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VOL. 129 | NO. 171 | Wednesday, September 3, 2014

Council To Review Conflicting Health Insurance Numbers

By Bill Dries

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City government’s open enrollment period for health insurance begins in October and new details of health insurance benefit cuts approved in June go in the mail later this month. Yet Memphis City Council members meet in a special committee session next week to again review conflicting numbers from actuaries on the coverage.

The conflicting numbers involve how much the city would save if benefits to be cut to employees and retirees were restored but the proposed plan includes higher deductibles. The plan is an alternative presented earlier by the Memphis Fire Fighters Association. The union and its actuary claim the plan would save the city of Memphis $24 million.

Mercer Global, a consultant to the administration of Memphis Mayor A C Wharton Jr., put the savings to the city at $5 million to $12 million with the higher amount dependent on everyone involved enrolling in the higher deductible plan including those now in the city’s premier plan.

Katrina Jefferson of Cigna Health Care, which is the city’s insurance provider, however said their actuaries put the savings estimate at $17 million if half of those involved enrolled in the high deductible plan.

But neither company has talked to actuaries from the other company. So in the next week Cigna and Mercer actuaries will compare notes and see if they are using the same terms in their estimates.

Both Jefferson and Tony Holmes, of Mercer, expressed doubts that the full amount of savings could be realized if it depended on a large number of employees and retirees switching to the high deductible plan.

“At a minimum, Cigna and Mercer need to talk,” council chairman Jim Strickland said.

Thomas Malone, president of the firefighters union, said a reduction in premiums as well as keeping working spouses covered would be an incentive for such a switch. But that raised questions about what the impact of those changes would be on the savings estimates.

Council member Shea Flinn will chair a special meeting Wed., Sept. 10, of the council personnel committee at 4:30 p.m. at City Hall.

The council approved in June changes to health insurance benefits that begins with the open enrollment period in October and takes effect in January. It was a plan proposed by Wharton who has also said his administration is open to alternative proposals.

By raising health insurance premiums 24 percent, the city would save an estimated $28 million according to Mercer. The city would also eliminate its 70 percent subsidy of health insurance costs for most retirees cutting the total cash subsidy the city pays by $23 million.

The savings from the health insurance changes would go toward the city’s unfunded pension liability with the council scheduled to vote on proposed pension plan changes in October.

A presentation by citizens at a Tuesday morning committee session raised more questions for council members about the use of reserve funds in past fiscal years as health insurance claims have exceeded the amount budgeted in the health insurance plan for such changes.

A group of citizens who have combed city budget documents claim the numbers in their examination of the city’s budget for the current fiscal year and past fiscal years don’t add up and don’t balance.

In other action Tuesday, council members reconsidered their rejection at the Aug. 19 council meeting of an $8.8 million contract between Memphis Light Gas and Water Division and Davis H. Elliott Construction Co. of Lexington, Ky. The contract is for three years worth of work to be done to meet federal utility reliability standards.

A majority on the council voted down the contract in August citing a concern that the construction company is from out of town.

But several journeymen linemen from the utility told council members Tuesday, utility crews don’t have the time or equipment to do the work and presented a petition signed by most of the utility’s linemen to that effect.

Nevertheless, the vote was a close one with a seven-vote majority approving the contract only after council member Bill Boyd changed his vote to one in favor of the contract.

The council delayed a vote on a special use permit for a car lot in a strip retail center at Brooks Road and Dogwood Lane after the applicant didn’t show up for a committee hearing on the matter.

The council approved spending $270,000 in capital funds to buy two “Pro-Patch” trucks to be used for making street repairs.

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