Fort Smith Board moves to change employee health care plan

Editor’s note: story by Aric Mitchell, special to Talk Business & Politics

At least one City Director was angry with the “poor planning” of city officials at the Tuesday (Oct. 27) study session of the Fort Smith Board of Directors. Director Tracy Pennartz complained to Acting City Administrator Jeff Dingman that they were only now getting further information to help review options for the 2016 city employee health benefits package.

Pennartz and other directors received a fresh packet of information to “help” with their decision at the beginning of the meeting, giving them little time to parse through the data.

STATUS QUO VS. AML
On the table was the consideration of staying with the city’s healthcare plan and pursuing new requests for proposals (RFPs) for 2017 or switching to the Arkansas Municipal League (AML) healthcare plan in 2016. Ultimately, a straw poll revealed that most directors were unwilling to switch to AML with limited data and a time crunch.

The city must enroll 940 employees before the end of November – something Dingman and the remainder of the HR department agree would be a huge challenge, especially in light of the department’s short staffing.

Former Fort Smith HR director Richard Jones resigned unexpectedly on Sept. 21. His departure followed those of former City Administrator Ray Gosack, City Finance Director Kara Bushkuhl, and Fire Chief Mike Richards, all of whom either resigned or announced their retirements earlier in 2015.

TIME CRUNCH
The city’s plan is crafted specifically to encourage participation in the wellness program with the goal of identifying health risks as early as possible. However, it is projected to cost $7.34 million in 2016. Gallagher Benefit Services evaluated options for altering the deductible/premium arrangement of the plan while providing similar benefits and found that, with adjustments, the total could be reduced to around $6.9 million for the coming year. This would include a $2,000 deductible per employee.

Switching to AML would be comparable, coming in at around $6.5 million, but also requiring a $384,000 buyout from the city to satisfy terms of its final year in a three-year contract with Third Party Administrator (TPA) Meritain. The deductible for this plan would be around $500 per employee.

“I don’t think I’m ready to make a decision one way or the other between the current plan, the proposed plan, and the AML plan,” Pennartz said. “This is a decision, a timeframe of our own making. We were looking at this in August, and this wasn’t scheduled until now. I know we had problems with the HR director leaving, but we started this in August so we wouldn’t have to be looking at it right now.”

Dingman said the city had “contemplated bringing this before the Board at the October 7 study session,” but answers the city received from health insurance companies did not come back in time, drawing a frustrated “Poor planning” remark from Pennartz.

Three of the four major health insurance companies with whom the city pursued RFPs — Cigna, Aetna, and United Healthcare — refused to participate on such short notice, but would be “aggressively” pursuing the city’s business for 2017, according to Gallagher Area Vice-President Jerry Guy. Guy, who was in attendance at Tuesday’s meeting, recommended making the necessary adjustments for 2016 and pursuing RFPs in 2017.

Arkansas Blue Cross/Blue Shield was the only company willing to take a stab at the plan for next year, and their quote “was considerably more than either the city’s current plan or the AML plan and was not considered further,” Dingman wrote in a memo to the Board.

THE BUY-DOWN OPTION
City Director Mike Lorenz spoke in favor of letting employees decide their deductible and adjusting costs accordingly.

“Due to the fact that it is almost November, we’ve got to make some type of decision relatively quick,” said Lorenz. “I agree completely with the fact that the current plan is way too complicated. I’ve said that from the first time I ever saw it. My personal opinion is we make the recommended changes over the 2016 year and rather than going to a $2,000 deductible, have a buy down option.”

Lorenz said a buy down option would allow the city to “take steps to control our costs while at the same time, give our employees the option of buying down to a $500 deductible.”

“I don’t want to pass along costs to employees, but changing to the Arkansas Municipal League plan for 2016 would mean the city would spend $384,000 on a contract we get no benefit from and cannot get out of,” Lorenz added.

Given the time constraints, the Board will have to put this to a vote at their Nov. 3 meeting. Also on Nov. 3, the Board will be presented with the proposed budget for 2016.

The city has scheduled two hearings for Nov. 12 and Nov. 16 to review and make final adjustments. Both meetings will take place in the Bartlett Community Room of the Fort Smith Police Department.