The City of Homer isn’t immune to troubles with covering rising health care costs. The costs associated with providing insurance for city employees have increased over the last few years. City officials have had to change the benefits package to save money, which puts more of a financial burden on the employees. The policies will go into effect Jan. 1. And the reaction from almost everyone involved has been about what you’d expect.
“This sucks,” City Manager Walt Wrede said. “This really sucks for our employees.
Wrede and his staff have been poring over plans since the summer trying to find something that works for employees and the city’s coffers because the current situation isn’t working.
“As your city manager, I have to tell you can’t afford what you’re doing.”
In 2012, the city had to spend about $641,000 more than anticipated because of health care. This year Wrede is projecting it’ll be another $371,000 in losses. Council Member Beau Burgess said the city must make a decision that’s in the best financial interest of the community during the current budget process.
“Staff health care costs have gone up $600,000, $700,000, $800,000 a year to the point where it’s almost 20 percent of our operating budget; just health care,” he said.
In a memo to the city council, Wrede explained the projected costs for providing health care in 2014, if nothing is done, would be around $2.5 million for the year. He also mentioned the hardest hit employees would be those in the middle income bracket with families. Christine Szocinski is in that category. She said she accepted a job with the city a year ago based mainly on the benefits package. Szocinski became emotional as she made her comments to the city council.
“You’re asking a single mother with two children to take a 700 percent increase. Think about that tonight.”
She said if the city wants to continue recruiting a younger workforce with families, this isn’t the way to do it. Szocinski said the financial burden with the co-pays and deductibles will put her into a difficult situation. Burgess pointed out that although that increase in costs per employee is correct, it doesn’t consider the whole picture.
“In our old plan, it was highly advantageous for someone who had a family, or a large family, to be covered under the plan because there was virtually no deductible; no co-pay. When you’re seeing these rates of increases highlighted, we’re gonna pay 400 percent more. Well, yeah, because you paid almost nothing before,” he said.
Burgess said what’s offered in the new plan is still good; especially when that’s compared to private sector options. Officials did mention giving employees a lump sum of $1,500 per month to shop around, but Wrede said that might not be as beneficial as employees think. Mayor Beth Wythe was cautious about that option because of the penalties the city could face with the new health care law in place.
“There is a play or pay provision, where if... you are an employer of more than 50 people and you choose not to provide benefit then there are some penalties that come with that. So there’s a lot of aspects with that that need to be looked at,” she said.
Wythe said she is frustrated by the process to get to these new plans as well. She wanted to focus on benefits because it’s been a recruiting tool in the past for highly-qualified employees.
“We have people who left other employment to come work at the City of Homer based on this health insurance plan as a portion of their total compensation plan. And to turn it into what has been proposed here, then they’re kind of... why did we do this,” she said.
Wythe wanted the city council to have a series of meetings beginning in January to find a solution that could restore the more attractive benefits. Council Member Barbara Howard mentioned if the city needs a bold step:
“Then I guess that bold step is to reinstate the food tax.”
Council Member Francie Roberts pointed out that might only solve the problem for the short-term. And she wasn’t sure the council should be tasked with coming up with a new insurance policy for the employees.
“Certainly I’m supposed to look at the budget and the expenditures of... the taxpayers’ of Homer’s money and how to spend it. I’m not supposed to spend my time thinking about different ways to balance up insurance policies. I have no clue how to do that,” she said.
Howard said the special meetings should be about coming up with funding sources, not about crafting new health care policies. Burgess agreed and mentioned the current situation will stay as it is unless residents in Homer are willing to pay more taxes. Otherwise city officials can make decisions about funding programs, services and benefits by staying within a fixed budget.