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TO:
Honorable Mayor and Members of the Common Council
FROM:
John Fitzpatrick, Asst. City Manager/Director Admin Services
DATE:
September 24, 2024
SUBJECT:
Res 24-508 Approve Renewal of Employee Health and Dental Insurance for 2025
BACKGROUND
The City of Oshkosh manages a self-funded health insurance program as an employee benefit, which includes a variety of components such as a third-party administrator (TPA), a stop loss carrier, provider networks, and a pharmacy benefit manager (PBM). The City also manages a self-funded dental plan administered through Delta Dental, as well as Three Waves Health Clinic and Wellness Center, an employer-based clinic established in 2015 in conjunction with Winnebago County and the Oshkosh Area School District. Additionally, the City utilizes Gallagher Insurance, Risk Management, and Consulting as our benefits consultant.
ANALYSIS
After evaluating current medical plan cost trends, it was determined that the City will be incurring a 1.5% increase in projected costs in our health insurance program for 2025. This increase includes one-time costs to expand services provided via Three Waves Health Clinic and Wellness Center by relocating to a larger facility, updating equipment, and hiring additional staff.
As part of our analysis to expand services provided by Three Waves Health Clinic and Wellness Center, staff reviewed our healthcare cost trends since the inception of the clinic. National healthcare cost trends have averaged 8% increases each year. This equates to a cumulative increase of approximately 85.6% since 2015, which is the year the City established the clinic.
Since the implementation of the clinic, the City has experienced average healthcare cost increases of approximately 1.6% per year, equating to a cumulative increase of 13.1% over the same time period, outperforming trend by over 72%. Although these results cannot be definitively attributed to the implementation of Three Waves Health Clinic and Wellness Center, staff believes the employee participation in the clinic, along with ongoing wellness initiatives and moderate plan design changes, have been instrumental in the City’s continued success over the past decade.
FISCAL IMPACT
Staff is estimating an overall 1.5% increase, approximately $169,000, for the health insurance program which includes an additional one-time investment into Three Waves Health Clinic and Wellness Center of approximately $473,300 in 2025. A 2.1% increase of approximately $10,900 is estimated for the dental program in 2025, and the City is also currently out for bids on the stop loss insurance and plans to accept the most advantageous option for 2025.
Although the city employee focus group on health insurance, staff, and City Manager Rohloff are satisfied with the outcome of this year’s process, all parties understand that it will be necessary to continue to evaluate our plan for 2026 in order to consider what changes may be necessary in order to preserve the best benefits possible for our staff at the most cost-effective level possible for our taxpayers moving forward.
RECOMMENDATION
Based on the analysis conducted, staff recommends no modification of plan design at this time, retention of: UMR as the TPA for the health insurance program, Caremark as the PBM for the prescription drug program, Delta Dental of Wisconsin as the TPA for the dental program, and Premise Health as the administrator of the Three Waves Health Clinic and Wellness Center, as well as 1.5% and 2.1% increased funding for the health and dental insurance programs respectively.
Please let me know if you have any questions regarding this matter and thank you as always for your assistance and support.
Attachments
Res 24-508
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