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Consultant: stop-loss renewal pushes city's projected 2025 medical costs to about 17%
Summary
A benefits consultant told the Personnel Committee an unexpected stop-loss renewal increased the city's projected 2025 medical-rate rise to about 17%, and recommended programs that could trim roughly $458,000 in projected costs while staff seeks alternative stop-loss quotes.
A benefits consultant told the Manitowoc Personnel Committee that an unexpectedly large stop-loss renewal from the city's carrier has pushed the city's projected 2025 medical-rate increase to roughly 17%.
Sean, representing USI, said the carrier initially issued a renewal near 97% that USI negotiated to 89%. He told the committee the vendor's block-pricing on stop-loss coverage, together with several high-cost claims, explains much of the increase: "It's honestly the highest increase I've ever had to deliver in my 20 plus years of doing this," he said.
USI presented claims data through August and identified a small number of high-cost claimants driving the stop-loss exposure. Sean said the variance between earlier projections (about 10%) and the current renewal translates to roughly a $260,000 additional impact on the city's bottom line under the renewal the city has today.
To limit the effect on the budget, USI recommended keeping the city's self-funded plan and administrator, maintaining the high-deductible HSA plan design, and adding two cost-management programs: a specialty-medication sourcing approach (estimated savings presented as roughly $424,000) and a virtual musculoskeletal program (Hinge Health), which USI estimated could save about $34,000. With those savings factored in, USI presented an illustrative overall increase of about 17.3% under the current stop-loss scenario.
The mayor warned the committee that the difference between the 10% figure the mayor currently has budgeted and a 17% outcome has material consequences for the city's balanced-budget planning, saying staff needs clear guidance before budget adoption.
Committee members asked USI to pursue alternative stop-loss carriers and to provide more granular modeling on options such as higher deductibles with larger HSA contributions, spousal carve-outs, and the share of employees who actually hit deductibles in a typical year. The committee took no formal action and asked staff to return with updated quotes and analyses before the mayor's budget presentation.
