By Karen Cornelius
The Finance Committee of city council met on Monday, April 9, and listened to a review of the city’s self-insurance plan for city employees. Council called for the review due to concerns health care costs were out of control. The representative from the health plan, BAC, Tom Forrester was present with some suggestions to curb costs that have escalated year after year to what he estimated in 2017 as $1,145,984.10. A possible cost of even $1.6 million was mentioned for 2018.
Forrester told the committee that mayor Jim Forthofer has started a new committee on health care to go forward into union negotiations and to bring in attorney Susan Anderson for the city to review the structure of the plan. He said currently an individual’s deduction is $2,000 for single and $4,000 for family. Then, if they meet those deductibles they have a 100 percent free layout. There is also a Wellness Program where employees can buy down their deductibles to where they could be “zero” out of pocket. “That’s a wealthy plan,” he said. “That’s one you don’t see any longer so we have to re-think this.” He said the city’s increases year after year are due to the claims. He said in the self-insured plan they buy a specific deductible which is a $50,000 obligation per individual per claim. The city is responsible for this, but he advised this could be changed. There is also another layer he called an aggregate for claims that never reach the $50,000 but the city is responsible for the whole host of aggregated claims. He said this is due to an aging work force. He said looking forward to today and the future he doesn’t see any serious large claims coming up.
Forrester said they could make some changes in the basic benefit plan such as what they are buying, make a change in the deductible to add out-of-pocket costs. “We cannot continue on with “zero” deductible plans, we need greater participation.” He suggested looking at other plans, but said Vermilion has too many claims and no other insurance would cover them. He suggested seeing where they are heading with claims in the next two to three months and get attorney Anderson involved to help with negotiations giving her the data to where she can go. He thought this would be on ongoing process for the next few years.
Councilman John Gabriel pointed out that he had questions related to how the city pays versus BAC’s book and figures. He said this is at least the third or fourth set of numbers that he has been given concerning budget figures from 2015, 2016, and 2017. Now that councilwoman Barb Brady and he are on the new health committee, he hopes to bring back a set of numbers that are more accurate. “Our growth doesn’t match the expenses,” said Gabriel. Forrester and Gabriel agreed the self-insurance plan is a moving target. Forrester added that Vermilion was hit hard the last few years with large claims.