Frustration mounts over city employee health insurance

Published 6:48 pm Friday, November 11, 2022

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The rising cost of health insurance is at the heart of frustration felt by unions representing the City of Austin’s employees, but it’s still only part of an overall picture that union reps feel is pushing employees into a corner.

During Monday night’s City Council meeting, members voted largely in favor of approving 2023 health insurance memorandum of agreements (MOA) for the eight unions representing the city’s employees.

The vote broke down 5-1 across all eight resolutions with council member Joyce Poshusta being the lone dissenting vote.

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At the crux of the decision, however, is that union representatives, including firefighter Tom Schulte, Local 598 representative of the International Association of Firefighters, felt the decision paints them into a corner of accepting the MOA or opting out and paying higher premiums as well as losing a monthly $215 opt-out payment the city currently has in place.

“With this MOA, what the city did was, we’re not giving out that $215, which was a contractual deal,” Schulte said. “We’re not paying out the $215 anymore and you have to go to this high deductible plan, which is $12,000 max out of pocket for a family, $6,000 deductible for single.”

At the same time, though, the city itself was put into a bind when they received late word of a 31% rate hike by the Public Employee Insurance Plan (PEIP) in September. The city itself opted out of the PEIP plan and shopped around, ultimately settling on a plan from Medica, that while not idea, Schulte said, was better.

Complicating the process was the fact that the city had already finished its budget for 2023.

“They gave us a renewal on Sept. 30 … an anticipated 31% increase,” said City Administrator Craig Clark. “Medica was the most compatible, but still had increases. We worked with the council on the proposed plan and budget parameters. We held meetings with the unions and city employees to go over the new plan options.”

“We don’t care for it either,” Clark added. “It’s the reality of the healthcare world.”

Schulte argued that nobody is arguing against the time table, or the Medica plan itself. The biggest concern is the perceived lack of willingness to work with the unions to further drive down premiums. Schulte brought the case before Monday night’s City Council meeting in hopes to further arrange an opportunity to talk out the process, but the council instead chose to move ahead with the vote, though it should be noted that no discussion could take place during the meeting.

However, there is also a chance that coverage could be lost all together based on Medica’s parameters.

“But now Medica is saying — if you’re a public entity you have to have at least 50% of employees on the plan,” Schulte said. “Right now, Austin is at 54%. If we lose 10 more people we’re not going to have any insurance coverage.”

According to Schulte, the city wanted to take the opt-out money, $215, and shift it over to Healthcare Savings Account, which is similar to a flex account.

This new plan does increase annual HSA/HRA contribution to caps of $2,000 for single and $4,000 for family annually and while on the surface that appeared like a good thing to employees, it effectively takes away the employee’s say in what to do with that money.

Something Schulte said he had a plan for.

“What we had proposed is take that HSA money, and it’s already set aside, jockey it around and put it back toward premiums,” he said. “That would give the employee the option to make those decisions on how much they want to contribute to the HSA and it would lower premium costs so it’s less money out of my pocket unless I choose to put it in there.”

Schulte also argued that the move would help in recruitment and retention. It would make it more of an incentive to stay in Austin rather than go to other communities with better options.

“We’re looking around at other entities: Freeborn, Owatonna, Fairbault … their single coverage is free,” Schulte said.

While Schulte said he was hopeful they could come to an agreement for 2023, the fact remained that the timetable worked against the entire process. A similar view held by Clark.

“They’re pretty short timelines,” Clark said. “It was nothing unique this year. The important thing is we tried to share with employees that we have to make a decision on the MOAs in order to offer the third plan. Certainly, in the design plans we try to limit exposure to employees to higher monthly costs.”

Clark also agreed that the topic needs to be revisited.

“Fifty-four percent of employees take city healthcare. That’s something we need to address,” Clark said, but argued that doing away with the opt out was needed. “It was prudent to eliminate the opt out and put that toward the HSA contribution from the city.”

Still, the process itself left a bitter taste and Schulte said he hoped that their views could have been considered a little more.

“What I don’t like is how it was leveraged and how it was used,” Schulte said. “I understand they were on a deadline. Basically, what I’ve tried to say is nobody is arguing about the plan itself. What we were trying to do is reallocate. All we asked for was for the city to reallocate (opt-out) funds away from HSA funds and put them towards the premium so it’s palatable for a family, enticing for a single employee to jump on the plan.”