From the Bakersfield Californian

BY THEO DOUGLAS  –  

The city of Bakersfield is switching healthcare plans after learning one of its two providers would have raised the cost of employee coverage as much as 21 percent in 2016, the third year of 20 percent increases.

A large number of employee claims and the rising cost of specialty medications were what powered the increased cost of Anthem Blue Cross coverage.

By offering Blue Shield during open enrollment next year instead, Bakersfield will save nearly $2.2 million.

A consultant hired to review the city’s options also found employees who chose the Anthem PPO had a risk score about two-thirds higher than Anthem’s benchmark — meaning participants here were at higher risk of being readmitted to a healthcare facility than Anthem participants elsewhere.

Bakersfield’s human resources manager, however, said city employees’ health isn’t any better or worse than that of other Kern County residents.

The Bakersfield City Council approved switching to Blue Shield Oct. 14, which isn’t expected to dramatically reduce available healthcare options.

In fact, switching to Blue Shield will restore the GEMCare physician network that Anthem users lost in 2012.

Blue Shield will cost Bakersfield nearly $13.9 million in 2016 for employee coverage, and about $21 million for retirees’ coverage.

Most of that will come from the city’s taxpayer-supported general fund.

Bakersfield is staying with its other healthcare provider, Kaiser Permanente, which will raise its HMO rates 3.6 percent for employees and 15 percent for retirees under age 65.

If Bakersfield had stayed with Anthem, the cost of its employee PPO coverage would have jumped 21 percent, from nearly $9.9 million to nearly $12 million. Anthem’s employee HMO coverage would have gone up 9 percent, from nearly $3.6 million to more than $3.9 million.

With Blue Shield, plan costs will rise between about 8 and 10 percent the first year, and no more than about 10 percent the second. That’s how the city wanted it.

“When we looked at the various requests or proposals we received, we wanted to make sure we were switching to a provider who didn’t give us a great rate the first year, but then in the second year, once they have us, they’re able to jump up and increase the rates,” said Assistant City Manager Steve Teglia.

There’s no real reason for a higher number of claims during the past calendar year, the city’s human resources director said, and it’s not considered to be a harbinger of things to come. Whatever the reason, employees simply filed more claims.

“It’s all about the claims utilization,” said Christi Tenter, Bakersfield’s human resources director. “This year, it was the claim utilization for the active (employees) that drove those costs higher and Blue Shield was able to do better.”

SEIU Local 521 Chapter President Billy Owens, who represents so-called “blue and white collar” bargaining units, all city employees who are neither supervisors nor safety personnel, said the plan’s cost is good news for all of Bakersfield’s 1,416 city employees.

Deductibles, which rose from $500 to $750 during the last benefits cycle, will hold at $750 — still a lot of money, Owens noted, but better than another increase. Going with Blue Shield also meant the city didn’t have to trim the plan it offered, as it likely would have had to do if it had stayed with Anthem.

”It was a good deal for the city and employees, unlike previous years where we had to butcher the plan employees got to contain the cost,“ Owens said.

Councilman Terry Maxwell, a member of the Bakersfield City Council’s Personnel Committee, which was among the council committees monitoring the selection process, praised city officials for seeking new proposals and getting a lower bid.

”In this day and age, it’s all about competition,“ said Maxwell, who like Bakersfield’s mayor and other council members has the option of coverage under the city’s medical plan. (He’s an Anthem member who will switch to Blue Shield.) ”In previous years (other plans) weren’t interested. This year people suddenly are interested.“

So far, no one seems to be speculating what 2018, the first year Blue Shield could possibly raise its rates, will hold.

”Each year is sort of a dynamic year,“ Teglia said, meaning each year is different. ”I have no idea what will happen in the third year.“

RELATED INFO

THE NATIONAL PICTURE

Bakersfield is among municipalities nationwide struggling with growing healthcare costs, driven in part by a rising tide of retirees.

In 2014, California Common Sense, a nonprofit, nonpartisan think-tank, found the bankruptcies of San Bernardino, Stockton and Vallejo were fueled partly by the cost of retirement benefits.

Bakersfield keeps chipping away at its retiree obligations, however, reducing the unfunded liability of its retiree healthcare from $83.7 million in 2011 to $63.8 million in 2013, according to the most recent information.
WELLNESS ON THE WAY

Segal Consulting, Bakersfield’s healthcare consultant, found one reason for the rise in the cost of Anthem Blue Cross’ coverage was the higher risk scores among its Bakersfield PPO members.

A higher risk score generally denotes a plan member at higher risk for readmission to a medical facility.

Bakersfield’s risk score was 1.66 compared to Anthem’s benchmark of 1.

Christi Tenter, Bakersfield’s human resources manager, said Bakersfield’s employees aren’t any less healthy than other Kern County residents.

“I wouldn’t feel it appropriate to say our group is less healthy than Kern County as a whole. But I do think in wellness, we definitely have an opportunity to educate our employees better when it comes to health and wellness.”

SEIU Local 521 Chapter President Billy Owens, who represents so-called “blue and white collar” bargaining units, differed and said Bakersfield employees could face health challenges “absolutely because of air quality and other factors that we face here in the valley.”

In an August report to a Bakersfield City Council committee, Segal pointed out “generally, healthy people cost less,” and noted avoidable and unnecessary medical care adds a great deal to the cost of healthcare in this country.

Bakersfield recently received a $6,000 grant from Kaiser, which offers the city’s other health plan, to develop a wellness plan.

“We definitely want to try to do that,” Tenter said. “If people are more well, there’s obviously not as many claims and not as many high claims because it falls to preventative maintenance and routine physicals and not these high-risk conditions.”