2002-07-15 Special Called Regular Meeting and Workshop Meeting

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City Council Workshop July 15, 2002 Page 2 of 3 • Current premiums paid by each employee per Month for Medical Coverage: $ 0.00 Employee only $49.83 Employee plus spouse $43.33 Employee plus children $56.33 Employee plus family WHAT IS HAPPENING WITH MEDICAL COSTS IN GENERAL? Premiums for medical and costs are increasing nationally at an average of 15%, but even more so in Texas at an average of 25%, in an attempt by organizations to retain health coverage for their employees. In March 2001, the City made a decision to carry individual stop loss coverage and exclude the aggregate coverage. With the information available at the time, this decision appeared to be appropriate. However, in hindsight, this may not have been a correct decision given actual claims costs paid during the stop loss contract year. (See attached Council Agenda Request and backup). WHAT OPTIONS ARE AVAILABLE TO THE CITY OF LA FORTE TO ADDRESS MEDICAL COST ISSUES? To sustain the City's medical fund, staff is researching the effects of increasing premiums to the fund, increasing deductibles and co-pays, and reducing benefits. Implementation of a Disease Management Program should help control costs for serious diseases that can contribute to catastrophic loss claims (diabetes, hypertension). CHAPTER 17Z OF THE LOCAL GOVERNMENT CODE Chapter 172 of the Texas Local Government Code governs health benefits provided by local governments. However, a local government must adopt Chapter 172, formally by ordinance, to be exempt from certain mandates by the Texas Department of Insurance. Adopting Chapter 172 allows a local government to form a risk pool (a designated self-funded entity), with trustees overseeing fiduciary responsibilities. By not having adopted Chapter 172, the City of La Porte was obligated to meet a recent state mandate to provide medical benefits to dependent grandchildren, in addition to dependent children, up to age 25 rather than the previous age limit of 19. Since this is not atime-sensitive topic, staff plans to present Chapter 172 at a future City Council meeting requesting adoption of this chapter of the Local Government Code.