Park Hills and the realities of employee insurance

Insurance broker John McCarty explains the benefit plans available to Park Hills during the council meeting earlier this week. (Jeannie Northrup)

JEANNIE BARTON-NORTHRUP, jnorthrup@dailyjournalonline.com

During the Park Hills Council meeting Tuesday, insurance broker John McCarty and City Administrator Zachary Franklin explained the facts behind a more than 20% increase in the cost of employee insurance.

Concern about the affordability of family healthcare for employees was said to be spreading among residents and city employees.

McCarty reported to the council that he spoke with many reputable insurance companies – including Blue Cross & Blue Shield, Allstate, Aetna, and others – to negotiate a reasonable rate for city employees and their families.

“It was a bad year for insurance claims, and it’s hard to find any coverage at all. Most of the companies I talked to denied coverage. The plans I have to present are the most reasonable coverage plans offered,” he said.

According to McCarty, the number of medical claims exceeding $10,000 this year is significant. City workers used their health benefits to cover substantial medical and pharmaceutical expenses.

Insurance companies project future claims on current year claims and decide what to charge customers for employee and employee family coverage. Insurance companies decided Park Hills employee insurance claims would continue to increase; therefore, companies denied coverage altogether or raised rates.

Franklin produced a cost analysis of the least expensive options for the city and its workforce.

The city currently has a plan that pays 80% of employee and dependent insurance premiums. A current family plan costs approximately $2,600 per month with a $2,000 deductible; the city pays $2,080, and the employee pays $520.

The current plan is not renewable at the current rate. Franklin explained that the renewal offered is a plan with the same deductible, but the city would pay 100% of employee and 20% of dependent premiums. The proposed renewal family plan premium is about $3,200 with an included employee cost of about $950. Park Hills would pay $1,400 monthly, and the employee would pay $1,800. This plan is not popular among city workers.

McCarty introduced a second offered plan with a “base” and a “buy-up” option. The city would pay 100% of the employee’s “base” premium and 50% of the dependent’s “base” premium on this plan. The difference is the deductible. The “base” option has a $4,000 deductible, and the “buy-up” option has a $2,000 deductible. With the “buy-up” option, employees would pay 50% of their dependent’s “base” premium plus the difference between the cost of employee and dependent premiums.

The “base” premium offered for a family is about $2,700, with an included employee premium of about $820. The city’s cost of roughly $1,760 will remain the same whether the employee chooses the “base” or “buy-up” options. The employee’s “base” option would cost about $940 a month, whereas the “buy-up” option costs close to $1,550. 

“A city has two responsibilities,” began Franklin, “to provide essential services, and to take care of the people who provide those essential services, our workforce.” 

Franklin said part of providing services is a fiduciary responsibility to manage taxpayer funds. He explained that the general funds account includes nine departments, and 70% of those funds is for employee expenses, including payroll and insurance, with 30% of general funds left to be split among nine departments.

“That’s only 3.5% each department receives for essential services. Where do you make cuts,” Franklin asked.

Employees and city residents took to Facebook to vent their frustration over the drastic hike in insurance costs for families of city workers. Many concerned citizens blame the current administration for the rate increase. Some of those same citizens also claim that Franklin cannot correctly manage a city budget to provide city funding for the insurance of city employees. Other residents lay blame at the feet of insurance companies themselves.

“Insurance companies and pharmaceutical companies rule the world. They are why health care is so high, and nothing can be done about them,” Pam Chance Miller commented.

“I have recently had to quit my job that offered absolutely fabulous insurance that was about 90% company paid for myself and my spouse (due to physical disability). His job offers insurance much like what’s been shown here [Park Hills Employee Renewal Rates]; it’s relatively inexpensive for him, but not both of us,” commented Robin Demps. “I chose not to add both of us. I then went on a marketplace site to find affordable insurance for myself. I have not been able to find any. I have been bombarded with calls and texts that I just don’t respond to.

“What are all of us supposed to do now? Our income is too much for Medicaid, not enough to be able to afford private insurance, yet we will still be penalized at tax time if we don’t carry medical insurance that we cannot afford. And then there is the fact that most people must be under a doctor’s care for medical reasons. People need medicines, treatments, and testing for chronic conditions.”