11/07/1988 SPECIAL WORK SESSION - HEALTH INSURANCE
November 7, 1988
The City Commission of the City of Clearwater met at City Hall, Monday, November 7, 1988, at 1:00 p.m., with the following members present:
Rita Garvey Mayor-Commissioner
James Berfield Vice-Mayor/Commissioner (arrived 1:14 p.m.)
Lee Regulski Commissioner
Don Winner Commissioner
William Nunamaker Commissioner
Also present were:
Ron H. Rabun City Manager
Cynthia E. Goudeau City Clerk
Robert Siver Siver & Associates
The Mayor called the meeting to order at 1:00 p.m. and the following items were discussed:
The City Manager reviewed the history of the Health Insurance Program stating the City was facing a 57 percent increase in premiums from Gulf Life. The Commission authorized Mr. Siver
and his Company to look at the problems and come back with recommendations. Unfortunately, there is no magic cure and the City is trying to propose a new plan and set a course for the
future.
Mr. Siver reviewed the current provisions for health insurance stating there were four plans with the individual employee cost being covered by the City and dependent coverage being
paid by the employee. Retiree's pay 100 percent of the coverage at the active employee rate. He stated health costs have been increasing and the City's claims experience has been creeping
upward. He stated, if there is no change in the plan, there will still be a 25-50 percent additional increase.
He reviewed the meanings of PPO & HMO networks, stating they are attempts to contain the costs of health care. He stated they released a request for proposal designed for a managed
medical plan and the responses were not great. After looking at the proposals, as a result of the RFP, they requested further study be done by those responding and came up with the
HMO plus concept where an employee could join an HMO but could choose to go outside of the HMO network with increased payments. He stated he believes reasonable plans will be available
within the next two years.
Discussion ensued regarding the various options available to the City. It was also recommended that the City consider establishing an IRS Section 125 premium conversion which would
result in the deduction being made prior to taxes, thereby reducing the employees taxable income.
Mr. Siver's recommendation is that the City adopt option #1 as outlined in his proposal which would maintain the current HMO's plus the current traditional plan. The major reason for
this recommendation is that for the City to change to the Humana plan that was submitted, would limit the doctors available to the employee's and would require that many of them go to
St. Petersburg for care.
Further discussion ensued regarding the options available to the City and in response to a question, it was indicated self insurance was not a reasonable alternative at this time.
In response to a question it was indicated that while a multi-year contract would be desirable, there are no insurance companies willing to
provide such a contract.
Discussion ensued regarding the impact of health care and deductibles on rates. It was the consensus of the staff that option #1 made the most sense.
The City Manager stated that it was not a good year for insurance but that option #1 leaves the City within the budget.
Mr. Siver also suggested that the City budget an employee benefit equalization fund. It was reiterated that it is anticipated within two years the market for insurance would loosen.
In response to a question regarding why option #1 is being recommended when it will cost $125,000 more than option #2, the City Manager responded that staff took into account the hospitals
and doctors available to the employees. It was the consensus of the Commission to schedule this item for its meeting of November 17, 1988.
The meeting adjourned at 2:30 p.m.