Fort Smith Board demands more info on city health benefit plan

It soon became apparent Tuesday (Aug. 25) that at least four members of the Fort Smith Board of Directors are not happy with a pitch by city Human Resources Director Richard Jones to stick with the city’s self-insured health care plan and not look at plans used by other cities.

In an Aug. 11 memo, Jones argued against moving the city’s health care benefit plan for employees to a benefit plan offered by the Arkansas Municipal League.

“There are four critical issues with moving the City of Fort Smith's Health coverage to any other health plan design that we do not control. The only way to manage cost containment in healthcare is to maintain control of the plan design and each piece of the healthcare program,” Jones noted in the memo.

Other factors cited including a “value based benefits design,” and “12 years creating a culture promoting wellness by carefully piecing together the best available innovations in healthcare, all of which are evidence based,providing the best healthcare outcomes for our employees and their families.”

Jones said the key part is the existing self-funded plan serves as a partnership between the city and the almost 900 employees on the plan. He also said claims expenses and plan cost have been relatively stable. Following is a look at the past five years for each item.

CLAIMS HISTORY (2014-2010)
2014: $6.368 million
2013: $6.232 million
2012: $6.674 million
2011: $6.646 million
2010: $4.772 million

PLAN COST (2014-2010 – cost per employee/per month)
2014: $661
2013: $598
2012: $582
2011: $625
2010: $531

“Finally, and most importantly is that the City has developed a partnership with our employees and their families that promotes culture of wellness by each person knowing and managing their health to keep the cost of healthcare as low as possible,” he noted in the memo.

The Fort Smith Board has approved a plan to move contributions from 75%-25% – with employees paying the 25% of plan costs – to a 70%-30% plan.

‘DISCUSSION GOES ON PAUSE’
During Tuesday’s Board study meeting Jones began to argue that the AML plan is $1.3 million less than existing city coverage costs, but he doubted the AML plan would provide near the coverage and would possibly require payment cuts by area doctors. City Director Kevin Settle interrupted Jones’ explanation of AML disadvantages.

“I disagree with that,” Settle said, and then asked Jones if he had visited with Don Zimmerman, executive director of the Arkansas Municipal League.

Jones professed to not having talked to Zimmerman since 2010. Settle seemed visibly upset with the response. In a brief interview after the meeting, Settle said he was not happy with the lack of choices provided by Jones.

“I was upset because our human resources did not reach out to the Arkansas Municipal League and talk to them and get all the proposals before they presented this to the board, including the costs, which is a big piece here,” Settle said.

During the meeting, Settle said cities like Little Rock, Conway and neighboring Van Buren have moved to an AML plan. He said if more than 200 Arkansas cities are using the plan to control costs and provide benefits, then it can’t be discounted as an option to consider in more detail.

“This discussion goes on pause” until more detail is provided, Settle said, charging city staff to “open it up and go get the best plan.”

GET THE BEST DEAL
Jones stuck to his guns, arguing that the self-insured plan is the best way the city can maintain control of costs and benefits. He predicted that reviews of other plans will show the city’s plan is the best plan. Director Tracy Pennartz then interrupted Jones.

“And if it does, that’s fine. That’s fine, Mr. Jones,” Pennartz said matter-of-factly. “I know it’s your baby and you’re proud of it … but I think it is appropriate and prudent of us to ask you to compare. … Private companies do that every year. They sample plans every year to get the best deal.”

City Directors Keith Lau and Mike Lorenz also suggested more information about the AML plan, and possibly other plans, is needed before the Board is willing to vote on the issue. Lorenz said if the AML plan provides a much lower premium and puts the city in an insurance pool, then costs could be lowered for employees but all parties – city, city employees and insurance providers – would share in the risk.

Jones was asked to reach out to Zimmerman and learn more about the AML plan and how it might be flexible to meet Fort Smith’s needs.

The AML does coordinate health care benefits for 213 Arkansas cities. The AML also provides the benefit to many non-city groups like the Fort Smith Housing Authority and the Western Arkansas Planning and Development District, which is based in Fort Smith. Zimmerman told The City Wire that the benefit plans can range to be flexible in cost and benefits for cities large and small, ranging from Alma in Crawford County to the capitol city of Little Rock.

City Director Don Hutchings was the only director to step up and defend Jones. Hutchings said he thinks the city plan is doing well, is a good service to city employees and does not understand the reticence to see it continue.