Adjustments increase city budget $300K
Published 10:54 pm Friday, August 25, 2017
Despite an adjustment of more than $800,000 to cover a shortfall in its employee health insurance program, the city of Vicksburg’s general fund will get an additional $300,000 after approval of a series of budget adjustments Friday by the Board of Mayor and Aldermen.
The adjustments are part of an annual reconciliation of city finances at the close of the fiscal year, which ends Sept. 30. Overall, the adjustments totaled $1.402 million in increased revenue and $1.07 million in expenses for a net increase of $332,262.
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The insurance adjustments totaling $846,833 composed the bulk of the city’s personnel costs, while increased costs in supplies and services totaled $107,060, and increased capital costs were $116,165.
South Ward Alderman Alex Monsour said the board is already beginning to look at alternatives to bring the health insurance costs down.
“I’ve gone back over the past years, and what we’ve basically done, we’ve kept the plan intact,” he said. “We haven’t been negotiating; we’ve just gone ahead and kept the plan intact and rolling the plan over.”
City accounting director Doug Whittington said after the meeting the city’s self-insured health care plan is based on a calendar year, not the fiscal year the city operates on, which runs from Oct. 1 through September 30.
The city’s third party provider is Blue Cross/Blue Shield, which charges the city a monthly fee to administer the insurance plan and handle the claims. Those costs, he said, have gone up.
He said the city receives records of employee insurance claims every 10 days.
“In the last three to four years, they were averaging every 10 days, say, $75,000 to $125,000,” he said. “In the last two years, they have gone to … the lowest is $91,000 and the highest one was $352,000 for 10 days worth of claims.”
Whittington believes the reason for the increase has been the result of some major health insurance claims that have forced the company that handles the reinsurance on major claims to raise the threshold where it will provide coverage.
Reinsurance is a practice where an insurance company transfers some of its risk to another insurer.
Under the city’s insurance program, once medical costs reach a certain limit, the reinsurance takes over and covers the cost.
In two cases in 2016, Whittington said, cost of treatment for the patient’s illness was so high, the reinsurer raised the limit, forcing the city to pick up the cost of treatment until those costs reached the new limit. A similar case occurred in fiscal 2017.
“I can only assume that was the reason,” he said. “It never happened before.”
Monsour said the board is looking at several options that will allow it to save money.
“We’re actually going to go in and negotiate now. There’s other reinsurers that you can bring to the table, plus you can go in and negotiate; the big things, not the deductibles, but you can negotiate emergency room benefits, you can negotiate on reinsuring dental plans, other various plans to bring the cost down.
“We’ve never really done it before.”