Belleville Council gets lesson on Affordable Care Act options for city

By Rosemary K. Otzman
Independent Editor
On July 14, the Belleville City Council was given an hour-long lesson on the federal Affordable Care Act and options officials have to supply health care for employees and comply with federal law.
On hand were Ken Hurtt and attorney John Wilson from Employee Solve, Inc. of Birmingham, a firm hired in February to give Human Resources help to the city for retiree health care. Now the firm is helping with employee health care.
Hurtt has professional designations as a Chartered Life Underwriter, Registered Health Underwriter, and Registered Employee Benefit Specialist.
Hurtt told the council that he comes to them with “all the frustrations and battle scars of health care reform.”
Attorney Wilson said the Affordable Healthcare Act is “the most impactful piece of legislation in my career of 23 years.”
Hurtt said the city administration will have to construct a new strategy, scope, and approach to health care. While he said the subject could be covered in a three-day session, he will give a little orientation on the subject.
Wagner said one of the issues involved is that the city has a Cadillac plan for employees.
“The city has a long history of benefits richer than normal,” Wagner said. “Now all the dynamics have changed. There’s upward cost pressure.”
He said in 2018 there will be a tax on richer benefits, including the Cadillac benefits plan.
“Why not just not provide insurance and put them out to the exchanges?” Wagner asked and then answered himself. “Having health insurance is better than not having health insurance. But the last place to get insurance coverage is in the public exchange.”
“Every segment of health care is affected,” Hurtt said. “Doctors are going into practice groups from private practice. Eighty-five percent of the premium has to go for claims. There’s a dynamic going on and it is not a comfortable change.”
Hurtt said Blue Cross did away with its old schedules because there are new federal requirements.
“The plan we looked at at the last contract [with employees]… doesn’t exist anymore. It was for us,” said Councilwoman Kim Tindall.
Hurtt said it was good until July, but then it wasn’t an option.
“We knew our Cadillac plan was going to go away,” Mayor Kerreen Conley said. She said they tried to get ahead of the problem.
“There are two federal elections before 2018,” Councilwoman Tindall said of the rules due to go into effect.
“All we know today is what is,” Mayor Conley replied.
“This would fall closer to a Cadillac tax than not,” Hurtt said. “This is a richer plan.”
Hurtt said a health care plan is like a piece of paper, and he held up a small sheet of blank paper.
He said what you have to consider is how to fund it, what to offer, and how to administer it? He is recommending defined contributions rather than defined benefits as the funding consideration.
He said the plan is stabilized by defining it.
“We have to retrofit our thinking,” he said. “How to fund it and how to define it.”
“Funding is the first step. Then, convert funding to compensation,” Hurtt said.
Councilman Tom Fielder asked if employees would have a set of choices within a plan?
Hurtt said in the past the city offered plans for a single employee, a husband and wife, and then a family of more.
“Now, we have to get information and age on every employee and every family member and the zip code to match to the market,” Hurtt said.
With the new process, “Some of the employees are frowning, some are laughing. Some have their cost doubled and for some it went down,” Hurtt said.
Hurtt and Wagner had met with Belleville employees recently to explain the new law and what it means to them.
Hurtt said the city could say, “I’m getting out of the health care business and getting back into compensation.”
He said in the past people were paid a dollar at this job or a dollar at that job, with no difference in the dollar pay. Then the employers started competing by adding benefits. They brought in employees’ health care needs and their retirement.
“All portions of personal lifestyle were brought into the workplace,” Hurtt said.
“Really, this is an opportunity if we take advantage of the time and change the compensation system,” Hurtt said.
Fielder said, “We’re going to pay you a salary and tell you we have a medical / dental plan to consider. You’ll need something to satisfy federal law. We can get you a better deal than on your own. But, you will have to make your choices.”
Hurtt said that was correct.
Wagner said this is a defined contribution system and people now are buying below the coverage they had before and there is extra money for them. He said there is a flexibility where those with medical problems can pay more for medical than healthy families would want to.
When it comes time to choose whether the city will be offering the 80/20 plan (city paying 80% and employee paying 20% of health care premiums), as in the past, the city wouldn’t have to choose that plan.
Hurtt said the budget issues, contract language, and underwriting problems defines the corridor the city can take, and, “It is narrow.”
Mayor Conley said the size of the city is a factor and if they could partner with another municipality it might help them in cost.
Wagner said the city could sponsor its plan as part of a multiple-employee association plan.
“Federal legislation required change to our health plan,” Tindall said. “We discussed in the past trying to tweak the retired employees, but the previous Cadillac plan [for retired employees] we cannot change.
“The Feds are not saying that. The underwriters are,” Hurtt said.
In discussing the options for the city, Hurtt said they will have to comply with the law and his company will “resource and support you with a choice for you.”
City Manager Kollmeyer said employees once a year will decide what they want to have and, “We get out of the insurance business.”
“There’s a potential for this to be a real win-win,” said Wagner. He said if less is paid by the city for health care, there is potential money left for a wage raise.
“You can look at this as a disaster or an opportunity,” Fielder said.
“Certainly, there are issues rising out of the ashes. An opportunity,” Wagner said.
Hurtt said City Manager Kollmeyer and Clerk/Treasurer Lisa Long have been “working in the trenches” with the health care changes.
Hurtt said he would be quite interested in talking with associations to which the city belongs to see if a group option can be worked out.