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Board of Aldermen 3-31-2020 Page 14

Alderman Harriott-Gathright

OK well | will just stop at this point because | see where we are going. | am against this. And | will not vote for
it.

President Wilshire
Are you all set Alderman Gathright?

Alderman Harriott-Gathright

Yes, | am thank you.

President Wilshire

Thank you. Who else would like to speak? Alderman Dowd?

Alderman Dowd

Just a couple questions, | am going to ask one ata time. First of all, | could be wrong but | think there are
already some people in the other unions that are already on the high deductible. In fact, | may be wrong, but |

think that half the fire department is on the high deductible is that correct?

Kim Kleiner, Admin. Services Director

That is correct.

Larry Budreau, Human Resources Director

May | respond?
Alderman Dowd

So it’s correct, thank you. It’s not just this 135 people that are going to be in the high deductible, we’ve
already had people start to change. So one of the questions | had from some of the non-affiliated is “why are
we paying them twice a year rather than putting all the money in July 1°” and they are also concerned that ok,
now that’s two times, it could change to three times and they are concerned about what documentation that
they are going to — like we said we would pay them over if they ran out. But they afraid that they are going to
provide serious documentation and it is going to take time. That’s the one portion that | would be OK with if
we Say it is a simple form and it happens quickly and they are not out on a limb with payments. And also the
other part of the question is, don’t we as a City keep track of every employee’s use of the funds and don’t, we
know when they are getting close?

Larry Budreau, Human Resources Director

Thank you, Alderman Dowd. You may have to remind me of a couple of the questions but to actually to start
and go backwards. No the City does not track the claims activity of the employees so we don’t have that
information in our system. We do get weekly bills but they are only segregated between the School and the
City. The purpose for splitting the contributions into two segments is that, on occasion, it doesn’t happen a lot
but on occasion someone will come and join the City and we will pay them $3,000.00 on July 1* and then
they won’t stay very long. It creates two problems — one is it makes you feel that you’ve been taken
advantage of and that’s not a comfortable feeling. And the other is and | can’t speak eloquently on it right
now but you have to be a high deductible health plan in order to have so much money in a health savings
account. If someone goes in and doesn’t stay for very long and they leave and we’ve given them $3,000.00

Board of Aldermen 3-31-2020 Page 15

we may have exceeded the IRS limitation.

Earlier you had said and | think | may have missed part of your question but to confirm a couple points that
you made. Yes we had been marketing and this has been growing very successfully, we picked up over a
couple hundred people last year, we are now at 675 employees enrolled throughout the organization,
throughout the City and the School and obviously most of those are unionized employees because most of
our employees are. The Fire Department does have the highest percentage of people enrolled as that group.
We believe that’s because they have the opportunity at the Fire Stations to discuss these things and we’ve
seen now every new employee at the Fire House, they come back and when they sign their benefits they are
joining the health high deducible plan because their colleagues are imploring or not imploring but
recommending that they do. And in the Police Department there’s a craze going on, it feels like they are
highly enthusiastic and | believe that regardless of this Legislation and some regardless of what happens with
Unions, they are getting it. These plans cost everybody less money and so | think we are going to see a
surge on July 1* this year just because of all of this discussion. And if I’ve missed something and you want to
catch me while I’m still on please do.

Alderman Dowd

| think you’ve caught most of it. | have heard from some of the people in the education department and they
seem to think that the sales pitch to the teachers and staff has not been significant enough to change. So |
am not sure how we address that and give them more presentations. | think part of it is a trust factor. They
want to make sure that everything is ironclad and people are very subject to issues with changes as we’ve
found out with all the stuff going on lately. So | think once you get more and more people on, it'll snowball.

The question related to that is Manchester’s health insurance costs have only gone up 2% a year is that
because they are so far ahead of us? Nobody wants that question?

Kim Kleiner, Admin. Services Director

No I'll be happy to, so Workplace Benefit Solutions does work with the City of Manchester and they have
been actively moving people to the high deductible health plan for over four years now. So are they ahead of
us? Yes, they are ahead of us. Most of their School population is on the high deductible health plan. They
have certainly seem some benefits in savings from that. You know when we had Tom DeLacey from WBS
go over and meet with the Union Leadership, | think they were working on some ways that they could further
address teachers, you know, through their team leads and the Union Leadership and that might create that
trust that you were just speaking of, Alderman Dowd. But yes, the City of Manchester has realized savings
embarking on this type of worth.

Larry Budreau, Human Resources Director

I’m sorry | didn’t mean to interrupt you but | recalled that one of your concern or concern that had been
expressed to you was wondering how difficult it would be to access this second half of the contribution if
necessary. This is my most recent EOB, | received it earlier this week and at the bottom of it, it tells me how
much of my deducible | have reached. Our plan is to make this very simple and just show us a copy of that,
that shows that you have exceeded the $1,500.00 on your deductible spending thus far, it does have a little
provider information but | can block it with one finger, that’s not our interest. Just show evidence that you
have exceeded the $1,500.00 and we will pay the second half.

Alderman Dowd

OK my last question is | looked at the slope of one of the first charts you had Ms. Kleiner and that insurance
growth is, if it keeps going, it is going to take a significant chunk of our budget and we won’t have increases
for anything else. So not only do we have to work to lower that number but | am just wondering if we need to
take a one time hit and say we need a new baseline to work from, otherwise, we are never going to get there

Board of Aldermen 3-31-2020 Page 16

with the budget.
President Wilshire
Director Kleiner did you want to respond?

Kim Kleiner, Admin. Services Director

Well | certainly couldn’t have said it better than Alderman Dowd. It cannot continue, we can’t continue on the
course we are on. | do believe that with the processes that we are putting in place, all the additional
measures, as well as moving everyone over to the HSA even though it may take time to negotiate these into
contracts, we can still move people on annual enrollment. | mean we can still do it through employee
education while we are negotiating contracts. WBS estimated $6.8 million dollar savings and | think that is
what we strive for.

Alderman Dowd
| just got another thing on-line while we were discussing and that is what is going on now with the pandemic
and City Hall closed. Is there any way we can extend the sign-up period or even make it an on-line system

because otherwise you could have a problem with people signing up period.

Kim Kleiner, Admin. Services Director

So again Alderman Dowd raises a really good point because we just had a phone conversation on that this
morning, Director Budreau and | and his benefits team. It is going to be a challenge this year. We are
reaching out to WBS to see what they have in their wheelhouse, what products we can rely on. We will be
working with IT to see what recommendations that they have. But there’s a conference this Friday that we
know of that because people are starting to discuss this, now your open enrollment becomes a virtual one
because of the on-going situation. So we will have to work through those challenges.

Alderman Dowd

OK | am all set.

President Wilshire

Thank you, Alderman Dowd. | have Alderman Jette.

Alderman Clemons

And can | speak when you have a chance too, this is Alderman Clemons, thank you.

Alderman Cleaver

Alderman Cleaver as well.

President Wilshire

OK | have Alderman Jette, Alderman Clemons and Alderman Cleaver.

Alderman Jette

This is Alderman Jette can you hear me?

Board of Aldermen 3-31-2020 Page 17

President Wilshire
Yes.
Alderman Jette

OK good. So | understand, you know, we’ve been told for some time about the increase and the rise in
healthcare cost and how that is so difficult for the City to deal with in light of the fact that there are so many
other pressures being put on the City like the State Government is doing less and less to support us. But |
think this comes at a difficult time. | am thinking about our employees and from what I’ve heard this evening is
that the high deductible health plan is not being changed at all and it is something as attractive as itis, is an
option for employees to choose even without this Legislation. What this Legislation does is increase the
deductibles for the HMO Plan and so you know, | saw the chart that was part of the PowerPoint Presentation
and it showed how much greater the healthcare costs for the people in the HMO is or are and how that when
you divide it by the number of employees there, it is the higher average per employee. But! wonder if that’s a
reflection on the fact that the employees that have chosen the HMO have done so for whatever reasons,
probably because they see it as initially cheaper for them. But they could, in fact, be people with greater need
for healthcare and that if we move them into the high deductible plan, their cost will continue to be higher than
others and it will just increase the cost of what we are paying for health care for the people in the high
deductible health plan. | am just wondering, you know, are we just pushing those high claimants, the people
with the higher claims into a different group?

| also am concerned about the employees that are going to be affected by this, not probably in this first wave
but as we try to implement this with the other employee groups, the Unions, that are represented by Unions.
You know we are talking about people who are on the front lines and what this Coronavirus crisis that we are
facing, | am wondering are they more at risk and | wonder about people in the high deductible health plan
when they go to the doctor now, that $3,000.00 that’s in their health savings account and the $1,000.00 that
they are going to have to pay eventually, that initial $4,000.00 that they have to pay before the City takes
over, are they going to regard that really as their money and be more reluctant to seek health care. And with
this Coronavirus Crisis, the longer they wait if they need health care, the longer they wait to get healthcare,
the more expensive it is going to be. And | am just wondering what your comments are in that regard and
what our consultant or whether our consultant has weighed in on that issue?

President Wilshire
Director Budreau or Director Kleiner?

Kim Kleiner, Admin. Services Director

So I'll start off, President Wilshire and then Director Budreau can fill in any piece I’ve left out. We do
understand with COVID-19 Virus this is uncharted territory. We don’t know what that will do to claims, we
don’t know, we certainly encourage all of our employees, no matter what health plan you are on to seek
healthcare. That is one of the reasons we have waived those costs for the telehealth, cost for Sidney for the
Sidney App you can get a virtual call with a doctor and they can point you into the right direction; the cost for
that evaluation is waived as is the cost of testing. But | don’t think realistically that we are going to give much
information on what we expect to happen with claims as related to the current crisis.

Having said that, with the HSA if you are a family, the most you are going to pay out-of-pocket is that
$1,000.00. Now studies do not show that people have refrained from getting healthcare in order to save that
money. Studies realistically, time after time show that people become better educated consumers. You
know we used to say it is like having some skin in the game; yes it is their money and they'd like to keep it
and they’d like not to have to pay it so they are going to use some education and make some realistic
decisions in how that money is spent. And that has been what industry studies have shown over time. I'll
give it to Director Budreau.

Board of Aldermen 3-31-2020 Page 18

Larry Budreau, Human Resources Director

Thanks Director Kleiner, Good Evening Alderman Jette.
Alderman Jette
Good evening.

Larry Budreau, Human Resources Director

| think that one speculation or the reason that people join HMO is that they perceive that it may cost them less
which | believe you indicated. | think that’s a reasonable speculation, the reason that so many people are in
the HMO is because it has been the predominant healthcare plan for the last 40 years in this country. So
people have because that’s what they had and high deductible plan is much newer than that. If you are
comfortable with the plan you had at the last company then you join it when you come here.

So the high deductible health plan is, for the whole country, a new opportunity. | don’t believe perhaps some
cases it would be true, but | don’t believe that you could find many comparisons between two people with the
same healthcare conditions who would save money through having the HMO. And to the point of whether
people can access healthcare, the speculation will the higher cost payments move into the HDHP and
therefore the difference will go away? We would hope not and over time, as the data builds, and there’s now
probably 15 years of data that Anthem has that WBS can access, it continues to be consistently lower, it is
still $4,000.00 on average all these years later. So | think there’s a good chance that the lower cost continues
to prevail and I’m not sure that when people make healthcare decisions, | have been party to those first day of
employment decisions people make for a long time. It is not necessarily analysis because they think they are
choosing the least expensive; they are often choosing the one that they are most comfortable with. Thank
you.

Alderman Jette

Thank you.

President Wilshire

Anything further, Alderman Jette?

Alderman Jette

No, thank you very much.

Alderman Klee

Thank you and this probably goes to Director Budreau. Alderman Dowd had asked this question about the
breaking up of that $3,000.00 between July 1° and October 1“. First my question is it common practice to do
a lump sum or is it something — | mean so is that just part of the way that the program would work, you would
just pay it all at once or with an equal amount of payments. And the second part of that is what is the

expected loss, do we know on average how many people leave?

Larry Budreau, Human Resources Director

May | Madam President.

Board of Aldermen 3-31-2020 Page 19

President Wilshire
Talk to Director Budreau.

Larry Budreau, Human Resources Director

So Alderman Klee again, | am going to start with the last question first because that’s the one | remember.
And that is relative to phasing the contribution payment, basically is that necessary, how many people leave?
Well we did look at that, | don’t have the numbers in my head but it’s not really a lot of people. One of the
timing phenomena that this also considers and of course we are not talking about the schools yet in general.
Because the school year starts in September, but the Fiscal Year for the City and the Fiscal Year for the
health plan starts in July, there’s the possibility sometimes that we enroll a teacher and we provide the full
benefit for $3,000.00 and then they don’t return to school that school year. And so we could have in that case
paid the $3,000.00 to the contribution intending for that to be for the next 12-month period and it might only
end up being for the next 2 months, July and August.

Secondly, we have mostly been communicating with Manchester about their plan and they do pay their plan
in installments also.

Alderman Klee

| am in complete agreement with paying it in payments, | just didn’t know if it is common practice for one big
lump sum or is it more common to have it kind of drawn out whether it be July and October or four times a
year or three times a year. | would feel more comfortable if it was paid out that way but | also understand if
you have one maior incident at the beginning of the year you want that $3,000.00 there. But again if they
then did have that care and got the $3,000.00 and then left as you said whether they took it with them or used
it, it still is in the same kind of boat. So thank you.

President Wilshire

Alderman Clemons?

Alderman Clemons

Thank you very much. So | have a few questions, I'll let whoever wants to answer them answer them. So
just so | am clear, there are no copays on the high deductible plan correct?

Larry Budreau, Human Resources Director

Correct.

Alderman Clemons

So like if you go to the pharmacy or you have a prescription or whatever, you are just paying whatever the
prescription costs and then once you reach that, in the case of a family, once you reach that $4,000.00 then

what happens?

Larry Budreau, Human Resources Director

Then you don’t pay anything.

Kim Kleiner, Admin. Services Director

Just to note Alderman Clemons there was some question on this so | just want to be clear. They are paying

Board of Aldermen 3-31-2020 Page 20

the negotiated rate. So you continue to get, even though you are on the high deductible plan, you continue to
get the negotiated rate that Anthem has with either the pharmacy on the medical drug or the doctor on the
provider rate.

Alderman Clemons

Ok thank you. So overall on a month to month basis, you know the cost that comes out of the employee’s
paycheck, | am thinking that you explained it, the high deductible is less?

Kim Kleiner, Admin. Services Director

So currently as it is right now, the HMO is more than the high deductible health plan, and significantly, for a
family you are looking at $6,100.00, I’m rounding to a high deductible plan for you know $4,300.00. That
changes a little bit and with the HMO and the change you are dropping from that $6,000.00 to $5,100.00 and
the high deductible HSA Plan is just a tad bit more expensive at $5,274.00. So right now on the current HMO
it is considerably higher. And then with the shift in plan design the HMO will be just a tad bit less expensive.

Alderman Clemons
OK so they are about the same as far as the cost for what is coming out of my paycheck every week roughly?

Kim Kleiner, Admin. Services Director

With the new plan design yes. Now the employee with the HMO pays significantly more.
Alderman Clemons

OK so my other question is on the HMO Plan the deductibles are going up but if you take the HMO Plan the
City is contributing basically the exact amount the deductibles are is that correct?

Kim Kleiner, Admin. Services Director

So with the change in the deductible for the HMO which if you are to be hospitalized or have an outpatient
surgery you could be charged on a family that $3,000.00 deductible. The cost is going down 15% if you stay
on the HMO. It will drop 19% from the current HMO to the HSA if you were to switch over and I’m not sure if
that answers your question Alderman Clemons.

Alderman Clemons

So right now it’s a $250.00 deductible for an individual and a $500.00 for a family on the HMO correct? That’s
what it is right now?

Kim Kleiner, Admin. Services Director

Correct.
Alderman Clemons
OK so it’s going to change to $1,500.00 and $3,000.00?

Kim Kleiner, Admin. Services Director

Correct.

Board of Aldermen 3-31-2020 Page 21

Alderman Clemons

However, the City is going to give a health savings account to anyone with the HMO of $1,500.00 and
$3,000.00?

Kim Kleiner, Admin. Services Director

With the HSA yes. With the HSA we give the contribution, the Health Savings Account.
Alderman Clemons

Ok so this is where | am confused; so if you have the HMO you aren’t paying that, we are not giving you a
health savings account is that correct?

Larry Budreau, Human Resources Director

Thank you may | jump in? Alderman Clemons the deductible for the HMO is not a first dollar deductible as it
is for the High Deductible Health Plan. You could go in fact according to one of the statistics that Ms. Kleiner
had earlier this evening, 95% of the people on the HMO were not hospitalized in 2019. But if those same
people did not have an outpatient procedure either, then none of them paid a penny towards the deductible; it
is only applied for inpatient admission and outpatient surgical procedures.

With an HMO, an HMO is a plan designed for which the IRS does not approve a Health Savings Account.
You can only have a Health Savings Account if you have a high deductible health plan. I'll stop there so you
can clarify if you like. Thank you.

Alderman Clemons

Thank you. So basically what you are saying is that with — if you have the high deductible plan you will get a
health savings account and the City will put either $2,000.00 or $4,000.00 into it for your out-of-pocket
expenses that you can use? But if you have an HMO you are responsible for the full deductible if you incur
one?

Larry Budreau, Human Resources Director

That was merely correct Alderman Clemons, the only difference is that the City is going to contribute
$1,500.00 and $3,000.00 towards the deductibles of $2,000.00 and $4,000.00 respectively. And in the HMO,
you are correct, there is no contribution to help allay those expenses.

Alderman Clemons

So essentially the, so this is what | was trying to get to. So essentially what we are really looking at here is if
you have the HMO effectively if you are an individual, the cost to you is going to go up by what $250?

Larry Budreau, Human Resources Director

If you have the HMO today and you stay with it, the cost is going to go down and Ms. Kleiner may have been
a better person to answer. The cost is going to go down about 15% so that the cost for both the high
deductible health plan and the HMO are about the same in terms of their premium contribution, their 20%
share of the premium. The current HMO is much more expensive than the high deductible plan.

Alderman Clemons

OK so | guess what | am asking is this, right now what | am asking is this, if | go into the hospital and | am on

Board of Aldermen 3-31-2020 Page 22

the HMO in let’s say August of this coming year, and | have to pay the whole amount of money for my
deductible, let’s say it is $3,000.00. How much of that is the City going to pay?

Kim Kleiner, Admin. Services Director

So Alderman Clemons if you are on that HMO currently, and you ...

Kim Kleiner, Admin. Services Director

In August? If you are hospitalized in August then you are going to run into that $3,000.00 deductible.
Alderman Clemons
And how much is the City going to pay?

Kim Kleiner, Admin. Services Director

That is your deductible. So if you are a family if you are on a family plan that’s your deductible, up to that
amount the employee would occur. What we are saying is because the cost of the plan has been reduced, if
you saved that cost, you could apply it toward that deductible and that would bring that exposure to $2,000.00
and he put the slide back up for us so we could see it. Because you are saving $936.00 annually because of
the plan change.

Alderman Clemons
| understand now. Ok | understand that now, thank you. My last question is | think this is pretty straight
forward, just that the copays are increasing on the HMO from $6 to $10 if you were going to get a prescription

at the pharmacy? | think | have that correct.

Larry Budreau, Human Resources Director

I’m sorry Alderman Clemons’ voice was choppy. | think it had something to do with going to the pharmacy
but could he repeat the question?

Alderman Clemons

| think this is the most straight forward part of it is that the copays on the HMO are basically doubling from
where they are now?

Larry Budreau, Human Resources Director

Yes that is true for the pharmacy.
Alderman Clemons

Ok | just want to make a couple of comments | guess if | can. Thank you. The reality is that right now for me
we are in a tough, this is a tough place we are in right now. We want to try to balance what we can do for our
employees with the understanding that we have a limited amount of resources to do it with. You know the
economy right now has never been worse and that happened overnight. When the economy was doing fine
the Mayor came to us with budgets that had an over per cent increase in the tax rate. So my thought is that
that’s going to have to change if this economy doesn’t turn around with this Coronavirus. So you know this is
a pretty good proposal to try and help us mitigate some of those costs. | understand that it is difficult to try to
budget and things like that and you are doing something completely different that you’ve never done before.
But the reality is that you know we can’t keep going down the road we are going. We have to be able to do

Board of Aldermen 3-31-2020 Page 23

something to change our healthcare cost until either the State or more likely the Federal Government does
something to bring down the cost. So we have to do what we can do locally to do that. And | think this is a
pretty good proposal. It gives people a clear choice and you know it is unfortunate that we can’t keep things
the way they were, but it is just not sustainable unfortunately. And | would rather have all of these people
working as opposed to laying them off because we have to pay for the healthcare for some of them and lay
off the rest in order to do it. So for those reasons, | am going to support this proposal. Thank you.

President Wilshire
Thank you, Alderman Clemons. Next, we have Alderman Cleaver.
Alderman Cleaver

Thank you very much, a couple of questions. First of all, who are the providers besides Anthem and has
there been any shopping?

Larry Budreau, Human Resources Director

We moved to just one provider purposefully because last year we had two before, Harvard Pilgrim and
Anthem. We are self-funded; the City of Manchester and the City of Nashua are the only two self-funded
municipalities in the State because of our size. There are economies of scale that come from having just one
administrator instead of two. That may not answer all your questions just part of it.

Alderman Cleaver

The follow up is when is the last time we approached another provider for processing?

Larry Budreau, Human Resources Director

Oh I'll continue | forgot that. We did RFP’s just last, not for Fiscal 21 but for Fiscal 20. WBS the consultant
that Director Kleiner has mentioned a number of times this evening has done that for us. We usually do it
about every 3 years and Anthem was the best choice.

Mayor Donchess

Could | add to that answer? Keep in mind that we are self-insured so the City is paying the claims just out of
tax money. So we are not paying an insurance company to insure people, we are paying them only to
administer the claim. Either Ms. Kleiner or Mr. Budreau can correct me if I’m wrong on this figure, but out of
the approximately $50 million dollars we are projected to spend on healthcare, only like $1.2 is for
administration. So you know it’s 2% of the entire cost. So whether it goes up or down a little bit with the
administrator, obviously we want to save every dollar, but even if it goes up or down a bit on the
administrator, that being Anthem or someone else, it doesn’t really affect, because it is only 2% of the budget,
it doesn’t really affect the overall picture. In addition, we say an 11% increase but that was after we reduced
the number of administrators from 2 to 1 and thereby saved $400,000.00. So we think having a single
administrator is not the same as just having an insurance company that covers everybody. Again we are self-
insured so we are paying only for the administration of the claims. We are not paying Anthem for the claims
themselves; we are to provide the insurance.

Alderman Cleaver
Thank you very much. The next question is somebody or a family has medical issues early on, they could be

out $4,000.00 until they get $1,500.00 reimbursed on July 1 and then the following $1,500.00 October 1*. Do
| understand that correctly?