Crestwood aldermen voted during a recent special meeting to increase the city’s annual contribution to employees’ health insurance by allocating $50,000 from the city’s general fund.

Aldermen also selected UnitedHealthcare as the city’s health-insurance provider to employees. The new plan, selected from 16 total options, went into effect July 1 and expires June 30, 2008.

With aldermen’s approval of an additional $50,000, the city’s cost now is estimated at $647,000 instead of the originally proposed $597,000. Employees will contribute $164,440 for a total plan cost of $750,400.

Because of aldermen’s concerns that employees would be paying higher costs for out-of-pocket maximum contributions, the board accepted Ward 2 Alderman Steve Knarr’s suggestion to increase the city’s annual cost for the plan by $50,000.

Under the new plan proposed by Knarr, single employees will pay an out-of-pocket maximum contribution of $3,000 instead of $6,000 and families will pay a maximum out-of-pocket payment of $6,000 instead of $10,000.

Knarr’s amendment was accepted by a 6-1 vote with Ward 3 Alderman Jerry Miguel opposed. Miguel then made a motion to increase the city’s annual contribution to $100,000 instead of $50,000. That motion was defeated 5-2 with Miguel and Ward 4 Alderman John Foote voting in favor of it.

Because the city’s former health-care provider, Group Health Insurance, had proposed dramatically increased rates for the next year, City Administrator Frank Myers recommended a change to a new health-care provider.

“We had a very large increase with our current carrier, GHP, which many people were not very satisfied with anyway,” Myers said during the June 18 special meeting. “We’ve got to find a way to come within budget or, in my opinion, close to budget. And that may be debatable with the board … We know we’ve got some growing threats to our health care and we’ve talked with our brokers about those. We have retiree health-care coverage, which many cities no longer have. That certainly is a factor in the large growth of our costs and it’s only going to get worse over time. A number of communities are engaging in wellness programs, comprehensive wellness programs that have proven to reduce costs.

“That is something that can be looked at. There’s also issues of plan design and providing incentives for employees to piggyback onto their spouses’ health care instead of taking the city’s and ‘incentivize’ that. That’s something that we do not do right now.”

At the same time, before aldermen decided to increase the city’s annual general-fund contribution by $50,000, Myers cautioned that the increase would apply to multiple years and that the board should consider the city’s pending financial troubles.

“We have just come out of a financial recovery,” Myers said. “Yes, 2006 was a very good year as presented by the auditors. But if you look at the audits in 2005 and 2004 and 2003, this city has had deficit budgets. We have to be careful about adding unbudgeted costs that will be carried over. If you add $30,000, $40,000, $60,000, $90,000, whatever that number is, that cost is going to carry over into and impact the 2008 budget. So it’s a $40,000, $50,000, $60,000, $90,000 cost each year unless you actually cut benefits back. So we need to be careful as we expand the plan because all we’re doing is delaying a decision to have to reel that cost in a year later.”

The new plan “provides a short-term affordable financial fix to the growing problem of rising health-care cost,” according to a presentation on the city’s health-care status. It also notes that a longer-term strategy “is needed.” That long-term strategy would include the creation of a health-insurance committee of the city administrator, assistant city administrator, two aldermen and one representative from each of the following departments — police, fire, public services and general.

But in the short term, Knarr said he is concerned that an employee in a catastrophic situation could pay more out of pocket than is feasible, which is why he proposed a $50,000 contribution to the health plan from the general fund.

“It seems to me we’re trying to put a plan together here we can’t afford,” Knarr said. “I agree that I hate to see any out-of-pocket (maximum) reach these numbers. But at the same time, I’d hate to see us commit to $230,000 additional city funds over and above what we’re spending now on health insurance. Is there any way that we can reach a compromise here by proposing a certain dollar-amount increase in the budget for health insurance?”

Ward 1 Alderman Richard Bland said although the city’s finances are expected to tighten in the coming years, he also realizes the city should provide a fair plan to employees.

“I am in agreement with my colleagues that the out-of-pocket seems a little bit high,” Bland said. “Now granted, most folks won’t hit that. But that’s a little solace to the folks who wind up in that. I think Alderman Knarr’s proposal of an additional $50,000 is workable. Our budget is tight and it’s going to get tighter. But I think if we were to look at that, I think that sends a strong message to our employees. And I think it’s a healthy compromise.”

While he, too, supported using additional city funds to decrease employees’ out-of-pocket maximum contributions, Foote said he anticipates a longer-term problem with health care and would support studying alternative revenue to fund it.