For the third time in as many years, North Little Rock's city employees likely will need to enroll in a different health insurance plan if they're using the city's insurance provider.
To avoid a 15.5 percent increase in its major medical insurance premium costs in 2017, North Little Rock is proposing to switch from United Healthcare-River Valley to the Municipal Health Benefit Fund through the Arkansas Municipal League. The city had used River Valley's parent company, United Healthcare, in 2015 and QualChoice in 2014.
The change in providers for next year will result in a 3.19 percent decrease in the city's costs, a savings of $216,638, city Finance Director Karen Scott said. If the city renewed coverage with River Valley, the city would instead face an increase of $1.28 million in next year's budget, Scott said.
North Little Rock pays 100 percent of its employees' health insurance premiums and 75 percent of the cost for the employees' covered dependents.
The insurance costs will be part of the 2017 general fund budget that the North Little Rock City Council will consider in December.
A resolution will go before the council at its regular meeting tonight recommending the switch in providers. Resolutions require only one reading.
The resolution also includes authorization for the city to continue using Stephens Insurance LLC as its insurance consultant. Stephens solicited proposals from providers to negotiate the city's health-care plan after United Healthcare-River Valley notified the city in June of a "significant anticipated increase" for 2017, according to the legislation.
Stephens received four major medical pricing proposals, with River Valley's 15.5 percent increase and Municipal Health's decrease of 3.19 percent being the lowest of the four received, according to the legislation.
Municipal Health also offered a dental insurance decrease of 38.4 percent, or $170,129, from the city's current plan. The other lowest dental coverage proposal received by Stephens was from Delta Dental, with a 3 percent increase, or $13,905, over current costs, the legislation said.
"I hate switching because I hate the enrollment process," Mayor Joe Smith said of the insurance changes. "It's a necessary inconvenience to have to work through the process, but when we're talking about having a $1.3 million increase, we have to ask our employees to suffer through that inconvenience.
"We certainly would love to settle in with one company for longer than a year, no doubt," Smith added. "Hopefully, this Municipal Health Fund will be that particular one."
North Little Rock changed from QualChoice for 2015 when that company proposed a 13 percent increase in the city's cost -- a figure that was negotiated down from an initial 37.2 percent rise but was still a $1.31 million projected increase. Switching to United Healthcare meant less of an increase in costs -- $770,730 -- to the city and raised employee deductibles from $500 to $1,000 annually.
United Healthcare's proposal for 2016 would have meant a 15 percent increase in the city's costs. Switching to United Healthcare-River Valley, a United Healthcare subsidiary, let the city see a decrease this year of 1.15 percent instead, a savings of about $50,000.
Asked whether annual changes will continue, Scott said, "I hope not."
"It is a little bit of a different environment that we live in now," he said.
Two years ago, city officials strongly hinted that, as health-care coverage costs continue to be uncertain year to year, the city might have to start asking employees to kick in a small share of their premium costs. However, the city has been able to continue picking up the full amount, and that remains the goal, Smith said.
"We talk about it a couple times a year normally," Scott said of whether the city should cut back on how much it pays in worker premiums. "But, there are no plans to change that this time."
Smith said that "as crazy as this insurance market is," at some point, the city may have to start looking at discontinuing paying the full amount of premiums for its employees.
"I hope to never take that away. That's my goal," Smith said. "If insurance costs do skyrocket at some point, we'll have to go to our employees and say this is all we can do. But, for 2017, that's not going to happen. Right now, we're good to go, and we'll keep the benefits the same."
Metro on 10/10/2016