R S F I E L D Staff: Carroll Hayden Irma Carson Mark Salvaggio AGENDA SUMMARY REPORT SPECIAL MEETING · PERSONNEL COMMI'I-FEE Friday, June 15, 2004- 12:30 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 12:30 p.m. Present: Councilmembers Harold Hanson, Chair; Mark Salvaggio and Irma Carson 2.ADOPT SEPTEMBER 18, 2003 AGENDA SUMMARY REPORT Adopted as submitted. 3.PUBLIC STATEMENTS 4.NEW BUSINESS A. Overview of health insurance plans status; 2005 projections Committee Chair Hanson explained the purpose of the meeting was informational and not to negotiate health insurance costs. The Committee wanted to invite the consultants to provide information and answer questions, so the employee representatives would be informed when meeting with the various groups. Human Resources Manager Hayden stated the City's health insurance consultants were requested to put together an analysis and provide an overview on how the health plans are doing to date and what trends might be expected. The information for 2004 was estimated on the first four months of 2004, as those were the only figures available at the time the report was prepared. Human Resources Manager Hayden introduced consultants Michael Schionning and Tim Beck from Mellon. Agenda Summary Report Personnel Committee Meeting Friday, June 18, 2004 Page - 2 - Consultant Michael Schionning explained the report information was provided by Blue Cross of California and covered Blue Cross medical/Rx, dental indemnity benefit plans, medical PPO plan utilization and a brief prescription drug analysis for actives and retirees. Financial information for the HMO plans was not included, but will be available at a later date. Consultant Michael Schionning provided an overview on the financial results and utilization analysis for year-end 2003, and based on the first four months of 2004 experience, preliminary comparisons on how 2004 is doing compared to 2003, and preliminary projections for 2005. The Blue Cross utilization analysis showed 2003 did fairly well and finished with a slight surplus of $26,784. In addition, the plan was credited with $6,973 in interest on the existing reserve. Together, this increased the accumulated reserve/surplus to $462,835 through December 31, 2003, of which about $200,000 could be available to return back to the plan with Blue Cross holding the balance in reserve. The total premiums for 2003 were $6,594,401. The report included information on how 2003 compared with 2002. Active inpatient hospital claims increased substantially for 2003 with longer hospital stays compared with 2002. Also, prescription drug costs increased due to an increase in the amount of prescriptions per employee per year. The provider network discount for actives was about 5% more in 2003 compared with 2002. The consultant felt this was a direct benefit of the City's changing the provider network for handling of claim payments for PPO and Blue Cross dental plans from the Kern Foundation to Prudent Buyer, which has a larger network and a bigger discount. Total 2004 claims for active and retiree medical and dental (based on the first four months of 2004) overall are running about as expected. The active medical is running about 6% higher than premium rates. The retiree claims are running about -22% lower. Overall dental is running about 12% higher than expected. Preliminary projeCtions for 2005 indicate an increased renewal adjustment for actives of approximately 21.3% and a decrease for the retirees of approximately -14.1% for an overall average increase of 11.7%. A 23.6% increase is projected for dental. The total overall average increase for medical and dental is projected at 12.9%. City Manager Tandy explained the overall average percent of increase does not reflect the true impact on the City's budget. The projected 21.3% increase for active medical and the increase in dental will have an impact. Currently, the City is picking up 80% of active employee premiums. Agenda Summary Report Personnel Committee Meeting Friday, June 18, 2004 Page - 3- The consultants will be negotiating for insurance premium rates in July with information available in August. The information will include updated projections for 2004 and the renewal rates for 2005. Committee Member Salvaggio expressed he would like to have a Committee meeting in early August when more information is available. In response to questions, Human Resources Manager Hayden stated the current health consultant contract expires in August 2004; however, staff has been considering requesting the current contract be renewed rather than going out with a Request for Proposals. Committee Member Salvaggio said he found it surprising that none of the employee organizations have a provision in their MOUs that clearly states if a retiree passes, the spouse will continue to have the same health benefits. He requested it be put in writing. Human Resources Manager Hayden confirmed the City currently continues health plan benefits for spouses when a retired employee passes, but there is nothing in writing. Committee Chair Hanson requested the Agenda Summary Report be sent out within the next 30 days and encouraged the Insurance Committee to meet with the consultants. Chuck Waide, CCAPE, spoke regarding a retiree savings account, which may exist to assist the retirees with health insurance costs and he plans to check to see if such an account exists and its purpose. 5. ADJOURNMENT The meeting was adjourned at 1:30 p.m. Attendees: City Manager Alan Tandy; Deputy City Attorney Bob Sherfy; Human Resources Manager Carroll Hayden; Ginger Rueben, Human Resources Benefits; John Patterson, Craft Worker II (CCAPE/Miscellaneous); Scott Monroe, Fire Department; Brian West, Police Department; Chuck Waide, CCAPE; Tim Beck and Michael Schionning from Mellon S:'~AC\04PersonnelCommitteeP04jun 18summary