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Council hears cautionary health-insurance update; staff recommends staying with Sourcewell this year
Summary
Gallagher consultant Jenny Van Dines told the council claims have risen and explained pool options including Sourcewell—s rebid to Blue Cross Blue Shield and a county-led SCALE pool feasibility. Staff recommended not leaving Sourcewell now given high recent claims and an August 1 soft notification deadline.
Jenny Van Dines, an employee-benefits consultant with Gallagher, briefed the New Prague City Council on the city—s health insurance performance and options as Sourcewell rebids its pool administration.
Van Dines said the city currently buys coverage through a Sourcewell pool that has a 15% rate cap for 2025 and that Sourcewell has announced it will move administration to Blue Cross Blue Shield. She provided claims data and said the city—s 2024 year-to-date claims-to-premium figure through May was running at about 68% (claims-to-premium) and that recent months have pushed the most recent 12-month period higher.
"For every dollar that the city is paying in premium to the pool, they are paying out a dollar and 68¢," Van Dines said, describing current claims-to-premium trends and noting that the metric excludes administrative and stop-loss costs.
Van Dines described SCALE, a Scott County-led feasibility project to create a county pool, which completed phase one feasibility and is entering phase two. She said SCALE may provide more transparency and earlier visibility into renewals and underwriting than Sourcewell; however, she and staff cautioned that a smaller county pool could magnify volatility if a few members have bad claim years.
Staff briefed the council on timing: Sourcewell requires notification by Aug. 1 if the city intends to bid out of the pool (that would remove the Sourcewell 15% cap), and Gallagher does not expect firm administrator selections or final rates before late August or September. Given the city—s recent claims experience, staff recommended deferring any decision to leave Sourcewell this year and revisiting the issue after new data is available.
During Q&A, council members asked how many agencies might join a SCALE pool, how membership would be contracted, and what protections could limit pooling volatility. Van Dines said the SCALE group includes about 28–30 groups overall and that the county could be a substantial participant, but final participation and administrator selection remain uncertain.
Next steps: staff suggested additional discussion over the next two weeks before the Aug. 1 notification deadline and said they will provide updated figures and any new SCALE timelines as they become available.
