WARWICK, RI — Warwick city employees have a new health insurance provider.
At a Wednesday night special meeting last week, after more than five hours of presentations and discussion, City Council members approved the Rhode Island Interlocal Risk Management Trust as the city’s newest medical and dental insurance provider. The council accepted the recommendation of the city’s health care consultant with Councilman Edgar Ladouceur making the lone dissenting vote and Councilman Jeremy Rix abstaining from the discussion due to a conflict of interest.
The city’s health care consultant Marsh & McLennan reviewed and evaluated several proposals before making their recommendation. The Trust currently handles coverage for 54 municipalities, school districts and special purpose districts in Rhode Island. Warwick previously participated in the Trust’s health pool through Fiscal Year 2017.
MMA recommended the city move its membership to the Trust for a three-year cycle beginning July 1, 2021 based on costs, exposure, and the expansion of plan resources the city could realize. Additionally, the Trust provides a first-year savings opportunity for the city of approximately $1.3 million. The recommendation of a three-year contract will promote stability for members and preserve its market leverage in the long run, according to MMA representatives at last week’s City Council meeting.
Of the bids submitted, MMA representatives told city councilors they found the WB Community Health and the Trust to be the two most competitive options for the city.
Additionally, the Trust maintained all current plan designs for city members. There will be a change in the pharmacy benefit manager, but MMA’s Danielle Chaplick, Marsh & McLennan’s vice president and public sector lead, said that while the company that is administering or managing the plan is different than what is utilized today under the WB, we do not anticipate any type of major disruption to members as they have a robust network of pharmacies.
MMA’s recommendation of the Trust was based on the following factors, as well as
that it would promote stability for members and preserve its market leverage in the long run.
It was the most cost-efficient FY22 employee health care premium cost providing the least budget impact. Its fully-insured premium guarantees costs will not exceed budget. It has a strong administrative support capacity and experience with claims management and reporting. And it offers robust wellness programs to foster improved employee health and lifecycle choices leading to better medical and pharmacy claims outcomes.
MMA representatives also told council members that the Trust’s monthly per employee premiums across all active and retiree groups are an average of 5.6% below the current year working rates — a factor that will positively impact the appropriations required to fund the FY21-22 annual budget.
Ladouceur raised concerns with the proposal stating the city has been with WB for several years and that the city has performed very well under them, particularly citing the fact they have not exceeded their budget. He also questioned moving the city into a pool of 54 other communities.
“Our rates have stayed stable to the point where we have amassed this $4.6 million in surplus, in addition to $450,000 in dental benefits, as well as a $133,000 dividend,” he said. “We have a stop loss in place and it is very effective. “The issue with me is also having to take our plan, which has a history of being very successful, and put it into this risk pool. I would personally compare that to putting one into a risk pool because you don’t have such a great driving record — you go into the risk pool because it’s the only place to get insured. We can’t have this situation.”
Chaplick explained to the council that the surplus may not be $4.6 million or $4.4 million next year. “It’s not a guaranteed variable and I think that to your point it’s really coming down to the WB and the Trust. They are both very viable options for the city,” she said. “They have both afforded the city very positive outcomes year to year. We were not there nor part of those discussions as to why the city left the Trust. From our vantage point, the city has performed well under these two arrangements and it really comes down to does it make sense for the city to remain self-insured or switch back to this fully insured arrangement.”
During the first year the city will see $1.3 million in savings going to the Trust. The trust health care rate adjustment is a 3.2% rate increase for 2021 and 2022. Chaplick, when asked between last year and this year, said they’ve been right around 3%, “well below market.”
“Marketplace trends tend to be 7-10%,” she said. “This is well below what the market has yielded over the past five years. We won’t be able to tell us what year two or three would be. When a community is in a pooled arrangement because the risk is spread over communities sharing risk with several other municipalities the larger the pool the lower the trend.
Ladouceuer also questioned the wellness benefit MMA outlined as a factor in their recommendation. “I agree it’s a benefit but it’s only a benefit if we use it,” he said. “If we do not use it it’s not a benefit. I believe the testimony early on doesn’t appear it has been used – at least there were not any statistics.”
“I am not an expert on health care. As a matter of fact I don’t think anyone is except for the experts that we contract to go over health care,” Councilman Timothy Howe said. “If I want to figure out how to get health care insurance I’m going to contact health care insurance professionals/analysts who are going to recommend that we hired them to do the best thing for the city.” He went on to say some of the issues brought up at the meeting had nothing to do with the business on the agenda and commended Council President Stephen McAllister for bringing that up throughout the meeting.
“Our job on the city council is to assess and to vote up or down,” he added. “Our job is simply to analyze and to go thumbs up and thumbs down and to bring up the points that need to be brought up.”
Councilwoman Donna Travis echoed Howe’s comments adding that she thought it was great the consultants were in attendance to answer their questions. She asked if there was anything about doctors being taken off the list under the recommended proposal. Chaplick said that was top of mind in the evaluation but because the Trust uses Blue Cross Blue Shield of Rhode Island, as does the WB, they do not anticipate any disruptions.
Councilman Ladisour made a motion to extend the current contract with the WB for one additional year. No one seconded his motion.
Councilman Anthony Sinapi moved favorable action by the council on the recommendation from MMA. His motion was seconded by both Howe and Councilman William Foley.
The first-year annual cost of the contract is $21,833,316 from July 1, 2021 to June 30, 2024. While the contract is for three years, only the first year annual fee is requested. The department will go before the City Council for years two and three with annual costs determined by claims experience, according to the proposal.