The purpose of this Mayor and Council Communication (M&C) is to take actions to provide additional funding for the payment of healthcare and related costs through the end of the current plan/calendar year from a combination of reallocated Risk Funding contributions and net position. In the adopted Fiscal Year 2017 budget, the Risk Financing Fund was provided with contributions from various departments and funds for use in covering anticipated losses and claims. Because losses and claims have been coming in at a lower-than-projected amount, Staff is recommending that $3,000,000.00 be transferred from Risk Financing for use in paying healthcare costs. This action will have a zero net effect to expenditures in the contributing operating funds. The transferred funds would then be appropriated along with $7,500,000.00 in net position in the Group Health Insurance Fund for use in paying claims for active and retired employees. Adoption of the above recommendations is anticipated to provide sufficient funding for all healthcare costs through the end of the current plan/calendar year.
For the Fiscal Year 2017, the City implemented a variety of cost-mitigation strategies including, among others, introduction of a RX90 program, a requirement for generic prescriptions across the board, a step therapy approach to pharmacy benefits, a reformatted specialty drug tier, an increased employee out-of-pocket maximum, and an increased Emergency Room co-pay. While staff believed these efforts have avoided a higher growth rate, costs have continued to rise. Management is actively evaluating various plan changes for year 2018 that are intended to address these trends.
The Group Health Insurance Fund is expected to end Fiscal Year 2017 with an overall deficit of approximately $7,500,000.00 after taking the actions proposed in this M&C. This M&C does not request approval of a contract with a business entity. |
