The city’s employee health insurance expenses exceeded budget by $4 million, city officials revealed on Friday.
Municipal officials transferred $2.72 million from other line items in the fiscal 2018 budget to make up for the shortfall. Another $1.32 million has to be raised through taxation in fiscal 2019, which started on Jul.1.
“We had many sick patients whose costs were in excess of half-million dollars,” said finance director Marge Cherone. “That kept growing. It’s still growing. We can’t project who is going to be sick, how many people are going to be extremely sick. Since we are self-insured, we have to pay those claims.”
The city’s health insurance cost has gone up from $25.75 million in 2008 to $52.48 million in 2017, according to budget documents. The city budgeted $46.45 million in fiscal 2018. It may have artificially underbudgeted for the line item. The previous year, the budget for health insurance line item was $50 million.
“What’s the plan?” asked Luis Velez, 5th Ward councilman.
“We’re moving to the state health benefit plan,” replied Cherone. She said city employees will be switched to the state plan by Jan. 1, 2019.
Municipal officials had previously said the switch would be done in October 2018. The switch will save as much as $4 million, said officials.
Alex Mendez, councilman at-large, suggested the city try to educate employees to visit their primary doctors for regular checkups. He said that could help to keep costs down for the city by avoiding costly emergency room visits. “A lot of employees we have, they, wait until they are very sick to get into the emergency room,” said Mendez.
Business administrator Nellie Pou told him the city has a wellness program and a newsletter for that purpose.
The city council approved the transfer of $2.72 million from other line items and emergency appropriation of $1.32 million in its close-out meeting on Friday afternoon. The city also had to boost its liability insurance line item by $844,500.