City facing growing deficits in health care spending

mowen@ledger-enquirer.comMarch 18, 2014 

The Columbus Consolidated Government is running a health care deficit in the current fiscal year that is at about $3.1 million, and counting and will face a projected $4.6 million deficit in the next fiscal year if nothing is done, city administrators told Columbus Council Tuesday.

“It’s obvious that something has to give,” City Manager Isaiah Hugley told councilors during Tuesday’s council work session. “Something has to be done about health care costs.”

City Finance Director Pam Hodge, Human Resources Director Reather Hollowell and Internal Auditor John Redmond outlined the problems facing the city and some proposed ideas to reduce the deficit.

Among the ideas Hollowell presented were:

Jettisoning Muscogee Manor employees from the city’s health care plan, which would save an undetermined amount of money.

Excluding city employee spouses who have access to insurance at their jobs, which would save about $1.2 million.

Using the amount the city pays for the Health and Wellness Center plan as the base amount that the city will pay, instead of a straight 75 percent of the cost of the premiums. This would save almost $1.7 million.

The Health and Wellness Center is the cheapest plan for both the city and the employees, but only about 600 of the city’s 2,600 insured employees have signed up for the clinic.

“We need to migrate more people over to the clinic,” Councilor Skip Henderson said. “We might just have to give them the choice of the clinic or higher premiums.”

Hodge said under the plan, the city would pay 75 percent of premiums for employees opting for the clinic and pay employees in the HMO and PPO/POS plans the same dollar amount, which would be a smaller percentage that 75 percent.

For example, the city’s share for a single employee with no dependents is about $320 for the clinic. The employee pays about $106.

If the city were to offer only that $320 toward a single HMO plan, the employee would be responsible for paying about $150 of the $470 premium, or about 32 percent. Under the straight 75/25 split, the employee’s part of the premium would be about $118.

Another cost-saving idea Hollowell presented would be to cut back on how much the city subsidizes pre-65 retired employees. Currently the city pays 65 percent of their insurance premium. Under the proposal, that would drop to 50 percent for the former employee and 40 percent for their spouse. Hollowell said it is fairly rare for pre-65 retirees to get any subsidy at all on insurance premiums. Only 24 percent of large corporations offer any such insurance, and then with no subsidy at all, she said. Only 4 percent of large corporations offer any kind of subsidy.

Redmond told councilors that he has studied the issue and determined that over the last decade, CCG’s health care costs have risen from about $10 million a year to almost $25 million a year.

He attributed this in part to expensive medical technology, rising pay for health professionals, new and expensive drug therapies and mandated benefits.

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