City Of Houston Pays Millions Over Budget On Health Costs
by: Laurie Johnson, October 31, 2012 4:10:00 pm
About a year and a half ago, the City of Houston switched from a fully-funded health plan with Blue Cross Blue Shield to a self-funded plan administrated by Cigna.
The switch was estimated to save the city as much as $30 million. Instead, it's costing the city $17.5 million more than was budgeted.
Houston Mayor Annise Parker says one reason for that may be the plan's focus on prevention by requiring employees to undergo a health assessment.
"Because we were so aggressive on wellness and testing, we had a sharp rise in treatments for illnesses that people did not know they had prior to the wellness program."
The city did take out stop-loss insurance to cover unforseen costs. That insurance kicks in going forward, but the city still has to pay the extra $17 million already incurred.
Councilmembers expressed dismay over the expenses, pointing out employees are paying more in monthly premiums and co-pay fees and now the city is paying more than expected as well. This is Councilmember Wanda Adams.
"Just say that we do not recur the loss of the $17.5 (million) and say next year, during the same period, we're still at a loss, and we're going into the third year of the contract. At what point do we come back to the council table and say, okay, we're losing money and we're not saving."
But the mayor and city finance officials say although the plan is over budget, it's still cheaper than the old contract with Blue Cross Blue Shield.
Council will examine the health plan in committee and the city controller's office is about to do a complete financial audit of the plan.