3.3. SR 09-24-2001MEMORANDUM
Item ~ 3.3.
TO:
FROM:
Mayor and City Council
Lori Johnson, Finance Director
DATE:
September 24, 2001
SUBJECT: Consider Patrol Union Health Insurance Contract Renewal
The city accepted quotes for the Patrol Union's health insurance contract that is up for
renewal on October 1, 2001. However, because of the difficulty in finding plans that match
current benefits, only two quotes were received. The Patrol Union currently has Medica
Choice Select coverage with no office co-pay, no deductible, and an $11.00 prescription co-
pay. Attached is a letter from Barry Rosenberg, the city's insurance agent, regarding the
difficulty we experienced in trying to find plans that match current benefits.
At this time, the best renewal option is with Medica. Medica's renewal includes an 11 percent
increase in premiums. Medica has chosen to offer both Choice Select and Choice Elect plans
to this group. Both plans are offer identical coverage but have different provider networks.
The Elect network is smaller; therefore, the premium is discounted seven percent. Employees
may chose whichever plan best fits their needs. Although the Patrol Union steward has
indicated that Union members do not want the option of choosing the Elect plan, it is being
offered in an attempt to help employees reduce their insurance costs.
Action Requested
The City Council is asked to authorize the renewal of the Patrol Union health insurance
contract with Medica for the Choice Select and Choice Elect plans.
s:Xcouncil~patrolhlth.doc
From: A. Barry Rosenberg To: Lod Johnson Date: 9/7101 Time: 11:03:08 AM Page :2 of 3
9/7/01
A. Barry, Rosenberg CLU, ChFC
Minnesota Insurance Services of St. Paul, Inc
10562 Sycamore St. NW
P.O. Box 48958
Coon Rapids, MN 55448
Ms. Lori Johnson
City, of Elk River
13065 Orono Parkway
Elk River, MN 55330
Dear Lori,
Subject: City, of Elk River Patrol
The Ci~' of Elk River Patrol Union is facing the reality, that insurance companies are not
willing to quote zero co-payment on small groups. A s~nall group for this purpose is
under 50 Employees. Matching benefits going forward will be next to impossible. We
attempted to get several comparable quotes at this renewal and found only one company
xvilling to match the zero co-pay benefit. The health insurance industry is moving away
from that Wpe of benefit for small groups because of over utilization.
Going forward we need to be cognizant of the fact that if we maintain current benefit
levels, eventually, there will be no competitive quotes. Solutions that will be effective
include accepting benefit levels that are in line with the industry standards. The other is to
get larger. As I mentioned these restrictions are only in the small group arena. Groups of
50 and over are free to design benefit plans to fit their particular needs.
Feel free to call me if you have additional questions or if you would like me to meet with
any of the Union Officials involved.
Sincerely,
A. Barry, Rosenberg CLU, ChFC