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Insurance premiums on rise for city

11/2/2012

By DAWNE LEIKER

dleiker@dailynews.net

Health insurance premiums will be increasing for city of Hays employees in 2013, human resources coordinator Erin Niehaus reported to city commissioners at Thursday night's work session.

It is the first increase city staff has seen since a cap of $9,500 per employee on health insurance was placed by city commissioners in 2010.

In 2011, the city began a partially self-funded dual option for employees that entailed a high-deductible plan with the city contributing funds to a savings account. Employees were offered the option of a traditional plan, where they paid the difference between the two plans.

In 2011, utilization of medical services decreased approximately 6 percent.

That trend is turning around this year.

"2012 utilization is up quite a bit," Niehaus told commissioners. "In 2011, we spent about $866,000, so far we've spent $1.2 million in health insurance this year."

City staff, together with an employee wage and benefit committee, prepared a recommendation for commissioners to modify the insurance program for 2013, increasing deductibles for those on the traditional plan and bringing their out-of-pocket costs more in line with those on the high-deductible plan.

In addition, the city will decrease its contribution to the health savings accounts for those employees on the high-deductible plan.

Niehaus said 20 percent of city employees on the traditional plan make up approximately 41 percent of all city claim costs, or approximately $5,000 more per employee than the high-deductible plan.

"It's about preventative and wellness," said Commissioner Henry Schwaller IV. "These traditional plans are going to go away."

Commissioner Kent Steward said high-deductible insurance plans encourage participants to act as consumers, often making transitions from brand name to generic prescriptions.

"I might argue that (plan participants) don't have a choice," Schwaller said. "Certain drugs that are used for heart condition, or whatever, there aren't generics available yet, and they are going to have to take drugs for which there are no substitutes."

Commissioner Ron Mellick said he had no questions regarding the health insurance issue.

"I have to do this every year because I'm self-insured," Mellick said. "Not subsidized by anybody ... and it's depressing."

In other business, commissioners:

* Tabled discussion of giving Larks Park ownership to Fort Hays State University. The topic will be addressed at a later meeting because Steward and Schwaller, both employees of FHSU, have been advised by the city attorney of a conflict of interest. Mayor Troy Hickman and Commissioner Barbara Wasinger were absent from Thursday night's meeting, leaving only Mellick in a position to discuss the issue.

More than a dozen residents had shown up to discuss the Larks Park issue. Steward told them ample public notice will be given prior to the topic coming before commissioners at a later meeting.

* Under advisement from Hays Police Chief Don Scheibler, decided not to pursue changes to an ordinance requiring two forms of identification to enter a drinking establishment.

* Requested more information from city staff before moving ahead with a pre-annexation agreement for water service for the residence at 3232 E. 27th.

* Discussed contracting with Organizational Development Services to conduct a wage and benefit study, proposed to cost $22,800. Commissioners will vote on the issue at next week's regular meeting.

* Received an update of City Manager Toby Dougherty's 2013 statement of legislative priorities.