Special Board of Aldermen Public Hearing — May 20, 2020 Page 7
Now the Budget expenses for Health Care include what you see on the screen, not only medical but dental,
administrative fees, there’s something called Stop Loss Insurance, Wellness Activities. The total
expenditures that we project for Fiscal ’21 are around $51 million dollars. Now much of that is paid by the
employees but the City’s share of the healthcare cost is going up as we mentioned $3 million dollars or 8.6%.
One problem or challenge that we have, of course, is that last year, healthcare also went up by a very
significant amount. When | say “last year’ | mean the Budget we passed a year ago for the current Fiscal
year right now. Fiscal Year ’20, that’s the current Budget that we are operating with today, increased
healthcare costs by 11%. That was $3.3 million. So if you add last years increase when | say the increase
for Fiscal ’20 with the increase for Fiscal ’21, we are dealing with more than a $6 million dollar increase in a
single line item. Just so you get a perspective on the impact this is having on us, the City, the taxpayers, the
community, $6 million dollars on one line item translates alone to a 3% tax increase. Now the taxes went up
2.6% last year, the vast majority of that was caused by the $3 million dollar increase in healthcare costs and
taxes will go up again, this year we project, we want to limit that as much as we possibly can. Again, most of
that will be driven by the increase in healthcare costs.
Still on the subject of healthcare, this just shows you the escalating cost for healthcare between Fiscal 14
and Fiscal ’21, this is in a graph form of course. But you can see healthcare costs going up very steadily and
significantly every year. Let’s go to the next slide. Now | want you to know that we are working hard to use
the term using around COVID-19, bend the curve on these rising healthcare costs. We have taken
aggressive actions to limit future increases. The most significant change is we have come up with a new plan
design, meaning a change in the deductibles and the co-pays paid by City Employees. If applied to all
employee groups in the City, will have a very significant effect in holding healthcare costs down. So far, we
have asked one group of employees, the so-called unaffiliated or non-union employees to accept this. The
Board of Aldermen passed it for that group of employees. There are certain reasons why it is actually better
for employees and the City. We can get into the details of that, but tonight let’s just touch on the healthcare.
We need to make sure that this new plan design is incorporated in all Collective Bargaining Agreements as
they come to the Board of Aldermen for consideration so that over a period of several years, we can greatly
reduce increases in healthcare costs.
Now let’s look to the second budget, the reason that the new plan design, even though it includes higher
deductibles for hospital stays and higher co-pays may help employees, is that it also reduces the amount
they pay on a weekly basis. But another alternative we are offering is we are encouraging enrollment in a
high deductible plan which enables an employee to save money towards future years. We can discuss the
details and we have discussed them with the Board of Aldermen, but tonight we are focused on the Budget
and we want your comments. But the high deductible plan is something we are encouraging and many
employees are moving to that.
We have the use of Smart Shopper, which is a way that employees can shop for routine medical procedures
such as testing and things like that. If they use the same quality but a less expensive provider, they get a
bonus and they share in the savings that the City realized. We have a healthcare consultant which is
referred to here as WBS; they are educating all employees, they are reaching out to Divisions and
Employees across the City to educate them regarding healthcare cost, regarding the higher deductible plan
and regarding and a lot of other information that they can use in terms of managing their own healthcare.
We are offering now Wellness Alternatives, TeleHealth and Sydney which is an App. It enables you to shop
for healthcare. We are also going to undertake and audit to confirm that all dependents of employees who
are being carried by the City on the City’s healthcare. We are doing this audit to confirm that all dependents
are actually eligible. There could be a divorce or something like that, someone might still be on the plan who
shouldn’t be so we are going to make sure that all people whose healthcare we are providing are actually
eligible for City Insurance.
