Crestwood employees will pay more for their health insurance next fiscal year, but the city’s provider will give them a choice between two plans that vary slightly in both cost and benefits.

The Board of Aldermen passed on June 9 a bill that retains Anthem Blue Cross Blue Shield as the city’s health insurance carrier for fiscal 2010, which runs from July 1, 2009, to June 30, 2010.

The administration drafted the measure based upon recommendations from a committee of employees representing each city department.

Under the approved contract, employees can choose from two benefit plans. One is the city’s current plan, Blue Access Choice Option 42 Rx Option P, the total cost of which will increase 26 percent over fiscal 2009. The city will increase its contribution to the insurance premium by 15 percent, an inflation-related cost for which it initially budgeted. Employees will see their part of the premium jump by 63 percent to offset the remainder of the 26-percent cost increase.

Anthem’s alternate plan, Option Z, is set at a 23-percent total cost increase from fiscal 2009. Under that plan, the city’s contribution to the premium still will increase by 15 percent, but employees would see their premium increase by roughly 51 percent, instead of 63 percent.

Options P and Z differ in that the latter plan’s prescription drug co-pays are higher.

The total health insurance cost for fiscal 2009, with 90 employees, was $807,311.36.

Of that amount, the city’s contribution was $561,792.72 and employees paid a total of $165,518.64. The cost for the city to self-insure part of the employee deductible was $80,000.

Under Anthem’s fiscal 2010 proposal, the total cost, with 90 employees, will jump to $991,413.48. The city will pay a total of $646,064.88, as well as $75,000 to self-insure part of the deductible. Employees will pay a total of $270,348.60.

Renewing Anthem’s services became the city’s only reasonable option as it solicited bids from health insurance carriers. Crestwood has switched providers three times in the past five years in order to keep costs down for both the city and employees, City Administrator Jim Eckrich said. However, this practice can make clients appear disloyal to providers, and this year the city’s “unstable resume” resulted in limited carrier interest, he said.

Providers Aetna and Principal Financial Group required the city to submit individual employee underwriting before submitting bids. When Crestwood complied, only Aetna returned with a bid, which turned out to be more expensive than Anthem’s proposal, Eckrich said.

A third carrier, Mercy Health Plans, submitted an initial quote, but Eckrich said it was costlier than the other providers, and the city declined to submit underwriting.

Sandy Roeger of the Todd Organization, the city’s health insurance broker, told the Board of Aldermen last week the increased cost to renew with Anthem stemmed from a combination of the city’s claims experience, market trends and the competitive rate it gave Crestwood when it became the city’s provider last year.

Anthem clients that are in the same business block as Crestwood will see an across-the-board 16-percent increase in insurance costs this year, Roeger said. In addition, Anthem took into account the fact that for fiscal 2009 it offered Crestwood a rate that was 8-percent less than what then-provider United Healthcare was offering the city to renew, she said.

Therefore, she said, the 26-percent cost hike actually bumps Crestwood up to paying current market levels.

Ward 1 Alderman Mimi Duncan asked if staying with the same provider for more than one year would improve the city’s chances of seeing smaller health insurance cost increases in the future.

“I think the market is going to underwrite your group on an annual basis as it did this year,” said Paul Flotken, also of the Todd Organization. “So what we do is plan ahead … get these forms out, get the forms back to carriers and get the numbers as quickly as we can in order to make sure the numbers we end up with are the most competitive available. I don’t think that there’s an expectation that because you stay with a carrier for a long time — if the experience of the group is not good — there will be lower rate increases.”

“Conversely, many carriers will automatically decline you if you have been with more than three carriers in five years,” Roeger added. “So if you get past that point where you’ve been with less than three carriers over a five-year period, that at least gets you into the ballgame where they’re willing to look at your experience, claims and medical history to consider bidding on you.”

Following the 7-0 vote — Ward 3 Alderman Paul Duchild was absent — Eckrich thanked the employee health insurance committee and the Todd Organization for their work on what he called a “difficult topic.”

“While nobody likes to pay more for health insurance, I’m pleased with our process and pleased with our result,” he said.