Frustration is mounting over city employee health insurance
Published 18:48 Friday, 11 November 2022
The rising cost of health insurance is at the heart of frustration felt by unions representing City of Austin employees, but it’s still only part of an overall picture that union representatives feel is driving employees into a corner.
During Monday night’s city council meeting, members voted overwhelmingly in favor of approving the 2023 health insurance memorandum of agreement (MOA) for the eight unions representing the city’s employees.
The vote broke down 5-1 on all eight resolutions, with Councilwoman Joyce Poshusta being the lone dissenting vote.
The gist of the decision, however, is that union representatives, including firefighter Tom Schulte, Local 598 representative of the International Association of Fire Fighters, felt the decision painted them into a corner of accepting the MOA or opting out and also higher premiums to pay. than the loss of a monthly $215 opt-out payment that the city currently has in place.
“With this MOA, what the city did was, we’re not spending that $215, which was a contractual deal,” Schulte said. “We no longer pay out the $215 and you have to go to this high deductible plan, which is $12,000 maximum out of pocket for a family, $6,000 deductible for singles.”
At the same time, however, the city itself was rocked when they reported a 31% rate increase through the Public Employee Insurance Plan (PEIP) in September. The city itself opted out of the PEIP plan and shopped around, eventually settling on a plan from Medica, which, while not an idea, Schulte said, was better.
Complicating the process was the fact that the city had already completed its 2023 budget.
“They gave us a renewal on Sept. 30 … an expected 31% increase,” City Administrator Craig Clark said. “Medica was the most compliant but still had increases. We worked with the council on the proposed plan and budget parameters. We held meetings with the unions and city employees to go over the new plan options.”
“We don’t care about that either,” Clark added. “This is the reality of the healthcare world.”
Schulte argued that no one is arguing against the timetable or the Medica plan itself. The biggest concern is the perceived lack of willingness to work with the unions to further reduce premiums. Schulte brought the matter before Monday night’s city council meeting in hopes of further organizing an opportunity to talk the process out, but the council instead chose to proceed with the vote, although it should be noted that no discussion during the meeting could not take place.
However, there is also a chance that coverage could be lost all together based on Medica’s parameters.
“But now Medica says — if you’re a public entity, you have to have at least 50% of the employees on the plan,” Schulte said. “Right now, Austin is at 54%. If we lose 10 more people, we’re not going to have any insurance coverage.”
According to Schulte, the city wanted to take the opt-out fee, $215, and move it to Healthcare Savings Account, which is similar to a flex account.
This new plan does increase the annual HSA/HRA contribution limits to $2,000 for singles and $4,000 for families annually, and while on the surface it seemed like a good thing for employees, it effectively takes away the employee’s say away about what to do with that money.
Something Schulte said he has a plan for.
“What we proposed is to take that HSA money, and it’s already set aside, turn it around and put it back into premiums,” he said. “It will give the employee the option to make those decisions about how much they want to contribute to the HSA and it will lower premium costs so it’s less money out of my pocket unless I choose to put it in there.”
Schulte also argued that the move will help with recruitment and retention. This would make it more of an incentive to stay in Austin rather than go to other communities with better options.
“We’re looking around at other entities: Freeborn, Owatonna, Fairbault … their ankle coverage is free,” Schulte said.
While Schulte said he is hopeful they can come to an agreement for 2023, the fact remains that the schedule works against the entire process. A similar view from Clark.
“They’re pretty short timelines,” Clark said. “It was nothing unique this year. The most important thing is we tried to share with employees that we need to make a decision on the MOAs to offer the third plan. In the design plans, we definitely try to limit employee exposure to higher monthly costs.”
Clark also agreed that the topic should be revisited.
“Fifty-four percent of employees take city health care. It’s something we need to address,” Clark said, but argued that doing away with the opt-out is necessary. “It was wise to eliminate the opt-out and place it on the HSA contribution of the city.”
Still, the process itself left a bitter taste and Schulte said he hoped their views could have been given a little more consideration.
“What I don’t like is how it was applied and how it was used,” Schulte said. “I understand they were on a deadline. Basically, what I was trying to say is that no one is arguing about the plan itself. What we’ve tried to do is reallocate. All we asked was for the city to reallocate (opt-out) funds from HSA funds and put them into the premium so that it is palatable to a family, which entices a single employee to jump on the plan .”