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Board of City Commissioners - October 24, 2017 Minutes

Agreeable with a call for a Special Meeting issued by Mayor Mahoney, the Board of City Commissioners of the City of Fargo, North Dakota convened in Special Meeting in the City Commission Room at City Hall at 12:00 o'clock p.m., Tuesday, October 24, 2017.

The Commissioners present or absent were as shown following:
Present: Grindberg, Strand, Mahoney.
Absent: Gehrig, Piepkorn
Mayor Mahoney presiding.

Transition to Blue Cross Blue Shield of North Dakota Health Insurance Plan Effective January 1, 2018 Approved:
City Administrator Bruce Grubb said the timing of the special meeting is due to a November 1, 2017 deadline for the City of Fargo health insurance plan for employees, currently administered through North Dakota Public Employee Retirement System (NDPERS) and insured by Sanford Health Plan (SHP). A couple of updated proposals have been received recently for consideration, he said.

Human Resources Director Jill Minette said the City transitioned from a self-funded plan to the NDPERS plan in 2012. The NDPERS plan was initially administered by Blue Cross Blue Shield of North Dakota (BCBSND), she said, and since 2015 it has been administered by Sanford Health Plan. She said there has been a good relationship with NDPERS, as well as both insurers. Earlier this year, BCBSND representatives requested a meeting to discuss potential savings regarding the City of Fargo health insurance, she said, and presented their quote this month. During that time, she said, a quote was also requested from Sanford Health Plan. Finalized numbers were just received yesterday, she said, and she appreciates the Board coming together for a special meeting to discuss the proposals. Both quotes provide substantial savings for the City and for employees, and both provide the same plan design as the current health insurance under the NDPERS plan, she stated. If the City were to transition to a separate group with either insurer, she said, maintaining the grandfathered status is important. Maintaining the current cost sharing structure for the portion the City covers and the employee covers is also an important component, she said. She shared a spreadsheet with a side-by-side comparison of the current NDPERS plan, the BCBSND proposed plan and the Sanford Health proposed plan. Currently, she said, 335 full-time employees are enrolled in the single plan and 404 have elected family plan coverage. She said under the BCBSND proposal the total new premium, annualized, would be $6.6 million, a total premium savings of just over $3.4 million. Based on the cost sharing structure, the City would realize a 14% premium savings, over $2.5 million, she said. The BCBS quote offers a 34% premium reduction, with a total annual premium savings of $3,438,991.20, based on current full-time employee enrollment, she said, and the City of Fargo would save $2,599,317.12 while full-time employees would collectively save $839,674.00. She said this equates to a monthly savings of $30.68 for employees enrolled in single coverage and $147.76 for employees enrolled in family coverage. The Sanford Health Plan quote offers a 5% premium reduction, she said, with a total annual premium savings of $500,069.76 based on current full-time employee enrollment. The City would save $385,444.80, while full-time employees would collectively save $114,625.00, she said, and this equates to a monthly savings of $6.36 for employees who have single coverage and $18.37 for employees with family coverage. Also important, she said, is to consider what happens after the first year. BCBSND would set a 7% increase cap for 2019, she said, and Sanford would maintain their rates for two years.

In response to a question from Commissioner Grindberg about the reason for the November 1, 2017 deadline for a plan going into effect January 1, 2018, Ms. Minette said the contract with NDPERS requires a 60-day notice to transition to another insurer.

In response to a question from Commissioner Grindberg regarding recent changes to the Affordable Care Act, Ms. Minette said, as she understands it, that would not impact the City as an employer group. She said as the regulations are known to be today, the biggest concern going into a transition is to maintain grandfathered status. She said because of mirroring the current plan design and maintaining the current cost sharing structure, she understands the grandfathered status will be maintained with either plan. She said current enrollees will roll over to the new plan, and an open enrollment will be held for employees who may want to reconsider enrolling in coverage.

Pat Bellmore, BCBSND, said his company has a lot of experience and is proud of the level of service it provides its customers and its exceptionally high renewal rate for employer groups.

Jim Schneider, Sanford Health Plan, said their proposal offers minimal disruption since all the membership information is already in the system. He said the Sanford proposal offers security going forward with the premium remaining the same for 24 months.

Mayor Mahoney said on this particular vote, he might have a conflict in the sense that he is a physician and works with both companies. It is his manager who negotiates rates for him, he stated.
Commissioner Grindberg said he does not see that as a conflict in this situation.

In response to a question from Commissioner Strand about the effect on the budget if this is implemented, Finance Director Kent Costin said the monetary amount for the General Fund would be about $6.4 million, a substantial savings of about 6%. He said there will be discussions on how the savings can be merged into the budget.

In response to a question from Commissioner Strand on women’s contraception coverage, Ms. Minette said that has not been a point of discussion in receiving the quotes; however, it could be looked into as an added benefit.

Commissioner Grindberg said an important point to make is that the City consciously reduced spending and overhead by 5% in the 2018 budget, and another 6% now would make a collective 11% decrease to the bottom line in 2018.

Commissioner Strand said to have projected savings in the current health care climate is significant. He expressed appreciation for the providers who have delivered services and thanked staff and providers for their work to reduce premiums.

Commissioner Grindberg moved the transition to Blue Cross Blue Shield of North Dakota health insurance plan effective January 1, 2018 be approved.

Second by Strand. On call of the roll Commissioners Grindberg, Strand and Mahoney voted aye.
Absent and not voting: Commissioners Gehrig and Piepkorn.
The motion was declared carried.

Commissioner Grindberg moved that the Board adjourn.
Second by Strand. All the Commissioners present voted aye and the motion was declared carried.
The time at adjournment was 12:32 o’clock p.m.