PRESENT: Personnel Committee: Chairperson Molski, Alderpersons Moore, Stroik, Barber, Markham

Finance Committee: Chairman Barr, Alderpersons Rackow, Molski, Moore

Others: Mayor Wescott, Comptroller/Treasurer Schlice, Chief Morris, Chief Barnes, City Attorney Molepske, Mayoral Assistant Ostrowski, Carol Grubba, Lisa Jakusz, Gene Kemmetter - Portage County Gazette, Kelly McBride - Stevens Point Journal, Eric Twerberg - Virchow Krause Benefits, Jeff Steckbauer - Virchow Krause Benefits

Finance Committee Chairman called the meeting to order.

1. Discussion and possible action on changing the third party administrator for the City's Health Insurance

Comptroller/Treasurer Schlice stated that the City recently hired Virchow Krause Benefits to review the City's health insurance plan and the reinsurance portion of the plan.

Jeff Steckbauer and Eric Twerberg from Virchow Krause Benefits gave a presentation on their findings.

There are three major components to the 2005 renewal; first, there is the administrative cost. This is the amount Humana charges for processing claims; second is the reinsurance portion. This is the premium the City pays for insurance to pay for claims that are in excess of $55,000.00. This is the largest portion of the renewal, the portion we hoped VK could help the City reduce. The third portion is the actual claims themselves. Because the City's plan is self-funded, our premiums are driven by our claims experience. VK can't address this part without changes to the plan being bargained with the six labor unions in the City.

The cost for the reinsurance escalated dramatically after the 911 terrorist attacks. Because many insurance companies experienced huge losses, companies offering this product went out of business. Coupled with the number of claims that hit the stoploss cap, the City's plan had a large increase in the reinsurance premium for the 2004 renewal but anticipated a smaller increase in this portion of the 2005 renewal. Unfortunately, that didn't occur, and Virchow Krause was asked to look at other vendors to provide this coverage.

In doing so, they found four vendors who were willing to offer not only the reinsurance but the claims processing portion of the plan. The lowest quote was 43.8% less than Humana's renewal for 2005. Jeff Steckbauer and Eric Twerberg from VK met with representatives from Humana
and shared this information with them. Initially, Humana was unwilling to adjust the 2005 renewal, but eventually reduced their renewal by 21.1%. This lowered the difference between the Humana renewal and the Wausau Benefit Proposal to 22.2%, representing 2.7% of the City's total health plan liability. Final numbers for the reinsurance portion of the proposal will be submitted to the City from Wausau Benefits by the end of this week.

Staff recommends that savings the City experiences due to the reinsurance portion of the renewal being less costly, be applied to the replenishing the loss of $251,180 in the health insurance fund balance from 2003.

Finance Committee Action

Chairman Barr moved, Alderman Rackow seconded, to recommend changing the health insurance claims processor to Wausau Benefits effective 1/1/2005. Further, any reduction in reinsurance premiums be applied to replenishing the loss in the health insurance fund balance from 2003. Ayes, all; nays, none. Motion carried.

Personnel Committee Action

Chairman Molski moved, Alderman Stroik seconded, to recommend changing the health insurance claims process to Wausau Benefits effective 1/1/2005. Further, any reduction in reinsurance premiums be applied to replenishing the loss in the health insurance fund balance from 2003. Ayes, all; nays, none. Motion carried.

Meeting Adjourned at 6:30 P.M.

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