LTC 272-2012 Referral to BAC MIAMI BEACH.
OFFICE O.F'THE CITY MANAGER
NO. LTC # 272 -2012
= LETTER TO COMMISSION
TO:. Mayor Matti Herrera Bower and Members of the City Commission
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FROM: Kathie G. Brooks,.Interim City Manager
DATE: October 19, 2012
SUBJECT: Referral to Budget Advisory Committee — Discussion on Health Care Costs
This Memorandum is to provide the Mayor and Commission with an update on the
August 29, 2012 referral by the Committee-of the Whole' (Committee) to the Budget
Advisory. Committee (BAC)- regarding - the City's health.. care, costs. The Committee
recommended that the BAC examine the City's medical* premiums by plan, and perform •
a tier - *tier analysis of what each .medical plan is receiving in premiums and what it is
costing.
On October 16, 2012, the BAC met to discuss the City's health care costs.. To help
facilitate the PAC's discussion,, the City's .employee benefits consultant, Gallagher
Benefit Service (Gallagher), provided the BAC, members with a review of the cost
components of the current medical plan" options; suggested medical plan changes that
can be implemented in order to share more of the costs with the employees; compared
the City's medical plans with other employers, both, in the private and public sectors; end
reviewed the self - funded medical plan experience of other employers based on .their
filings with the State.
Additionally, the City's Benefit Administrator provided the BAC members with 'a synopsis
of the City's. current medical, plans, as'well as the City medical plan history from a, fully
insured health care.plan implemented in the late 1980's, to a self- funded medical plan in
2009: The Benefit Administrator also apprised the BAC of the medical plan's current
struggles with an aging employee population and a large number of retiree participants.
At, the conclusion of the presentations, the determined'that an in depth review of
the City medical`plan was necessary, requiring research.'A motion was made and .
unanimously, approved by the BAC members• to. create.a sub- committee of two that
would work with Gallagher and City staff to review and recommend options to the BAC.'
The sub - committee will examine the feasibility of:
• Reverting to a fully - insured. medical plan (this will require issuing an RFP to evaluate
all of the City's options);
Reducing the number of medical plans offered;
• Restructuring medical plans benefits (to possibly parallel private sector plans);
• Changing the City's premium subsidy to pre- Medicare retirees; and
Reducing the plan's administrative costs.
City staff is working with" the sub - committee and Gallagher to schedule the first sub-
:~ committee .meeting the week of October 22, 2012.
The BAC members• understand the urgency of the Commission's request,. and have
expressed their willingness to complete this task as quickly.as possible, and to have `a
recommendation to the Commission within the' "_next three.months.
Should you 'have any questions, or need additional information, please feel free to'
contact me.
KGB /REG /SR