Council rescinds prior one-time health plan vote, approves phased changes to city employee health insurance with supplemental funding

City Council voted July 1 to rescind an earlier one-time insurance action and adopt a revised, phased approach to changes in the city's employee health-insurance program, after a lengthy presentation from Human Resources and the city's benefits consultant and questions from council and employee representatives.

Linda Tenedo of Human Resources outlined the financial pressure in the city's health-benefits fund, advising that rising medical and pharmacy costs and a year with an unusually high number of catastrophic claims required plan changes to avoid depleting reserves. She said the city faced a projected increase in medical and prescription costs and that, without changes, the fund would be unsustainable.

Natalie Haskett, identified in the meeting as a consultant with Gallagher, described the insurer's exercise of re-pricing the city's three plan options (PPO, HMO, and HDHP) to better align premium contributions with plan value. She said a larger-than-usual number of high-cost claims in the last 24 months and an industry-wide pharmacy trend drove part of the pricing pressure.

After public-safety union representatives and other employees described concerns about out-of-pocket increases, council members asked staff and the broker for alternatives. HR recommended a phased approach that would reduce the immediate premium shock for employees and buy the city time to rebuild reserves. Staff presented an approximate city cost to hold premiums at a somewhat lower increase: about $800,000 to $1,000,000 charged to the general fund in the near term, with an estimated total fiscal impact across all city funds of about $1.3 million.

Council votes and procedural steps: - Because the earlier health-plan action had already been approved, council moved to rescind that prior action. By the required two-thirds vote of the council members present, the previous motion was rescinded. - Council then considered a new, phased plan structure (presented by HR and Gallagher). After discussion, council voted to adopt the revised, phased plan with the adjustments agreed at the meeting. The motions were recorded as approved.

Implementation details and deadlines: HR and the benefits consultant said the city must finalize any plan changes by mid-July to meet open-enrollment and insurer timelines; staff requested July 14 as the working deadline to submit final plan documents and implementation directives. HR committed to continued employee education and more aggressive wellness outreach to increase preventive-care utilization; staff also committed to monthly and quarterly monitoring of the benefits fund and to bring replenishment and forecasting updates to the council.

Why it matters: The council approved a compromise intended to preserve employee access to benefits while keeping the benefits fund solvent. Council members, HR, and union representatives all said they preferred a phased approach to avoid an immediate, large premium shock to employees; staff emphasized the need to rebuild reserves to industry-recommended levels to protect the city against future high-cost claim years.

Speakers: Linda Tenedo (Human Resources) and Natalie Haskett (Gallagher consultant) provided the technical presentation; council members debated the tradeoffs; David Gonzalez (president of the Laredo firefighters association) and other union representatives offered public comment in support of phasing changes.

Ending: Council approved the phased plan and directed staff to finalize plan documents by the mid-July deadline; staff said they would return with modeling showing the multi-year reserve restoration plan and the projected general-fund and enterprise impact.