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Personnel health and welfare faces cuts; city keeps Anthem medical plan, flags pharmacy risk
Summary
Personnel's health and welfare unit told the committee that the city retained Anthem for medical coverage with a 4.5% increase, that the pharmacy plan remains self-insured and faces pressure from expensive drugs, and that the department saw $610,000 in reductions across wellness and internal-service accounts.
The Department of Personnel's health and welfare division told the Budget and Public Employees Committee the city kept Anthem Blue Cross and Blue Shield for the medical plan with an estimated 4.5% premium increase, is managing a $31 million medical plan and a $29 million pharmacy plan, and faces more than $600,000 in proposed line-item reductions that will reduce wellness programming and administrative funds.
Why it matters: Health and benefit costs are a major portion of the Personnel budget. The committee heard that cuts to wellness and professional services will require the department to reprioritize work, including possible delays to automation of enrollment and outsourcing family medical leave administration.
Brenda Haverly, supervisor for health and welfare, and Jamie McGeachan presented line-item changes the committee must accept. Haverly said the medical plan is a roughly $31 million plan and the pharmacy plan is about $29 million in annual claims, and that the city selected Anthem again through a request-for-proposal. "Our medical insurance went up this year by a 4.5%," Haverly said.
Haverly summarized proposed reductions: $175,000 cut from wellness facility supplies (used to maintain five employee fitness centers), $100,000 cut from wellness programming, and $150,000 cut to internal services that funds reproduction of enrollment materials. She said the department will work within the approved budget but will need to identify trade-offs and recommended leveraging technology: the department still processes many paper enrollments and is awaiting an Oracle "Redwood" user experience rollout that could handle online enrollment.
On timekeeping and FMLA tracking, Haverly said the city must ensure UKG pay codes are configured correctly so the timekeeping system records leave properly. She also told the committee the pharmacy plan is self-insured and therefore carries the city's claims risk; she highlighted emerging pressure from high-cost GLP-1 drugs and said the benefits committee would review plan design and utilization.
Haverly also noted a planned professional-services request to outsource family medical leave administration that could have required up to $200,000 in implementation costs, but the requested professional-services funding was reduced and the department will need to seek internal options or reprogram funds.
Committee members asked Personnel to prioritize system enrollment improvements and to brief the committee on pharmacy plan reviews and any proposed changes to benefits design.
