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HomeMy WebLinkAbout08/30/2004 B A K E R S F I E L D HarOld Hanson, Chair Irma Carson Mark Salvaggio Staff: Carroll Hayden SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield Monday, August 30, 2004 4:15 p.m. City Manager'S Conference Room, Suite 201 Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA AGENDA 1. ROLL CALL 2. ADOPT AUGUST 19, 2004 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Review and Committee recommendation on 2005 health insurance plan design changes- Hayden 5. ADJOURNMENT S:~C\04PersonnelCommittee\PO4aug3Oagen.doc DRAFT St---~'~.' ~ Hayd~ Irma Carson For: Alan Tandy, City Manager Mark Salvaggio AGENDA SUMMARY REPORT SPECIAL MEETING · PERSONNEL COMMITI'EE 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 Report Personnel Committee Meeting DRAFT 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 ~vith 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 Premiums 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. Agende. Summe. ry ~eport DRAFT Personnel Committee ~eetJng 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\04PersonnelCommittee~04aug 19summary The following documents pertain to the: PERSONNEL COMMITTEE meeting of Monday, August 30, 2004 at 4:15 PM. RANDOUT - AUGUST 30, 2004 INSURANCE COMMITTEE.AUGUST, 2004 REPORT The Insurance committee met on Friday, August 27, 2004 to discuss and take action on health plan design changes. The committee decided that there would be no plan design changes at this time. The committee did decide that the employees' portion of the Blue-Cross PPO surplus premium dollars stay on reserve with Blue Cross to help mitigate future large hikes in premiums.