2003 AGN AUG 19 I08 - Laserfiche WebLink

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Item #8 CITY OF COLTON AGENDA REPORT FOR THE COUNCIL MEETING OF AUGUST 19,2003 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: ANTHONY ARROYO, ADMINISTRATIVE ANALYST 11 SUBJECT: APPROVE AND ADOPT THE PROPOSED RESOLUTIONS FOR THE TERMINATION OF PERS HEALTH DATE: AUGUST 11, 2003 BACKGROUND: The Public Employees' Medical and Hospital Care Act (PEMCHA) was enacted in 1962 to provide medical insurance for active and retired employees of the State of California. In 1967, the Act was amended to permit cities and other public agencies to participate. The California Public Employees' Retirement System (CaIPERS) offered multiple medical carrier choices, statewide composite rating and simplified administration. Based on these findings, the City of Colton contracted with PERS for its medical offerings, effective August 1, 1993 for the Fire Safety Unit and April 1, 2002 for the Executive and Mid -Management Units. DISCUSSION/ANALYSIS: The CalPERS Health Insurance Program was a positive medical solution for the employees of the City of Colton. Unfortunately, the CalPERS Health Insurance Program has become less competitive for the following reasons: • Since the City of Colton contracted with CaPERS, Health Net is no longer available to CalPERS participants. Health Net had the largest CaIPERS group membership; these members were forced to choose another medical insurance carrier. • Forced and increased benefit plan changes (co -pays and deductibles). • Non-competitive rates based on a statewide pool. • Higher than trend -rate increases: approximately 25% increase for 2003 plan year and 18% increase for 2004 plan year. The variation of costs between Northern California and Southern California is one of the key factors for the increased costs. In June 2003, CalPERS staff recommended to the CaIPERS Board a regional pricing system to reflect the higher medical care costs in Northern California. Southern California has a younger and healthier workforce and less rural areas, the latter of which is another factor as to the higher medical costs. As a result, many Southern California agencies are evaluating—and exercising—their option to exit the CalPERS Health Insurance Program. The City has asked ABD Insurance & Financial Services (ABDI), the broker for medical and dental benefits to those employee groups who are not part of the CalPERS Health Insurance Program, to provide medical rates for the 2004 plan year. The rates provided are lower than those quoted by CalPERS in June 2003. More importantly, ABDI provides the City of Colton with insurance carriers Adg 08 1%3 T�mte �M H�