Thomas MacMillan Photo
Holmes & Marchand break the news to colleagues Monday night.
The city won’t save $2 million in health care costs after all — now that two lawmakers’ crusade has run aground amid union opposition and unforeseen complications.
Alderwomen Jessica Holmes and Adam Marchand, who spearheaded the plan, broke that news to their colleagues Monday night before a meeting of the Board of Aldermen.
The savings were expected to come from switching the health insurance carrier for city workers from Anthem to Cigna. That plan fell apart after municipal unions cried foul, and the city ran into technical difficulties.
Marchand and Holmes said their efforts nonetheless resulted in some progress. While the city won’t be switching to Cigna, it will save some money on a new contract with Anthem. City Chief Administrative Officer Rob Smuts said the savings will amount to between $300,000 and $500,000. The new contract with Anthem, to be settled soon, will extend to the end of fiscal year 2013 – 2014.
The collapse of the original idea reflects in part how big-ticket cost-saving ideas can sound simpler at first than they turn out in practice.
The episode also reflects that, contrary to some critics’ predictions, the election of a labor-backed Board of Aldermen majority two years didn’t mean that lawmakers and all unions will always march in lock step on city issues. The two aldermen spearheading this idea either used to work or currently work for Yale’s UNITE HERE Local 34; the idea’s chief opponents run municipal unions.
East Rock Alderwoman Holmes and Westville Alderman Marchand, a current Local 34 staffer, had taken on the health care fix as a signature issue of their first term. Shortly after taking office, they created a special Health Benefits Review Task Force to find savings in the city’s health care spending.
One of the task force’s ideas: Look into switching the city’s health insurance carrier. While the city is self-insured, it contracts with a health insurance carrier to administer the coverage, including negotiating prices with doctors.
Thanks to the work of the task force, the city issued, for the first time in years, a serious, competitive request for proposals (RFP) from companies seeking to serve as the city’s insurance carrier. And for the first time, aldermen sat on the RFP committee.
As a result, Anthem offered a cheaper deal than it had previously. Cigna, a newcomer, came in with an even lower bid.
When Marchand, Holmes, and Smuts presented the proposed switch to Cigna to the Board of Aldermen’s Finance Committee in March, Smuts (pictured) estimated the move would save the city over $2 million.
It turned out to be a little more complicated than expected.
On Monday evening, Holmes offered three reasons the proposal foundered.
First: “Union pushback.” Municipal unions wanted to be at the table from the beginning, to evaluate the RFP responses, not just the one response selected by the RFP committee.
Second: Several union contracts have “very, very particular language” that caused problems, Holmes said. For instance, the firefighters union contract stated that any new health plan would have to be “identical in every respect” to the current one, and the teachers union contract had no language at all about switching, said Smuts.
Third: There was a lack of “summary plan descriptions” (SPDs), the statements that spell out exactly what the insurance plan will cover and under what specific circumstances. Complete SPDs would be necessary for a new carrier to replicate the old carrier’s coverage. The city’s plan hasn’t had “that level of detail” since the ‘90s, Holmes said.
Alderman Marchand added a fourth complication: The city’s initial analysis of the potential savings included only ambulatory care. When the city factored in hospital services, the savings diminished, he said.
“This has certainly been a learning experience,” said Holmes.
Fair Haven Alderwoman Migdalia Castro sought more explanation of how things went wrong. “Were you misguided? What made you guys see this wasn’t going to work?”
“You can’t make it work without union support,” said Holmes.
“At the time we made the presentation at the Finance Committee, we had some hope that the transition would be possible,” Marchand said. After that, they got more information, he said. “I don’t think anyone misled us.”
Board of Aldermen President Jorge Perez thanked Holmes and Marchand for their work, and the progress they did make.
Asked later if the city should try again to find savings by switching carriers, Marchand replied, “That’s a conversation we need to have with the incoming mayor.”
As part of his transition report for Mayor-Elect Toni Harp, Smuts outlined what happened with the proposal and recommended considering new bids in the future.
The city would be better positioned the next time, with SPDs in place, Marchand said. And union leadership would have to be in the conversation from the start, he said.
“I’m still excited about it,” Marchand said. “In this fight you have to roll with the punches.”
“Everybody involved can claim to have moved the ball forward,” Marchand said. The city found savings, the unions “made a case for being involved,” and aldermen took a seat at the table.
Holmes said she asked at the outset for municipal unions to be a part of the RFP process, but the city wouldn’t agree.
“Is this a setback? No. Is this everything that we hoped to gain all at once? No,” Holmes said. “This is progress.”
Smuts, Holmes, and Marchand all agreed that unions should be more involved next time. So did Cherlyn Poindexter (pictured) and Jimmy Kottage, head of the city managers and firefighters unions, respectively.
“They didn’t do the bid properly. That’s why this whole thing is going down the drain,” Poindexter said. “They should have included unions in the bidding process.”
“I’m all for the city saving money; don’t get me wrong. But not at the expense of people’s medical benefits,” she said.
“What happened was when you’re not inclusive and you’re not transparent, you end up developing a level of mistrust,” Kottage (pictured) said. “Among many union heads there was a lot of mistrust. The unions, and especially me, challenged the legitimacy of the RFP.”
Kottage said unions want to be involved “not just on the fluff, but when you’re behind closed doors looking at the actual numbers.”
Smuts has invited all the municipal union heads to a meeting on Friday Nov. 22 to discuss the aborted switch, and to answer any questions.
<i> "contrary to some critics' predictions, the election of a labor-backed Board of Aldermen majority two years didn't mean that lawmakers and all unions will always march in lock step on city issues" NHI </i>
I ask dear readers, which is more likely...
1) the labor backed supermajority really wanted to reduce costs by reforming the employee healthcare package.
or
2) the labor backed supermajority wanted to appear to taxpayers like they're trying to reduce costs.