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Home My WebLink About09/08/1997 BAKERSFIELD Alan~y, Cit~a~a/~ Patricia J. DeMond, Chair Staff: John StinsonJ Mark Salvaggio . / Jacquie Sullivan AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, September 8, 1997 4:15 p.m. City Manager's Conference Room 1501 Truxtun Avenue Bakersfield, CA 93301 1. ROLL CALL Call to Order 4:20 p.m. Present: Councilmembers Patricia J. DeMond, Chair; Jacquie Sullivan and Mark Salvaggio 2. APPROVAL OF AUGUST 11, 1997 MINUTES Approved as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS A. HEALTH PLAN MARKETING John Stinson gave a status update. This item was deferred from the last meeting as there were several questions from the Committee and outstanding issues that needed to be resolved. A response prepared by Herb Kaighan of Aon Consultants A~: PROVED AS SUBI, IYTI'ED JAI~UARY 12, 1998 AGENDA SUMMARY ORT PERSONNEL COMMITTEE Monday, September 8, 1997 Page -2- was handed out (copy attached) as a follow-up to the questions from the August 11th meeting which includes: · A summary of responses from the carriers (included in the exhibits) · The benefit and access differences between our current Fee for Service and the Kaiser point of service plans with clarification dialog. · Information regarding Blue Cross CaliforniaCare HMO negotiations with Gemcare a current HMO physicians group. · Information on Kaiser Medicare Risk Plan for non-California residents primarily relating to retirees--to offer a consistent plan, the plan for California will be used · Information regarding plan differences between Blue Cross Senior Care and proposed Kaiser zero-premium medicare risk coverage, and rate information on offering coverage separately for just retirees versus coverage for the active group. · Information regarding dental coverages · Cost information on orthodontia benefit maximums (for review only) · Survey information regarding the fee-for-service dental plan annual maximum · Confirmation of proposed rates by Blue Shield · Clarification on point of service PacifiCare proposal · Information on the Kaiser HMO plan and if it is added as an additional HMO, whether or not they would carve out the mental health and substance abuse benefits that are included, they do not do that, so there would be some duplication of benefits (The Committee directed Herb Kaighan to check with Kaiser to make sure this does not cause future problems.) · Information regarding PacifiCare and zero-premium medicare risk programs Mr. Stinson stated that the City Manager and staff are in agreement with raising the annual maximum dental benefit to $1,500 if the Kaiser HMO plan is added, as the cost savings to the City by adding the second HMO would offset the increased cost of raising the maximum dental benefit. Mr. Stinson explained that the addition of Kaiser would reduce the years service subsidy for retirees by about $18 per month for a retiree with thirty years service. This would mean an equivalent additional cost increase for retirees. It was also pointed out that there will be a significant increase in the fee for service retiree medical rates and retiree contributions due to the rates being developed from the retiree claims experience separate from active employee experience (i.e. unblended rates). Amounts paid by retirees for fee for service are estimated to increase by approximately $33.86 per month for single, $65.94 per month for two-party, and $98.02 per month for family coverages due to the separate experience rating (increase example based on 30 years service). The reduction in the year service subsidy affects both retiree fee for service and retiree HMO participants and is in addition to the contribution increases anticipated for retiree fee for service rates due to separate experience rating. AGENDA SUMMARY ORT PERSONNEL COMMITTEE Monday, September 8, 1997 Page -3- The Insurance Committee met on September 4th to review questions and information from the last Personnel Committee on August 11th and City staff recommendations. Information regarding the potential impacts on retirees regarding the addition of Kaiser as a second HMO was presented by staff. The Insurance Committee discussed the impacts of the fee for service rate increases and reduction of the years service subsidy due to the addition of the Kaiser option on the retiree group. They also considered the cost impact of increasing the maximum dental benefit. After much consideration, and input from a retiree in attendance, the Insurance Committee unanimously recommended that: 1) The annual maximum dental benefit be raised from $1,000 to $1,500; 2) The Kaiser HMO plan be added as a second HMO for employees and retirees; and 3) addition of the Kaiser zero- premium medicare risk plan be offered as a third medicare risk plan for retirees as there is no cost to the City. After reviewing cost information, the Insurance Committee is no longer considering increasing the lifetime orthodontia benefit maximum at this time. The Insurance Committee recommends approval of the total health plan proposal. Employee Representative Chuck Waide stated that it is a positive package for the employees and good for the City as well. Mr. Stinson stated we have additional information on renewals. As a result of the marketing efforts, the renewal rate from MESC, the vision plan, has been confirm with no increase (with the possibility of a 2-year rate guarantee upon evaluation in the first quarter of 1998); and the renewal rate from Psychology Systems, the mental health and chemical dependancy coverage, has been confirmed with an 18 percent reduction in rates from what they are currently. The recommended health plan proposal includes the following: · Renewal of Blue Cross Indemnity Fee For Service Prudent Buyer Plan. (A reduction of rates of approximately 7.6% which equates to $216,000 savings) · Renewal of the HMO plan with CaliforniaCare. (A reduction of rates of approximately 1.5% which equates to $36,000 savings. 8% to 11% rate guarantee depending on shift to Kaiser for 1999 renewal) · Add Kaiser HMO plan as alternate HMO choice to CaliforniaCare for employees and retirees. Would expand HMO availability outside California to a limited number of other states and most western states for retirees. (Estimated savings due to reductions to City retiree subsidy is $45,000. Additional city and employee savings could occur if employees switch from more expensive plans to Kaiser. If more than 15% of City employees shift from California Care to Kaiser, there are likely to be rate increases in CaliforniaCare HMO to offset lost enrollment impacts, these should net out with premium savings, however.) · Pursue option of offering Blue Cross Secure Plan III medicare risk plan as alternate to current Blue Cross medicare risk plan. Let plan participants (6) choose preference. (Zero-premium plans so no cost impact.) AGENDA SUMMARY ORT PERSONNEL COMMITTEE Monday, September 8, 1997 Page -4- · Renew PacifiCare (Secure Horizons) medicare risk plan. (Reduction of 18.2% or approximately $2,000) · Offer zero premium Kaiser medicare risk plan. This adds another option for medicare retirees and provides transition for retirees who may choose Kaiser HMO plan when they become eligible for medicare. · Renewal of Blue Cross Indemnity Fee For Service Dental Plan. (No change in premium proposed) Increase plan annual maximum from $1,000 to $1,500. (Additional cost approximately $41,000) · Renewal of DDS prepaid dental. (Reduction of 2.4% or approximately $2,000 in savings, three year rate guarantee) · Renewal of HBI prepaid dental. (No change in premium proposed, three year rate guarantee) · Renewal of MESC vision plan. (No change in premium proposed, with the possibility of a 2-year rate guarantee upon evaluation in the first quarter of 1998) · Renewal of Pacificare, Psychology Systems Mental Health and Substance Abuse plan. (Reduction of 18% or approximately $41,000 savings, two year rate guarantee, no more than a 5% increase effective January 1, 2000) The proposed renewals are estimated to provide a net savings of approximately $300,000 to the City and its employees. The Personnel Committee unanimously approved the health plan proposal and forwarding it to the full Council. Staff also gave the status of getting a retiree representative for the insurance committee. 6. NEW BUSINESS None 7. ADJOURNMENT The meeting was adjourned at 5:15 p.m. Staff present: Assistant City Manager John W. Stinson; Assistant City Attorney Bob Sherfy; and Human Resources Manager Carroll Hayden who arrived at 4:30 p.m. Others present: Herb Kaighan, AON Consulting Retiree Margaret Ursin' C ayton Koemer, Alliance Brokers and Consultants; Rodger Gagosian, Gagosian Associates; and Chuck ~aide, SEIU Local 700. cc: Honorable Mayor and City Council JWS:jp