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RSSAudit gives insurance a clean bill of health: Questions remain as to cost of city plan
DECATUR - An audit of the city's health insurance program shows no major problems, City Manager Steve Garman said.
But important questions appear to remain unanswered about why taxpayers are footing the bill for one of the most expensive plans in the region, Councilman Dan Caulkins said.
The Decatur City Council last year approved spending $59,225 for Segal Co. to study the city's health insurance plan.
Caulkins advocated the study to find ways to control surging health insurance costs for city employees.
The report indicates the city should remain self-insured, and Consociate Group, the third-party administrator, has gone above and beyond expected performance.
Garman said the report is reassuring.
"We continue to assert, as we have since the fall of 2004, that the pressing area of concern lies within the area of city employee contributions to health care costs," Garman wrote in a memo to council members.
Nonunion employees recently switched to a plan in which they contribute more for health insurance.
If all city employees paid what nonunion employees pay on average, the city would have saved more than $800,000 last year alone, Garman said.
Union employees currently pay nothing per year for single coverage and $276 for employee contributions, Garman said.
"While we understand and appreciate the fact that employee groups bargained for these benefits in the past and we do not hold that against them, the time has come to seriously evaluate whether the taxpaying public should continue to shoulder these costs for the benefit of represented city employees," Garman wrote.
A 2004 city study showed Decatur pays substantially more on average for city employees' health insurance than do Bloomington, Champaign, Danville, Normal, Quincy, Springfield and Urbana. The city would pay nearly $5,200 more per employee over a year than the average for the seven other Central Illinois municipalities, the study showed.
Caulkins said the audit still doesn't appear to answer why the city's health care costs are much higher than the costs for surrounding communities.
"That's what we want to know," Caulkins said. "Maybe that's in here, but we just don't understand what it is yet."
Caulkins said he was glad the report from Segal was positive, but he expected a summary from Garman that was "a little less defensive" and "a little more proactive" in finding a solution to surging health insurance costs.
"I never had any real concerns or doubts that Consociate wasn't doing their job," Caulkins said. "That wasn't the issue.
"The issue is, are we getting the best bang for our dollar? Are we getting the best deal that we possibly could get?"
Caulkins said the report shows the city's stop-loss coverage leaves a gap because it covers only 10.5 months of the year.
"That's taking a huge risk that nobody comes down with cancer or gets burned in a house fire," Caulkins said.
Caulkins also pointed to a finding that said the city could have realized about 25 percent greater discounts minus fees from November 2005 to August 2006 if a Blue Cross Blue Shield of Illinois preferred provider organization had been in place.
Caulkins said that alone could have meant a savings of about $500,000.
"I think we ought to start looking immediately at this," Caulkins said.
Caulkins said the city's claims costs also have "gone berserk," noting radical swings in the percentage employees have paid per year in health care in recent years.
Adam Ruderman, president of the International Association of Fire Fighters Local 505, said there is "no doubt" in his mind that a self-insurance plan is driving up costs.
"The burden of the self-insurance plan is on the taxpayers' backs when it shouldn't be," Ruderman said.
Ruderman didn't dispute Garman's data for the amount union employees contribute for health insurance, but he said the data is misleading.
"Because of our collective bargaining agreement and collective bargaining rights, we make concessions in our economic package in order to maintain our insurance benefits at those levels," Ruderman said.
Mayor Paul Osborne agreed with the city's manager's review.
"There certainly should be reassurance that the recommendation here is that Segal says we should stay self-insured," Osborne said. "That's working out well for us.
"It also indicates that Consociate has gone above and beyond in serving the city of Decatur. Those are two aspects that really jump out at me."
The report does not recommend another course of action that would save significant amounts of taxpayer dollars, Osborne said.
"I didn't see them say if you'd go another direction, you'd save $2 million or $4 million per year," Osborne said. "You're not going to be saving millions of dollars, according to the report, by going in another direction. That's just not in (the report)."
The council will review the report at its April 16 meeting.
"Obviously, we need to schedule a study session and go over the report findings," Councilman Michael Carrigan said. "This long-awaited report hopefully will assist the city in our future health care decisions."
Mike Frazier can be reached at mfrazier@herald-review.com or 421-7985.
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