Finance committee backs staff request to seek 37.9% health insurance budget increase after reconsideration

Assembly member Deb Potter said the Skagway Finance Committee debated how to handle a sharp proposed rise in the city's health insurance costs and ultimately voted to ask staff to bring a budget amendment reflecting a 37.9% renewal increase.

City Manager Dietz, who presented the renewal analysis, told the committee the municipality participates in a Premera Optiflex plan that adjusts premiums based on claim experience. "We've been reimbursed $347,000 over the past three years for this program, which is why it's a good program," Dietz said, noting the plan returned rebates in earlier years but that this renewal cycle projects higher costs.

Dietz walked the committee through three scenarios: the current renewal (37.9% increase); an alternative with modified deductibles and higher coinsurance (33.3% increase, labeled "option 1"); and a lower-increase option (about 24.9%) that would raise out-of-pocket costs for individuals and families. For the remainder of the fiscal year under the renewal scenario Dietz said the city would need about $384,000 and a full 12-month projection of roughly $769,000; the six-month additional need under option 1 was cited at $348,000 and at $252,000 for option 2.

Committee members focused on trade-offs between municipal cost and employee coverage. Dietz said an employee cost-share would amount to about $200 a month for a family and would reduce the municipality's increase to roughly 31% (first option) or 26.6% (second option). "I think one of the huge reasons that we retain good employees is that the health benefits are really good," Dietz said, arguing for preserving benefit quality.

Assembly member Dan Henry and Potter initially voted to advance option 1 in a roll-call vote (Henry yes, Potter yes, Jay Burnham no), but Potter later moved to reconsider the item. After returning to the motion table, the committee voted unanimously to recommend staff bring forward a budget amendment reflecting the full 37.9% renewal increase (roll-call: Henry yes; Burnham yes; Potter yes). Potter moved the final recommendation and Burnham seconded.

Dietz told members staff will return with additional detail on how the Optiflex rebate is calculated. The committee's recommendation asks the assembly to consider a budget amendment ordinance to cover the projected premium increases; staff said it will produce the ordinance and the supporting calculations for the assembly record.