By Karen Cornelius
The Health and Safety Committee of Vermilion City Council met on Monday night, February 5. First on the agenda was a presentation by BAC Health Care, the city’s insurance carrier for city employees. After 40 minutes of discussion, there seemed to be more questions than answers on this self-insured plan. The city’s cost for family and individual appeared to be rapidly going up and most people attending seemed surprised by the costs and lack of specific information. Now that the door has been open on what the city is paying, the main question to determine seems to be the fact that the city could be overpaying for health insurance. Council needs to find out if something can be done to lower costs yet keep good benefits.
Representing BAC Health Care was the vice president, Tom Forrester. He said BAC is the third party administrator who works for the city. He said Vermilion has been self-insured since 1980 and with BAC for about 15-20 years. He enumerated that BAC does three things for the city by paying claims, writing the city’s benefits, not selling them, and monitoring health claims. He said BAC can turn the financials into clinical data by their medical staff who does health reports on where the problems are and if people are in compliance with their prescriptions. They reach out to employees with suggestions on what to do to stay healthy. The city’s renewal is coming up and it will be based on the age of the city employee population, the union negotiated benefits, and claims. These three items are important in computing costs and renewals. BAC also has a Wellness Program where employees can buy down their deductibles to save money and detect early health problems.
Forrester said during the last couple of years, BAC has handled some serious claims costing money. He said 20 percent of the city employees make up 85 percent of the claims, large ones. As an example, one person in September had claims of $114,375 and by the end of the year added on an additional $91,000. Another had $89,000 which increased to $107,000 by the end of the year. He said these are big claims and some are cancer and drug expenses as well have gone higher. Now plans the city offers are unlimited and hospital prices are high. He said he sees a 12 percent increase for Vermilion.
Councilman John Gabriel who first requested information from the administration about health care costs was struggling because the actual figures and the 12 percent increase did not compute. The city’s costs were up more than 12 percent. He was sure the city could get coverage in the private world for much less than they were paying now. He said once the city’s money goes into the self-insurance plan they can’t get any back out to use for other needs such as streets. Forrester responded he believed the city budgets health care based on the worst case scenerios. He said they could budget differently and his doctors feel the city’s major claims could come down in the future. Forrester said to save money they do prescription rebates. He thought the insurance market could decline Vermilion based on their claims history. He said a company could be coming up with a plan in April for schools and municipalities the size of Vermilion where there could be an opportunity to save money.
Councilwoman Barb Brady asked if BAC negotiates with hospitals on their rates. Forrester said they do and have saved Vermilion a discount of over $498,000 on the bills through Signa. It was noted that the city has to pay costs for the Wellness Program testing with $117,000 spent last year. Councilman Gabriel stated he is not against good health care, but he questioned how they can provide the same benefits for much less. He said a family of six, for example, costs the city a fortune. Gabriel said according to the figures he requested from the finance department each family coverage for the year is $39,999. Of this, $2,279.94 is covered by the city employee for the year or $87.69 per pay period. The monthly amount billed to the city is $3,332.61 for family. For an individual, the cost is $18,408.24. The individual employee contributes $1,765.66 per year or $67.91 per pay period. The city is billed $1,534.02 per month for individual. There are currently 15 on single plans and 34 family plans. They have medical, prescription, dental, vision and $10,000 in life insurance. There are 8 employees who have opted-out and receive a stipend of $400 per month totaling $38,400 per year for these employees.
Police chief Chris Hartung said he has to budget $600,000 to cover the health care costs in his department. He wanted to know what portion stays with the city and what goes into the kitty or self-insured pot. Forrester responded that he didn’t have a department breakdown and wasn’t sure that night of the fixed expenses and administrative fees for Vermilion. Councilman Steve Holovacs had been off council for two years and was taken back by the $39,999 per family cost and said earlier it had been in the $20,000 ranges. He was concerned council has to do a 2018 budget by the end of March and they don’t know the health care costs because the BAC renewal doesn’t come up for the city until September or October. He thought they could be in a hole by the end of the year. Forrester said he would talk to the new finance director, Amy Hendricks this week as well as the mayor. “I have a gut feeling that too much is taken out for you,” said Forrester. “We’ll find out for you.”
Councilman Gabriel said they now know what is going out, but they don’t known how the money is spent and what the administrative fee is and the fixed expenses. Health chairman Brady said she needs the end of the year figures for 2017, the costs, and she would like a spread sheet to get a better handle on insurance costs, claims, expenses, etc. The topic will go back on the Health and Safety agenda for March.