March 13 2013 12:00 AM

In an attempt to cut costs and align city employees with similar health insurance plans, changes start at the top

Thursday, Aug. 23 — The Bernero administration is seeking changes to health care coverage for cabinet officials in an effort to cut costs for the city and ultimately streamline health plans for all city employees.

The plan is subject to City Council approval. At a Council Ways and Means Committee meeting today, mayoral Chief of Staff Randy Hannan detailed the plan that would give those in the “executive management group” (in which he’s included) and non-bargaining employees two options of benefits packages between Physician’s Health Plan or Blue Cross Blue Shield.

The committee, made up of Council members A’Lynne Robinson, Carol Wood and Kathie Dunbar, unanimously approved the resolution. It now heads to the full Council for final approval.

“We’re leading by example, setting the tone for where we would like the city to come along,” Hannan said. “In the long run, we think we can significantly lower health care costs.”

Hannan cited a new state law that puts mandates on municipalities’ spending on healthcare. The city can choose between a “hard cap” on the amount it pays into a public employees’ benefits package — which varies by plan — or it can agree to pay 80 percent of the plan’s cost, with the employee paying the remaining 20 percent, he said. Since July 1, those in the executive management group and non-bargaining employees have been paying the difference between the hard cap and the cost of the plan. Hannan said the city has gone to health insurance providers to “come up with a new health care base plan that costs less than the hard cap amount.” With new base plans that cost less than the hard cap, Hannan said it’s the first time employees would pay deductibles on their policies and once those are met, employees are responsible for 20 percent of the costs of “major expenses,” like hospitalization and some testing.

The changes could result in employees paying more for health insurance, based on the plan they choose. In one example Hannan provided, a base plan for a family could increase by about $200 a month or about $400 a month depending on which option they choose.

“It’s a whole new benefit package that, depending on how much an employee utilizes healthcare, it’s an opportunity to significantly reduce costs,” Hannan said. “Because employees have different needs and interests in health care, we decided to maintain additional options.”

Employees in the executive management group have been paying a 5 percent premium share for “several years and changed their base healthcare plan to a less expensive plan last year,” the resolution says.

The goal, Hannan said, is to extend similar health insurance options to all city employees. Negotiations have started with the Teamsters Local 214 and the administration intends to approach other bargaining units.

“Our hope is that we can get all of our employees on a similar, if not identical, health care structure. There are significant advantages for the city to do that,” Hannan said. “We literally have dozens of health care plans. It’s a nightmare to administer our current health care plans.”

Also, employees in the executive management group are voluntarily taking a 5 percent pay cut, which the resolution before the Council says is “commensurate” to furlough days taken by other city employees.