At an Insurance Committee meeting held Tuesday evening, members of the Common Council heard from representatives associated with the Garvin Group, the city’s current employee benefits broker. Kevin Garvin, founder of the firm, proposed a plan to switch from the city’s current self-insured plan to a Medicare Advantage program for the city’s retirees. According to Garvin, the city’s provider, Blue Cross Blue Shield, would remain the same. However, he said that switching to the federally subsidized medicare plan could save the city nearly $100,000 per year if not more.
Garvin said that after looking at the city’s claims, that 85 to 90% of the city’s approximately $3.7 million in health care costs per year were paid out to retirees rather than current employees.
“The majority of the people who are working for you are healthy,” said Garvin. “People who are retired are having huge claims, huge operations, medications are going through the roof.”
“You’re in a death spiral with your senior citizens. You’re never going to be able to maintain the dollars spent. You have an aging population. Your workforce is fine, your retirees are killing you guys,” said Garvin.
He also pointed out that city insurance claims spiked last month to approximately $700,000. He said that switching to the new program would help even out the monthly costs, as well as potentially save the city 20-30% on stop-loss insurance costs, which cover catastrophic claims that exceed certain levels.
Garvin said his firm was ready to work with the city to make the transition if they decided to approve it, as well as assist the city in talking with the labor unions. He said that in order to switch to the new plan by the beginning of the city’s fiscal year on July 1, that he would need a decision by this Friday. However, he said the switch could be made either on August 1 or September 1.
Corporation Counsel Gerard DeCusatis said that each retired employee’s contract would have to be looked at in order to determine whether they could switch over to the new plan and what their co-pay would be.
According to Garvin, retired employees currently have a variety of different co-pay structures, ranging from $0 to $10. Garvin said the co-pay amount would be the only change in the coverage under the proposed change.
After the meeting, Alderman Ron Barone who is also the Insurance Committee Chairmain, said that the proposal would require additional discussion. “We got a lot thrown at us tonight, so now we have to de-cipher it and go from there,” said Barone. “I think it’s something we definitely need to look into.”