Colleyville staff recommends renewing medical coverage with Blue Cross Blue Shield after negotiation; net increase ~$251,035

City staff recommended renewing the municipality's medical coverage with Blue Cross Blue Shield and reported a negotiated net increase in premiums of about $251,035 for the coming plan year.

"The city ... was able to negotiate the renewal rate to 7.6% over current premiums," Jesse, the city's director of human resources, told council after describing the RFP process and bids received. Staff said the RFP drew proposals from four carriers; two large national carriers that have bid in prior years (Cigna and United) declined to quote this year. One bidder (Baylor Scott & White) offered a lower-percentage increase but with a limited provider network that excluded major local facilities, and another bidder quoted more than 20%.

Staff said the initial Blue Cross Blue Shield renewal proposal was an 18% increase; through negotiation and credits the net renewal was 7.6%. That 7.6% figure includes a one-time credit of $36,600 that staff said Blue Cross agreed to provide. Staff also noted an additional offset tied to dental bundling and described a separate $50,000 payment included in the package for on-site employee clinic/house fees as presented during the meeting. Staff recommended renewing medical coverage with no plan-design changes and also recommended renewing dental with Blue Cross, which produced a net decrease in dental premiums when bundled.

Staff presented three options for how to handle the $251,035 projected increase in medical premiums: (1) pass 100% of the increase to employees; (2) split the increase 50/50 between the city and employees; or (3) the city absorb the full increase. Jesse said the full $251,035 increase has been incorporated into the draft FY 2026 budget, and staff characterized absorbing the increase as fiscally accommodated in the preliminary numbers. Staff also noted that current employee premium contributions have not changed since plan year 2017–2018.

Council and staff discussed loss ratios and the drivers of renewal amounts. Staff presented claims-versus-premium data showing the city's 12-month loss ratio running around 94% (staff said the plan-year loss ratio was 95.2% as of April and the 12-month average was 94%). In the market, carriers typically target an 84% loss ratio; staff said a higher loss ratio generally produces higher renewal proposals. Staff and council discussed pooling options, self-insuring and the difficulty of joining a healthy pooled arrangement given the city's historical loss ratios.

Council members asked about the distributional effect of any premium pass-through. Staff noted that premium increases have a larger proportional impact on lower-paid employees and suggested council consider exemptions or mitigations if passing costs to employees. One council member observed the city had not passed a premium increase to employees since before 2016.

Staff asked council for direction; several council members expressed support for the city absorbing the renewal increase because the cost is already included in the draft FY 2026 budget. No formal vote or final change to employee contributions occurred during the work session; staff said the renewal typically is finalized during the second regular meeting in June to take effect with the plan-year start in October.