SPECIAL COUNCIL MEETING

A Special Council Meeting was held on June 18, 1990 at 5:30 p.m. with Council President Christiansen presiding, Members present were Councilmen Hall, Daisey, Levitt, Lynn, Weyandt and VanSant. Councilmen Pitts and Salters were absent. The Special Council Meeting was called for the purpose of selecting a Health Care carrier for the City of Dover.

Council staff members present were Chief Hutchison, Mr. Lucas, Mr. Worley, Mr. Cregar, Mrs. Boaman and Mr. Pepper.

AGENDA ADDITIONS/DELETIONS

By motion of Mr. VanSant, seconded by Mr. Levitt, the agenda was unanimously approved.

HEALTH CARE COVERAGE

In late April, Blue-Cross/Blue Shield (BC/BS) informed the City of Dover that health insurance premiums were projected to increase approximately 40%, effective July 1, 1990. Due to the fact that health insurance premiums had risen 60% last year and the tremendous hardship another significant increase would place on City employees, alternative health insurance programs were investigated and reviewed by City Administration and the Employee Health Advisory Committee. Based on this analysis, it was recommended by the City Manager's Office that the City of Dover enter into a contract with the Johnson Companies to administer a self-insured health insurance program.

In March, the Employee Health Advisory Committee submitted several recommendations on controlling health care costs to the City Council:

            1)        Implement Wellness Program

            2)        Institute Section 125 Plan

            3)        Explore Self-Insured Health Program

            4)        Hire a Consultant to advise City on health related issues

Item one has been achieved and item two is in the process of being completed. As requested by City Council, staff requested the assistance of Hardesty Insurance Company to analyze various options available to the City. Hardesty sought quotes from conventional insurers and self-insured third party administrators. In addition, staff obtained data from Blue Cross/Blue Shield, Principal Health Care, (HMO) and the Johnson Companies. Due to the restricted time frame, conventional insurers declined to provide quotes. However, a quote was received from Rasmussen Agency, Inc., a self-insured third party administrator. A comparison of the monthly premiums for the self-insured option is provided below:

Coverage                    Johnson                       Blue Cross/                 Rasmussen                Current

   Type                      Companies                  Blue Shield                 Agency                 Rates

Individual                   $ 133.89                      $ 144.28                      $ 167.93                    $ 146.51

Ind./Child                   $ 205.85                      $ 216.41                      $ 254.81                    $ 219.76

Family                        $ 345.30                      $ 360.69                      $ 296.01                    $ 366.27

Medicfill                     $ 86.94                      $ 86.04                      $ 122.55                    $ 102.08

Several important elements were considered by staff during its review of the various programs:

            1)        Total health insurance premium cost

            2)        Level of health care benefits

            3)        Ease of utilization by employees

            4)        Administrative services provided to City and employees

            5)        Optional Major Medical Plan - Higher deductible and co-insurance levels

All of the companies assured staff they were able to meet the above mentioned requirements with no problems.

Blue Cross/Blue Shield has a special relationship with many area physicians where the physicians agreed to accept the usual and customary fee and not pass on any additional costs to employees. Johnson Companies does not have this relationship but has provided data which indicates that charges over usual and customary are generally 1% of total claims. However, to alleviate any concerns regarding excessive costs to employees, staff also recommends that the health insurance fund reimburse employees for charges incurred above the usual and customary on a one-year trial basis to determine the actual impact, if any, to employees based on actual experience. However, the reimbursement is only for doctor's who have accepted the usual and customary fee concept. Any doctor who does not subscribe to this concept under Blue Cross/Blue Shield, the employee will have to pay the excess just as if employee would be under Blue Cross/Blue Shield.

If approved, meetings with the Johnson Companies employees and retirees will need to be scheduled to explain the new program and enroll participants in the plan.

Staff recommended that City Council authorize staff to enter into a contract with Johnson Companies to administer the City of Dover self-insured health insurance program effective July 1, 1990.

Mr. Worley introduced Barbara Remus of Johnson Companies who gave a very detailed presentation on the concept of self-insurance programs and the role of an administrator of the Plan. Many questions were raised by members of Council which were addressed by Barbara Remus, City Manager Worley and Finance Director Karia.

Mr. Weyandt moved that staff be authorized to enter into a contract with Johnson Companies to administer a City of Dover Self-Insured Health Insurance Program, effective July 1, 1990. The motion was seconded by Mr. Levitt and carried by a unanimous roll call vote (Mr. Pitts and Mr. Salters absent).

Mr. VanSant moved for adjournment into executive session to discuss personnel matters, seconded by Mr. Weyandt and unanimously carried.

Meeting Adjourned at 6:38 P.M.

                                                                                    DEBRAH J. BOAMAN

                                                                                    CITY CLERK

All orders, ordinances and resolutions adopted by City Council during their meeting of June 18, 1990, are hereby approved.

                                                                                    JOHN E. RICHTER

                                                                                    MAYOR

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