The City has been in discussions and negotiations with Aetna for Health Insurance renewals for FY2017-2018. Aetna initially proposed $6,990,796.08. The proposal represented a 6.09% increase over the current amount due. After several discussions between the City and Aetna, Aetna agreed to cap the increase at 3% over the current amount due.

After further review, it was found that the members and employee counts reported to and being used by Aetna to calculate the cost per member are incorrect. (Members includes both employees and their dependents covered under the health insurance plan.) Employees that are no longer employed by the City, and their respective dependents, are still reflected within the counts utilized by Aetna’s underwriting group. Aetna was using 555 employees and a total of 1,116 members. The City believes that the employee count is 478 and the total members are 997.

Aetna uses the member count along with claims and trending data to establish rates for the next renewal period. Using the City’s counts, the increase in costs per member is approximately 14%, not the 3% offered by Aetna. Fully aware that the change in member counts has a negative impact on the costs per member calculation, Aetna has graciously agreed to hold firm on their 3% offer. Holding the increase in payments to 3% will result in an estimated cost of Health Insurance for FY2017-2018 of $5,902,552.36. The City and those employees who contribute to their health insurance coverage will both see an equal 3% increase in premiums.

Staff supports accepting the proposal from Aetna. However, staff desires for the Council to be fully informed on this matter. The increase should be and could have been much higher if not for Aetna’s willingness to hold true to their commitment to the City. Though next year’s rates will be determined based on future claims and membership, the Council should be cognizant of the facts presented above and prepared for a significant increase for FY2018-2019.