Agenda No. 3.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | August 15, 2023 |
| Department: | Human Resources |
| Subject: | Resolution 23-R-66 - Authorizing the City Manager to enter into an agreement with Blue Cross Blue Shield for medical insurance. (S.Gonzalez/J.Kurz) |
BACKGROUND
The City has had Blue Cross Blue Shield (BCBS) medical insurance since 2019. Due to a few large claims in 2023 and current trends in the healthcare market, BCBS was originally proposing almost a 30% increase in premiums for plan year 2024. City staff consulted with our benefits broker and determined it was an opportune time to issue an RFP for health insurance to survey the market and ensure we are providing the best value to our current employees, retirees, and ultimately, the taxpayers.
The City released a Request for Proposals (RFP) for medical insurance, and three proposals were received in total. The respondents included Blue Cross Blue Shield, Cigna and United Healthcare. The proposals submitted matched the current plan coverage (co-pays, coinsurance, deductibles etc.)
After Best and Final Offers were negotiated with the carriers by the City’s benefits broker, BCBS has proposed a 7.5% premium increase ($381,986).
Though both Cigna and United came in lower than BCBS, after consultation with our broker, it was determined that either carrier would create (in some cases, significant) disruption in network facilities and providers for our members.
Therefore, after evaluation and review of all proposals, staff recommends contracting with Blue Cross Blue Shield for medical insurance.
Staff will go back to the market next year to further evaluate if member disruptions can be minimized by switching carriers for plan year 2025.
The City released a Request for Proposals (RFP) for medical insurance, and three proposals were received in total. The respondents included Blue Cross Blue Shield, Cigna and United Healthcare. The proposals submitted matched the current plan coverage (co-pays, coinsurance, deductibles etc.)
After Best and Final Offers were negotiated with the carriers by the City’s benefits broker, BCBS has proposed a 7.5% premium increase ($381,986).
Though both Cigna and United came in lower than BCBS, after consultation with our broker, it was determined that either carrier would create (in some cases, significant) disruption in network facilities and providers for our members.
Therefore, after evaluation and review of all proposals, staff recommends contracting with Blue Cross Blue Shield for medical insurance.
Staff will go back to the market next year to further evaluate if member disruptions can be minimized by switching carriers for plan year 2025.
GOAL
Approval of 23-R-66 authorizing the City Manager to enter into an agreement with Blue Cross Blue Shield for medical insurance for 2024.
COMMUNITY BENEFIT
The City was able to lower premiums for dependent care coverage when the City switched to Blue Cross Blue Shield in 2019. Offering a competitive benefit package enhances the City's ability to effectively recruit and retain top talent. This translates to lower turnover costs and a more engaged workforce, ultimately leading to increased productivity and quality of City services.
SUMMARY OF RECOMMENDED ACTION
Approval of 23-R-66 authorizing the City Manager to enter into an agreement with Blue Cross Blue Shield for medical insurance for 2024.
FISCAL IMPACT
The total premium cost for 2024 medical insurance will increase by 7.5%, or $381,986.
Funds have been allocated in the proposed FY 23/24 budget to absorb this increase. By the City absorbing the cost, employees will not see an increase to their dependent care premiums.
Funds have been allocated in the proposed FY 23/24 budget to absorb this increase. By the City absorbing the cost, employees will not see an increase to their dependent care premiums.
RECOMMENDATION
Approval of 23-R-66 authorizing the City Manager to enter into an agreement with Blue Cross Blue Shield for medical insurance for 2024.