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Council and staff press to address rising health-insurance costs; consultants to provide scenarios
Summary
Clinton City council and staff discussed rising health-insurance costs and whether to shift a greater share of premiums to employees; budget staff said they modeled a 5% premium-equivalency increase for FY26 and will present scenarios showing the effect of different employee shares.
Council members and staff discussed the city's self-funded health-insurance fund and how rising claims and premium costs are increasing the city's fiscal exposure.
Anita described the city's practice of charging departments a "premium-equivalency rate" for employee health insurance and said she budgeted a 5% increase for FY26. She explained the city has used fund balance in the self-funded health-insurance fund to buy down the levy in recent years and that the premium-equivalency rate is charged back to departments. "We levy for it, it comes into the levy fund... the premium equivalency rate from the departments goes into this fund," Anita said when explaining the flow of health-insurance levy and departmental contributions.
Council members pressed for a plan to reduce the city's exposure. Staff said they had asked their benefits consultant — Cunningham Butler — to provide multiple scenarios showing cost impacts if the city increased employee contributions to the plan (examples discussed included 10%, 15%, and higher levels). Staff said earlier modeling showed employee cost-sharing has to move substantially (into the 20%+ range) before the city's claims experience and net cost picture materially change, but that the city should start implementing incremental changes now and pair them with plan-design changes (for example, higher deductibles or spousal carve-outs) where feasible.
Council members asked staff to convene a small working group and to schedule a finance-committee meeting with the consultant to review concrete proposals within a month. Staff agreed to try to schedule the consultant to present near-term options and costs and said a follow-up could be part of the Feb. 13 budget workshop or a dedicated finance-committee meeting, depending on scheduling.
