Council adopts emergency ordinance changing 2026 employee health plans after steep renewal proposals

The Lee's Summit City Council unanimously adopted an emergency ordinance on the city’s employee benefits program for calendar year 2026 after staff and the city’s broker reported major renewal volatility in the health insurance market.

Matt Wheeler of Holmes Murphy summarized market responses and the city’s options. “When Cigna released their renewal, they were uncomfortable with where the risk was positioned...they, in fact, released, or had a calculated release of 39%, which was released initially at 27%...ultimately when Cigna released their renewal, they were at 24%,” Wheeler said, describing how large claims have shifted market pricing. He added that, using the city’s recent premiums and claims, the plan had paid about $21,400,000 in premium and experienced roughly $26,000,000 in gross claims—an approximately $4.6 million shortfall over the period reviewed.

Wheeler said the cabinet and finance staff explored insured and self-funded options, stop‑loss quotations, pharmacy carve-outs and alternative networks. After analysis the recommendation was to accept a Cigna renewal with a redesigned set of plan choices: remove the existing zero-deductible plan; keep a PPO with a raised deductible (from $500 to $750 with other plan adjustments); preserve an HSA‑eligible high‑deductible plan (with the IRS-required deductible adjustment); and offer an optional narrower network (Local Plus) at a lower premium for employees.

Wheeler summarized expected financial effects: the overall premium increase was modeled at roughly $2.3 million in aggregate, and staff placed the city subsidy estimate at about $14,388,000 for 2026 under the proposed subsidy structure. He described the city subsidy change as “just under 20%” relative to the baseline plan. Wheeler said the final payroll impact for an individual employee depends on plan and network choices; the proposed narrow-network options were presented as lower-cost choices for many employees who already use providers included in that network.

Council members pressed staff and the broker on alternatives and long-term strategy. Several members expressed concern over market concentration, the role of pharmacy rebates, and the need to examine options such as HRAs, an on‑site clinic, carve-out pharmacy benefit managers, pooled self‑funding or phased transitions. Councilmember Mia Pryor and Councilmember John Lovell asked about wellness programming and the feasibility and expected ROI of on-site clinics; Human Resources Director Jennifer Vargo said the city offers some Cigna wellness tools and that staff will expand proactive options.

Councilmember Hillary Shields said she wanted council involvement earlier in the annual renewal cycle and a multi-year plan. “We need to start planning and we need to start grinding on what are we doing, what's the plan to move forward,” she said. Councilmember Shields moved the emergency ordinance; Councilmember Hodges seconded. The council voted 9-0 to adopt the 2026 benefits program agreements and allow the city manager to sign the contracts necessary for open enrollment.

Staff and the broker said a more detailed multi-year approach is needed: continued monitoring of large claims, a closer look at pharmacy rebate pass-throughs and PBM structure, and a staged analysis of self-funding and stop‑loss markets that would require firm stop‑loss pricing before any funding change. Wheeler said carve-outs and self-funded scenarios had been priced but that stop‑loss proposals remained illustrative given the recent claim volatility and would require more time to firm up before they could supplant the insured renewal for 2026.

Council members asked staff to return with further analysis to the finance committee and to involve council in earlier stages of the 2027 planning process so the city can evaluate multi-year tradeoffs between premium subsidy, plan design, wellness investments and possible transition to a different funding model.