Resolution 14-116 Extinguishing the City Self-Insured Employee Health Insurance Plan and Approving a Contract With Premera Blue Cross

Summary

A Resolution of the City Council of Homer, Alaska, Extinguishing the City Self-Insured Employee Health Insurance Plan and Approving a Two Year Contract With Premera Blue Cross. City Manager.

Ordinance/Resolution ID: 
14-116
Ordinance/Resolution Status: 
Adopted
Effective Date: 
10/27/2014
File Attachments: 

Related Meetings

Details

CITY OF HOMER

HOMER, ALASKA

                                                                                                                             City Manager

RESOLUTION 14-116

 

A RESOLUTION OF THE CITY COUNCIL OF HOMER, ALASKA, EXTINGUISHING THE CITY SELF-INSURED EMPLOYEE HEALTH INSURANCE PLAN AND APPROVING A TWO YEAR CONTRACT WITH PREMERA BLUE CROSS.

 

               WHEREAS, HCC 3.05.043, adopted via Ordinance 94-5, provides for a health insurance reserve fund and the City has successfully operated a self-insured employee health insurance plan for two decades; and

 

               WHEREAS, The City Administration and its benefits consultant, Mercer Health and Benefits LLC. , have spent the past six months analyzing the performance of the self- insurance fund, projecting costs in 2015 and 2016 if the City remained self-insured, soliciting proposals from private insurance companies, and comparing those proposals with the self- insured plan in terms of both cost and benefits; and

 

               WHEREAS, The results of this internal review and the recommendations of the City Manager are contained in Memorandum 14-159 which was first provided to Council members on October 13, 2014; a copy of which is attached; and

 

               WHEREAS, The City Administration has concluded that although the self- insured plan has served the City and its employees well for many years, the health insurance financial and regulatory environment has changed significantly, health care costs have increased exponentially, and the employee demographic has evolved over time; all of which conspire to make self- insurance a much less attractive option; and

 

               WHEREAS, The Administration concluded further that the employee pool is too small for self-insurance, the self- insured plan is too expensive, the financial risks for the City are too high, the administrative burden is too great, and that the self-insured plan is not sustainable without large budget cuts in other areas, additional reductions in benefits, and increased payroll deductions; and 

 

               WHEREAS, The City received several attractive proposals from private health insurance companies which were evaluated by the consultant, the City, and the Employee Committee and all agreed that the best proposal was the one submitted by Premera Blue Cross; and

 

               WHEREAS, The Premera Blue Cross proposal would reduce total health care costs by approximately 30 percent or $600,000 over projected 2015 self-insured plan costs and provide insurance coverage that is better overall than the existing plan; and

 

               WHEREAS, Memorandum 14-159 contains a recommendation that the Council move away from the self-insured plan to a fully insured plan with a private sector insurance company, accept the proposal from Premera Blue Cross, and approve a new two year contract; and

 

               WHEREAS, The Employee Committee had a two hour presentation and discussion with Jeff Paxton of Mercer, reviewed the benefit coverage and cost projections for the current plan, and reviewed the proposals submitted, and concurs with this recommendation.  

 

               NOW, THEREFORE, BE IT RESOLVED that the Homer City Council hereby finds that it is in the best interest of the City to extinguish the self-insured employee health insurance plan.

 

               BE IT FURTHER RESOLVED that the Council hereby accepts the proposal from Premera Blue Cross, approves a new two year contract based upon the proposal with a term beginning on January 1, 2015, and authorizes the City Manager to execute the appropriate documents.

 

               BE IT FURTHER RESOLVED that the Council authorizes the City Manager to draft an ordinance amending HCC 3.05.043.

 

               PASSED AND ADOPTED by the Homer City Council this 27th day of October, 2014.

 

CITY OF HOMER

 

                                                                                          ____________________

                                                                                          MARY E. WYTHE, MAYOR

 

 

 

ATTEST:

___________________________

JO JOHNSON, MMC, CITY CLERK

 

Fiscal Note: $600,000 reduction over projected 2015 self-insured plan costs.