City Health Care Costs

The Journal has mentioned our rising health care costs in a couple articles now, so I’ll spend some time on it as well .  I thoroughly enjoyed the article below until I got to the end of the article discussing possible layoffs.

Middletown readies for flurry of activity in 2017

What I said at City Council late last year was that high health care costs were a very serious concern that we needed to monitor on an ongoing basis.  As is happening throughout the country, many health care costs and premiums are rising wildly.  We have two years of very high health care claims for city employees.  This has resulted in a $2 million deficit in our health care fund with expenditures exceeding revenues.

The plan I submitted to City Council assumes that claims remain high and that changes in the 2017 city health care plan and hiring practices will be able to bring the costs back in line and remove the deficit over the next few years. I will present an update to City Council quarterly on our progress.

What I told City Council is that “if you wish to recoup those costs more quickly, we may have to get into service cuts, and potentially future layoffs.”

To date, City Council has made no such mandate.  As the year goes on, if the plan doesn’t work and bring the savings we expect, we’ll adjust mid-year with other alternatives.  We review on an ongoing whether being self insured continues to be our best and cheapest manner to deliver health care, and we are working constantly on controlling costs.

This problem will be solved because there is no alternative.  The equation will balance.  Employee premiums and benefits will be adjusted until the health care fund is healthy again within the revenues that you already provide for us.  Capital projects will be unaffected by this issue.  End of story.


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