VALPARAISO | The city is having such a bad year with health care costs that it's, well, sickening.
Valparaiso Clerk-Treasurer Sharon Swihart told the City Council this is the first time in her 30 years in office the city has gone over the budgeted amount for the year, and they accomplished that feat in March.
When the city got an additional $580,000 in county economic development income tax money from the state, it was put toward the health insurance costs, but Swihart said that too is spent.
Last week, the City Council approved transferring another $100,000 from the city's Rainy Day Fund to the health coverage.
"The experts on insurance tell us this is an unusual spike in claims, that it is kind of cyclical and that you can have a year like this once in a while," she said. "We've often had a reserve to start the next year (from unused insurance funds budgeted the previous year), but we have not had any occasion when we came close enough to spending all of it that we were considering adding funds."
The city budgeted $1.8 million toward the plan this year and employee contributions during the year raise the total amount in the fund to about $2.5 million for the 300 or so employees and their families. Swihart said the city has had several people exceed $100,000 in claims for the year already.
The city covers the first $100,000 for individual claims and the rest is covered by an insurance carrier. If total expenses for the year exceed $4 million, the excess is again taken up by the carrier. Swihart said any additional funds from the city will have to come from the Rainy Day Fund, but she hopes it doesn't come to that.
"I'm hoping what we've experienced is just a spike, and we will be able to get through the rest of the year," she said. "I hope we won't have to use a whole lot of the $100,000."
The city also is considering changes in its insurance that would go into effect Jan. 1. City Administrator Bill Oeding said the administration has been looking at options since last fall that might include higher deductibles and health savings plans for employees.
"We've always felt employees are not payed overly well, but the benefit package is good," Oeding said. "When it comes down to the increase in health insurance for the last several years, it's gotten to the point of finding some way to limit the cost. How do you insure 300 employees and their families in an affordable market when the cost is increasing 10 percent a year?"
The health savings plan and high deductible would let the employees make the decision on what to spend their money on rather than the city, he said. The current insurance contract expires Sept. 1, but Oeding said the city expects to get it extended to Jan. 1 so it can start the new year with the new system.
"It's not settled yet, but that's what it's likely to be," he said. "We think there will be higher use of the health clinic with the health savings plan so people won't wait until they are sick before they get medical help."