Health care takes center stage at Nederland council

Published 6:01 pm Tuesday, April 25, 2017

The topic of healthcare loomed large at Monday’s Nederland City Council meeting as bids for employee group benefits were discussed and awarded.

City manager Chris Duque led the talk of City of Nederland employee benefits in a recess meeting during the council’s regular meeting.

Employees’ vision will be changed from VSP Vision Care to United Healthcare starting July 1. According to Duque, the change of providers will allow for a seven percent decrease for the City as compared to its current vision plan for employees.

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Employees’ dental will be changed from United Concordia to United Healthcare. According to Duque, the change of providers will allow for an 8.9 percent decrease for the City as compared to its current dental plan for employees.

“The benefits are roughly the same and (United Healthcare’s) network is strong,” Duque said. “United Healthcare is a big boy; they have a big network.”

However, the outlook for the City’s medical plan with TML Multistate IEBP was not so rosy.

“TML sustained a medical loss ratio of 97 percent in large claims,” Duque said. “That’s huge.”

A medical loss ratio is the ratio in cents that an insurance company pays for every premium dollar for its customer’s medical claims and quality of care activities versus the remaining cents of each premium dollar reserved for the company’s overhead expenses like profits, marketing and administrative costs.

According to Duque, TML’s medical loss ratio jumped from 73 to 97 percent over the course of one year. As a result, the $1,000 deductible would increase to $1,500. The out-of-pocket maximum would remain at $5,000.

Duque said to come up with a more affordable option the City would have had to come up with an additional $111,000.

“This has been a very bad year for our insurance plan,” Duque said, before stating that it had been a bad year for health insurance overall.

According to the City’s research, Duque said one-third of city employees had met the $1,000 deductible of last year and that seven employees had reached the maximum out-of-pocket expense.

Because of the significant jump in medical loss ratio, Duque said the City was unable to seek a competitive bid for this year that would have been any cheaper than what TML would have offered.

Essentially, the rise in medical costs and claims made the City of Nederland unappealing to any prospective bidders. In addition, if the City did try seeking out bids, that would have violated their renewal status with TML, meaning TML would have charged them as a new client instead of as a customer renewal.

“We need a good plan year to become competitive,” Duque said of any attempt to better their insurance bid for next year.

Among said attempts, Duque said there were preventative tests that city employees could take to both monitor their own health and to save money on their regular insurance plans.

The only problem was not enough employees were enrolling in these preventative tests.

According to Duque, out of 116 people eligible for preventative tests, only 60 opted to take it — or 51 percent of the employee pool.

Duque said that’s leaving money on the table because such preventative programs could result in savings as much as $780 a year for qualifying employees.

“With mandatory enrollment, we’ll stress education,” Duque said in encouraging more employees to sign up for preventative programs.

In other council items:

  • Public Works Director and City Engineer Steve Hamilton was recognized for his 26 years of dedicated public service. Hamilton will retire on April 30.

“Thank you,” Hamilton said to the audience and council in attendance. “I’m glad I made it this far that I can still walk away from it.”

  • Action was approved for a relocation allowance for Standard Operating Procedure 17.01 The allowance would cover up to $1,000 for hired applicants to move to the city of Nederland when taking a senior management position with the city (like city manager).

The allowance would be awarded after the applicant gets three quotes from three different moving companies and presents them to the City.