Agenda - Council - 07/11/2000 - Laserfiche WebLink

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I I I I I I I I ! I I I I I I I I I I ~f PC CASE # ~ REQUEST APPROVAL TO ENTER INTO CONTRACT WITH PUBLIC EMPLOYEES INSURANCE PROGRAM (PEIP) Rhonda Heryla, Human Resources Manager Background: For the past six years, the City of Ramsey has offered medical and life insurance to its employees through the Minnesota Public Employees Insurance Program (PEIP). In the past two years, PEIP gave the City, medical premium rate increases of 8% and 4% respectively, and this year has announced an increase for the City of Ramsey employees of 10%. The life insurance rates remained virtually the same. On August 31, 2000 the contract with PEIP will expire and staff is seeking Council authorization to enter into another two year contract with PEIP for medical and life insurance. Observations: The rising costs of medical insurance" have been a major topic of discussion amongst public sector human resource managers. Contributing to higher premiums are the costs of new technology and pharmaceuticals, increasing labor costs, provider increases and consolidation, population growth and aging, government cost shifting, and Minnesota's required coverage of mental health and chemical dependency. Staff has learned that the average increase for local units of government is between 12% and 17%. Some cities were reporting increases of even 25% or more. With a goal of providing quality medical coverage with limited cost increases, the Labor Management Committee resumed its meetings and met three times beginning on May 24, 2000, to evaluate the City's options and make a recommendation to Council. First, the Committee recognized the limited timeline under which a decision about medical insurance had to be made. With a September 1st renewal date, PEIP requires a 31-day written notice of group termination or completion of the group application form by August 1st. If the City wanted to go out for bids, Minnesota Statute 471.6161 subdivision 2 requires a public notice of a request for proposal for 21 days in a newspaper or trade journal. The Labor Management Committee was concerned that a request for proposals would take more time than the August deadline would allow. Because PEIP was created by special legislation for local units of government, municipalities who use PEIP are not required to post a request for proposals. Furthermore staff felt the timeline would be prohibitive to ironing out the bargaining unit agreements complicated by a major change in medical insurance at this time. The second reason the Labor Management Committee is recommending a renewal with PEIP is the limitations of insuring a group of less than 50 lives. The City of Ramsey is not yet at 50 eligible full-time employees, and only 49% of these employees enroll in health insurance. With these limited numbers the City cannot be self-insured and must