Multi-Million Dollar Oversight

Jul 11, 2011

Health insurance costs have caused headaches for employers, both private and public.  Now, they're giving a big headache to city officials in Lexington. The city has failed to collect enough money from its workers for health care.  As a result, Lexington has lost tens of millions of dollars. The news comes at a bad time. Leaders at Lexington City Hall have just balanced their budget for next year.  Now they must find their way out of a ten million dollar hole that they are digging this year.

.  Since 2009, Lexington has undercharged its works for health insurance. Benefit Insurance Marketing Vice President Benji Marrs says many workers who just bought insurance for themselves paid only co-pays....they paid no premium.

“It’s costing those employees zero to participate in what they call the platinum plan, which is a zero deductible and a zero maximum out of pocket, and you can’t get any better than that,” said Marrs.

In 2009, Marrs says the city set aside 20 million dollars to pay employee premiums, but the actual cost was around 30 million dollars.  The health insurance consultant says it happened again in 2010 and Lexington, it seems, is on the same track this year. 

Now, the mayor and his council must find a solution to the cash shortfall.  Still, Marrs predicts the same coverage will remain available, but, workers will pay more for it,

“And we don’t want to take those benefits away per se, we still want to offer them, but people are now gonna have to pay the true costs of those benefits,” added Marrs.

As an example, Marrs says the per employee cost per month for the same coverage could go from about 440 dollars to 740 dollars.

Health insurance consultants will lay out the full extent of the problem to council members when they meet Tuesday afternoon. Lexington Mayor Jim Gray knows there’s no Santa Claus in federal, state, or local government who will bail Lexington out. Gray learned early on in his administration that providing city workers with health insurance is costly.  Still, he says Lexington must find a balance between what’s good for workers and good for taxpayers.

“That role includes being responsible to the taxpayers, to our citizens, and to our employees.  And sometimes I say it’s kind of like dancing on the head of a snake,” explained Gray.

For employees, the issue could come home this fall.  That’s when workers can change their health insurance policies.  For workers who want the same coverage, Gray says many will likely pay more.

“I’m very sympathetic with the challenge that it represents to employees.  We don’t know what the numbers are yet.  We know that it’s going to be a greater cost than it is today.” said Gray.

Another factor influencing the debate over health insurance is the number of people covered in all the plans offered by the city of Lexington.  Consultant Benji Marrs says the number of employees and retirees covered dropped from just over 35 hundred in 2009 to just over three thousand this year.  Marrs says fewer participants usually means higher premiums.

“The lfucg began removing satellite companies such as the health department, and lextran, and the housing authority.  All these satellite agencies that were affiliated with lfucg, they removed them from the health care plan.” Said Marrs.

Mayor Jim Gray says there’s no silver bullet which will offer a health insurance solution.  He says health care has lot of challenges and lots of issues with it.  The work toward finding a solution begins Tuesday in downtown Lexington.  However, serious discussion might not come until August. After Tuesday's meeting, council takes a month long summer break.