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Council looking for ways to lower insurance expense

Between March, 2009, and February of this year, the city of Cairo’s health insurance provider has paid out over $1.8 million in claims, but only collected $1,077,040 in premiums and city leaders are bracing for a second consecutive year of a double digit rate hike as they craft the 2010-2011 operating budget.
“We need to be prepared to make some tough decisions at the next meeting,” Mayor Richard VanLandingham told city councilmen Monday.
Currently, the city pays the full premium for city employees and their annual deductible is only $250. Six employees pay for family coverage and they pay the full premium of the additional coverage.
Two weeks ago, the mayor encouraged the council to consider increasing the deductible and requiring employees to pay a portion of their health insurance to get them more “involved” in their health care.
The cost of the city’s health insurance increased approximately 30 percent last year, according to City Manager Chris Addleton, and Ron Arline of Madison Street Insurance told councilmen Monday night to expect a rate increase this year of about 25 to 30 percent.
“We know it is going up, but we don’t know how much. I hope to have some numbers by the 28th of this month,” Arline said.
The insurance agent told city leaders that most of his clients have $1,000 and $2,000 deductibles and indicated that a $250 deductible was practically unheard of these days. He went on to describe the city’s insurance plan as a “Cadillac plan.”
Arline said he would present the council with some recommendations to help bring the city’s cost of health insurance down. He also has some ideas on how to help city employees cover the higher deductibles.
Currently, the city pays half of the employee’s dental plan and between March 2009 and February of this year, $60,958 had been collected in premiums, but only $30,936 had been paid in claims.
Arline suggested the city self-fund the dental plan and his agency would help manage the plan. By doing so, according to Arline, the city could use the $30,000 in savings to create an account that would be available to help employees pay the higher deductibles.
The city council has discussed going to a self-insurance plan for the major medical, but Arline says with the city’s claims history, that would be inadvisable and the likely costs would be prohibitive.
Councilman James H. (Jimmy) Douglas asked Arline how many employers are paying any portion of an employee’s dental plan and the insurance agent said not many, and that he does not see any paying 100 percent of health coverage.
On Tuesday, City Manager Addleton took exception with Arline’s description of the city’s insurance plan as being a rich plan. The city manager described it as “outdated.”
“We need to explore all options that will help us reduce our cost for health insurance,” the city manager said.
Although most employers do not pay 100 percent of an employees’ health insurance, Addleton notes that many do subsidize family coverage for employees and the city does not.
During the discussion Monday night, Arline indicated that only 10 to 15 percent of the city’s employees actually meet their annual deductible. Addleton favors a plan as proposed by the insurance agent that would create an account to help employees cover the cost of a higher deductible.
“From what Ron said, it appears to me that our employees  use their insurance only when they really need it,” Addleton said.
Unfortunately, over the last several years some city employees have suffered serious medical conditions. In fact, according to Arline’s report to the council Monday night, two employees between March 2009 and February 2010 had made claims that totaled $1,159,629.22, which is 62.7 percent of the total claims paid for the entire city plan.
The city’s insurance provider currently is United Healthcare, but Arline says he plans to “shop it” and see what will be the best price available.
Addleton admits the city can no longer afford the same plan it currently offers.
Grady County employees’ total premium for health care is paid by the county, but the annual deductible is $1,000. However, Grady County Finance Director Mary Mayer notes that the county also offers a bridge insurance that under certain conditions pays the employee back for the deductible.
Grady County school system employees pay approximately 25 percent of their health insurance premiums and deductibles range from $600 for employees to $1,200 for families.

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