City staff: Aetna bid could cut health premiums about 20%; recommends lowering proposed mill-levy increase and funding pay raises
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Summary
City HR staff said they received multiple bids for employee health insurance and that an Aetna proposal would lower city premiums by roughly 20% compared with the current plan; staff recommended using savings to reduce an earlier proposed mill-levy increase and to fund employee raises, while negotiating with the current carrier.
Human resources staff presented results of a market solicitation for the city’s employee health insurance and told the commission an Aetna bid would reduce projected premiums by roughly 20% compared with current costs, while matching most plan-design features.
Staff said the city had explored the state employee health plan but found rates for that program had increased in recent cycles. An initial renewal quote from UnitedHealthcare (the city’s incumbent carrier) showed an 8.1% decrease from the city’s current premiums, though staff said UnitedHealthcare later produced a separate quote that mirrored state-plan pricing for comparison. The Aetna bid — the lowest received as of the presentation — showed about a 20.69% reduction compared with current rates and was described by staff as similar in deductibles, copays and out-of-pocket maximums to the city’s present plan. Staff said aetna’s network appeared to be broad in the local area but that department staff and the broker were still reviewing plan documents and backend administrative differences.
Dental coverage remains with Delta Dental under a rate guarantee and vision coverage showed a flat renewal through the incumbent contract, staff said.
Using the Aetna numbers, staff proposed reducing the mill-levy increase included in the July 14 budget presentation from an earlier 2.884 mills to about 1.142 mills, and indicated the premium savings could be used to support employee pay increases in the 2%–2.5% range. Staff asked commissioners to permit continued negotiation and to allow them to finalize the carrier selection after final bid clarifications; staff said UnitedHealthcare was also reviewing the market bids and might return with a competitive proposal to retain the city’s business.
Staff noted the trade-off of year-to-year volatility: a lower premium one year could rise the following year, and carriers will not provide multi-year guarantees except in the state plan option (which would have required a three-year lock-in). Staff said final recommendation documents and employee open-enrollment communications were expected within two to three weeks pending final underwriting and any remaining bids.
Commissioners asked about claims-management practices, renewal guarantees and how savings would be distributed among single versus family plan participants. Staff said the finance department would calculate final pay-adjustment allocations and that the broker and HR would continue vetting network adequacy, prior-authorization practices and other administrative details before a final decision.
