ELYRIA — City employees saw their health insurance contribution increase earlier this year, but with claims reaching upward of $5.9 million this year, the city is looking for ways to cut health costs.
In hopes of reining in those costs, the city has hired a new health benefits consultant who will analyze the city’s health and ancillary benefits to determine if cost savings can be found.
This is the first time in 12 years the city has sought a new consultant.
Mayor Holly Brinda said the previous administration used the same group for 12 years, but she felt it was best to find someone who could give her a new perspective on what the city is doing — right or wrong — especially in light of skyrocketing expenses.
Gallagher Benefits Services and the Hoffman Group have been hired for about $54,000 to work on the analysis.
“I’m sure there are things we are not doing that we should be doing to decrease costs while at the same time increasing wellness and overall health in our employees,” Brinda said. “This is not a reaction to this year, but a reflection of the trend in the industry that health care is going up. We need to address that now because it plays into our overall budget strategy for the next three years.”
The analysis report should be completed by February, which will give the city time to make changes, if necessary, that can be reflected in the 2013 budget.
“Our employees know health care is going up and the health care committee is challenged to find ways to cut costs and retain good benefits,” she said.
Brinda said the conversations centering on decreasing health care costs have been going on for many months after it was revealed in August that the health insurance fund was running nearly $195,000 in the red.
On Tuesday night, the City Council Finance Committee voted to transfer another $750,000 into the account to keep it stable through the end of the year.
Still, it is not so bad that the city believes it is time to move away from being self-insured. City Auditor Ted Pileski said the city would spend a lot more money if it took its current plan to market and sought to purchase a comparable plan.
Pileski said the city has 452 employees on the health plan — 339 have family coverage and 113 have single coverage.
The way health insurance works in Elyria is that the city and employees both contribute to a health insurance fund that is funded with an 85 percent contribution by the city and a 15 percent contribution by city employees. Medical Mutual acts as a third-party administrator to handle benefits and claims. The city then pays those claims utilizing the discount Medical Mutual has with a network of health care providers.
“Every year, we have a catastrophic illness to deal with, but the high claims are more a reflection of rising health care costs and an aging workforce,” Pileski said.
“Having an older workforce is good because it means we have a high level of expertise in the city, but with that also comes the illnesses of an aging employee.”
Health insurance rates went up in the city in September. At that time, single plans went from $39.75 per pay to $48.05 for employees. City employees are paid twice a month. The city’s contribution went from $486.67 a month for a single plan to $590 a month.
Family rates likewise went from $79.50 a pay to $96.11 for employees and $973.33 a month to $1,180 as the city’s contribution.
Contact Lisa Roberson at 329-7121 or email@example.com.