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HomeMy WebLinkAbout2003-04-30 Workshop Meeting City Commission Meeting Minutes MINUTES DANIA BEACH CITY COMMISSION WORKSHOP MEETING APRIL 30, 2003 1. Call to order Mayor Anton called the meeting to order at 6:00 p.m. 2. Roll Call: Present: Mayor: Bob Anton Vice-Mayor: C.K. McElyea Commissioners: Robert Chunn Pat Flury Bob Mikes City Attorney: Tom Ansbro (arrived 6:05 p.m.) City Manager: Ivan Pato City Clerk: Charlene Johnson 3. Discussion of City Health Insurance Program, costs and looking to ® the future. (Administrative Services Director) Mary McDonald, Administrative Services Director, presented an overview of the current health plan containing two major elements: 1) workers compensation, and 2) medical plan. She showed a diagram of the medical plan and reported that the City currently insured 180 employees under a PPO plan and carried a $50,000 individual retention. Director McDonald stated that an overestimated projection of a $500,000 shortfall offset an error that was made in not budgeting for retirees. Director McDonald stated the average cost per person, based on only five (5) months of claims, was $626.22 and included administrative fees, paid claims, and necessary reserves. She further reported the census data, which stated the current coverage of 181 employees, of which 37 were retirees. She stated that of the 37 retirees, 14 were disability pensions: two with General Employees, eight with the Fire Department, and four with the Police Department. Director McDonald explained that unions handled the qualifications for disability differently. She stated that the General Employees' union used social security requirements to determine disability requirements while the Fire Department used an independent medical examination. She noted that the average age of the disability retirees was 42. Commissioner Mikes questioned whether or not a retiree on the medical or pension plan would be able to keep coverage once they had obtained another job. Commissioner Flury asked if a retiree would be entitled to full dental, health, and medical benefits once another employer hired them. MINUTES 1 APRIL 30, 2003 WORKSHOP MEETING In response to Commissioner Mikes' and Commissioner Flury's questions, Dave Rubenzahl, representative from Maxon, explained that standard medical benefit practice was that a retiree's medical or pension plan would be secondary to an active employee plan. In response to Commissioner Mikes' question about disability claims, Director McDonald reported that disability for the Fire Department ran $275,860 per year; the disability for Police was running $79,890; and the General Employees disability amount was not available. Commissioner Mikes inquired as to whether or not an audit was ever conducted to determine if a retiree had taken a job elsewhere. Director McDonald indicated negatively. Commissioner Mikes also inquired about the cost of providing coverage to 18 to 25 year old dependants. Director McDonald reported that there had been no medical claims and there were only nominal dental claims. Mr. Rubenzahl reported that Florida law required dependant children coverage through age 25. Director McDonald, reported that under the current medical plan premium, the City paid $469 to insure an individual and $1,124 for a family. In response to Commissioner Mikes' question concerning dependants aged 18 to 25, Mr. Rubenzahl stated that there was a certain flexibility in plans to charge an additional premium or co-pay, but cautioned that it could become quite complicated. Commissioner Flury questioned whether or not the City could select a date to make changes in the medical coverage for new employees. Mr. Rubenzahl indicated in the affirmative and stated that it would be handled by collective bargaining. Director McDonald reported that the current plan funding requirements were $1.63 million based on actuarial projections and introduced the next section of the presentation. She reported that network discounts, program designs, and utilization management were all factors that determined plan costs. Mr. Rubenzahl, reported that case management was done from their offices in New York and explained how local agencies were utilized by sub-contracting. Director McDonald continued to explain that claims experiences also affected the plan costs and stated that the City experienced an eight percent claims increase from 2000 to 2002, which she noted was not high compared to the industry's increase of 10 to 17 percent. Director McDonald also pointed out that another cost driver was how much participation the City received from employees in terms of contribution. She showed how claims were netted out and stated that the highest element of the claims structure was hospital expenses. She further explained that the second category of expense was • prescriptions and suggested that revising the Rx plan could result in significant savings. MINUTES 2 APRIL 30, 2003 WORKSHOP MEETING She showed that Laboratory and Radiology were the third highest expenses, followed by dental. In response to Commissioner Mikes' question concerning incentives for using generic prescriptions, Director McDonald explained the options that some of the newer plans were using and stated that the current plan was extremely generous in this area. She felt that the City was not getting the best discounts available concerning prescription drugs under the current plan. Commissioner Flury inquired as to whether or not there was anything in the union contracts that prohibited the City from looking at other drug plans. Director McDonald outlined the difficulty in getting a plan that would meet the requirements of the two different union contracts. Mr. Rubenzahl reported that generic drugs were more acceptable among people now than they used to be. He stated that he dealt with unions on a daily basis, and felt that educating the employees on the benefits of generic utilization, cost savings, and future benefits could help reduce costs. He also explained the patent protection process. Director McDonald explained that budget cuts, homeland security, and health trends were some factors in determining a new plan design, as well as the desire to provide a high quality health plan while working within the Collective Bargaining Agreement guidelines. She indicated the need to have a network that reached to retirees outside the state. . Commissioner Flury felt the union contract should be researched to determine whether or not the City must provide for retirees outside the state. In response to Commissioner Mikes' question, Mr. Rubenzahl explained that once a retiree became eligible for social security, the City health plan became a secondary provider. Director McDonald reported that over the past year Maxon had done a better job in claims management. She explained that the City had a sound plan, but needed to determine whether or not this plan would meet future needs. Director McDonald suggested directing efforts toward the following options: 1) creating a new plan design for new hires, 2) redesigning the existing plan, 3) redesigning the Rx plan, 4) negotiating increased employee contributions, and 5) cash incentives in lieu of coverage. Mr. Rubenzahll addressed Mayor Anton's question about an opt-out policy, and cautioned about giving back too much money. He explained that with group coverage the healthy employees helped pay for the unhealthy and that if too many people opted out, it created a smaller contribution group. Commissioner Flury was opposed to offering an opt-out policy. She had seen too many times where it became disastrous and felt that the City plan was not large enough to be self-funded. Commissioner Mikes.was opposed to anyone with children taking an opt-out plan. He felt that parents had a responsibility to their children to provide some type of medical • coverage. MINUTES 3 APRIL 30, 2003 WORKSHOP MEETING • Mr. Rubenzahl felt that a medical plan was not just a separate entity and noted how it took care of employees, increased productivity, and prevented absenteeism. In response to Commissioner Mikes' question, Mr. Rubenzahl felt that, in general, government medical plans were "richer" than those in the private sector were and stated that large companies were keeping comprehensive plans intact. Director McDonald stated one last alternative the City could look at was to have an audit of claims to be sure they were being efficiently paid. In response to Commissioner Flury's question, Director McDonald and Mr. Rubenzahl reported that claims processing was up to date. Commissioner Flury suggested tracking such things as hospital and drug costs to determine what the trends were. Director McDonald continued with the presentation and outlined the comparison of the City of Dania Beach with other municipalities in the area. She noted that most cities offered both HMOs and PPOs, but gave the greatest benefit to employees who chose the HMO. She stated that Dania Beach's benefit package was richer and less expensive to City employees than other cities especially when it came to dependant coverage. She concluded this portion of the program by recommending that the City determined what the budget for health care would be and assessed the effectiveness of continuing with the self-insured program. She also suggested taking a survey of employees to • determine what they would value the most and if that would work into the plan design. In response to Commissioner Mikes' question, Commissioner Flury reported that HMO's were typically less expensive and had a drug plan within them and that PPO's were more expensive and they had a lot of out-of-network expense, and the co-pay could be increased. She also felt that a PPO plan was clearly superior to an HMO. Commissioner Mikes felt the current percentage of plan increase was reasonable. He stated that an employee task force's involvement in the process would be beneficial. Director McDonald turned the presentation to Worker's Compensation benefits and reported that a change in carriers had taken place and moved from Florida League to PGIT, which resulted in $92,000 in savings for the City. She stated that there was less flexibility in Worker's Compensation plans because of State regulation. She reported the options of selecting an insured plan or a trust. Director McDonald stated that the trust gave more opportunity for savings and was the option that the City currently used. She noted that an idea to reduce Worker's Compensation by classifying people differently was not an option because of legality. She felt the City was doing as well as it could in regards to Worker's Compensation. In response to Commissioner Flury's question, Director McDonald reported that the City had no one that had been on long-term Worker's Compensation. Director McDonald further explained the items that drove costs in a Worker's • Compensation program. She stated the following factors: the experience history, the loss ratio, the classification of employees, and the availability of a safety or drug MINUTES 4 APRIL 30, 2003 WORKSHOP MEETING program. She reported that claims had gone down since 1998, but premiums had risen, ® nonetheless. Director McDonald summarized that the City was committed to providing employees with a benefit-rich, affordable health plan and implementing a plan and design structure that benefited the employees while it managed costs. In response to Mayor Anton's question about opt-out incentives, Mr. Rubenzahl, stated that he had seen incentives of a $4100 allocation for the medical plan and an equal amount for the opt-out program, which he felt was foolish. He reported that he had also seen opt-out incentives of $500. Mr. Rubenzahl stated that a study could be conducted to determine how many employees were most likely to take advantage of an opt-out plan. Mayor Anton recommended offering an opt-out option with small incentives to all employees, not only Commissioners. He stated he would like to see a breakdown of what other cities' contribution levels were, both on the employee and the City end, in comparison to Dania Beach. He stated that he supported the idea of a task force made up of employees and citizens. Commissioner Mikes would like to see staff recommendations put into place that would save taxpayers money. He agreed with Mayor Anton concerning the employee task force. He also wanted a disability audit to determine whether or not all the current disability pensions were legitimate. Commissioner Flury agreed with Commissioner Mikes and wanted consideration of a less expensive option for new hires after January 1, 2004. She also agreed with Mayor Anton that if the Commissioners received an opt-out option that the employees should also receive it, however, she opposed the idea of an opt-out program. Mayor Anton suggested conducting a survey of employees to determine how many would be interested in an opt-out program offering $100 to $200 per month. In response to Commissioner Mikes' question about insurance costs, Mr. Rubenzahl stated that costs would continue to increase and thought the only thing that would change would be the rate of increase. Commissioner Flury felt that knowing the ages of the people interested in an opt-out program would be beneficial. In response to City Manager Pato's questions concerning how governments were coping with the higher costs of health care, Mr. Rubenzahl reported that the Internal Revenue Service gave some advice concerning consumer directed care health reimbursement accounts that a number of private companies had begun using. He explained that it was a higher deductible plan with a carry over amount for people who did not go to the doctor on a regular basis. He felt that whether or not this type of program would work remained to be seen. Mr. Rubenzahl noted that large corporations encountered the same problems as smaller groups and that the government had as many medical plans as there were agencies. The Commissioners thanked Director McDonald for her presentation. • MINUTES 5 APRIL 30, 2003 WORKSHOP MEETING 4. Adjournment. • The meeting adjourned at 7:40 p.m. 0OBA9TON'o MAYOR-CO MISSIONER ATTEST: MIRIAM NASSER ACTING CITY CLERK Respectfully submitted by Jill Fiorentino APPROVED: February 10, 2004 • MINUTES 6 APRIL 30, 2003 WORKSHOP MEETING