Obamacare Slams the City of San Angelo Budget

 

The City of San Angelo will need to increase its health care insurance budget to pay for Obamacare mandates for city employees, says Lisa Marley, the city’s Director of Human Resources.

The City of San Angelo self-insures. That is, the city has a large enough pool of people enrolled in health insurance that City Council decided to self-finance its own insurance system rather than purchase third-party insurance from a vendor like Blue Cross Blue Shield of Texas. “When Shannon discontinued its Legacy insurance product, the city set it up,” Marley says.

Benefits of self-insurance don’t materialize until after the 10th year, Marley says. The new health care insurance mandates have hit the city in year seven, about the time when the city is struggling to build the fund balance to fully capitalize on compounding interest, and before the city has built a large cushion to pay for larger-than-expected health care costs of its employees.

Aetna is the current vendor to the city that administers the city health insurance plan. “When the hospital bills Aetna $200,000 for a hospital stay for one of our employees or retirees, we write a check out of our insurance fund for the full amount, Marley says.

“One of the misconceptions about the city health insurance fund [which is separate from the general fund] is that we have all of this money in there,” Marley says. “That’s not true when you consider that we’re on the hook to pay 100 percent of all claims when they come.”

Obamacare mandates that the city lower its total out-of-pocket expenses for each insured to $6,340 from $7000. “So our employees and retirees will hit the max quicker,” Marley says.  Individually, it doesn’t appear to be that large an amount, but when multiplied over 1,800 lives that the city covers, it adds up.

Marley adds that the city council thought ahead when Obamacare became law and already has implemented some of its earlier mandates, such as allowing continued coverage of children to the age of 26 for city employees purchasing the family plan and providing coverage for pre-existing conditions. If those features weren’t already in place, this year’s health insurance costs would be a greater shock to the City Council.

The city offers four types of low-end (Obamacare Bronze) plans: employee-only, employee plus spouse, employee plus children, and employee plus spouse and children (the family plan). For every city employee insured, the city pays $357.53 per month into the self-insurance fund plus the employee’s contribution.

Currently, an employee on the employee-only plan pays $13.20 per month; employee plus spouse pays $383.62; and the family plan requires a co-payment of $518.20/mo.  for health insurance. Employees have the option to choose silver and gold plans too. Those plans require greater out-of-pocket contributions from the covered employee. Here’s the city’s benefits information sheet: http://www.sanangelotexas.us/vertical/sites/%7BBD27ED61-E710-4F56-8954-CC319F012B3D%7D/uploads/City_of_San_Angelo_Benefit_Summary_Sheet_Information_2013.pdf

Marley estimates that Obamacare mandates starting Oct. 1 will underfund the city’s self-insurance program by $186,000. To put that number in perspective, every one-cent in the property tax rate equals $370,682 in revenue to the city, according to city staff at the August 26 budget workshop.

The shortfall in city health insurance fund caused by Obamacare equals approximately one-half cent on your property tax rate.

Council already voted to lower San Angelo’s property tax rate for the next fiscal year on Sept. 3 by one-half cent. But Council considered squeezing out a full one-cent rate cut.

They split the difference.

By foregoing a larger one-cent total tax decrease, Council chose instead to cut property tax rates only one-half cent, and pocket revenue from the other half cent, placing the proceeds into a rainy day fund.

At their next meeting, City Council may be forced to vote to move their newfound rainy day money for FY2014 into the health care self-insurance fund to pay for Obamacare just as the fiscal accounting year barely begins.

 

 

 

 

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Comments

You call yourselves journalist, yet you keep referring to it as "Obamacare"? The proper name is "The Patient Protection and Affordable Care Act (ACA)". Is it possible for you to say that?
live, Tue, 09/24/2013 - 10:30

"Affordable Care Act" is a propaganda term forged by legislators to sell an entitlement that many argue is neither affordable or caring.

In the last presidential campaign, Obama for America fully embraced "Obamacare" as a moniker for its sweeping health care reform. http://www.washingtonmonthly.com/political-animal-a/2012_03/obama_campaign_sure_call_it_ob036267.php

Obama himself told Mitt Romney in a debate that referring to the legislation as Obamacare was 'alright by him.'

I'll continue to call it what it is: Obamacare.

Please don't get me started on pro- and anti-abortion monikers next (-; 

Joe Hyde

I don't care if you use the term Obamacare, but 'm not a fan of using the term "Slams" in the headline and also in the email title. If my math is correct, they are thinking it will cost the city about $103 extra per year per insured person. This works out to 186,000 out of a budget of approx 150,000,000 (150 million). I wouldn't say this "slams" the budget, and I'd like to know more details about what if any changes happen to the plans offered. (basically will it be any better than what is offered now?). If it is any better, than it is probably worth that $103. Also if this change causes positive long term effects in healthcare nationwide, it may be worth the price. Finally, will it affect the price that much in future years beyond FY2014 ?
live, Tue, 09/24/2013 - 11:08

Where does the $103 extra come from? Should the city increase its co-pay on employees and retirees, or raise taxes? Or spend money from cash reserves? After watching the city budget process, my impression that things are pretty tight in the HR budget.

My intent was to put the cost of Obamacare on city taxpayers into perspective. Its cost is approximately an additional 1/2 cent rate increase on the people's property tax bill. In the out years, no one knows what to expect.

Marley has a difficult time predicting the health insurance fund balance even without Obamacare. She has to submit her budget numbers each year halfway through the fiscal year, before all current expenses are realized, in order to have time to develop the next year's budget.

Good analysis, though. I appreciate the thoughtful comment.

Stina, Tue, 09/24/2013 - 10:53
The Patient Protection and Affordable Care Act is the 'short title' as defined in H.R. 3590. I have no problem with it being referred to as Obamacare though. It seems that sanangelolive.com is a bit more laid back and youthful than gosanangelo.com. Don't get me wrong, I'm glad that we have an alternative to gosanangelo.com and I welcome any new fair, local reporting but there have been a few articles that seemed a little too laid back.
No problem, just add the increase to my water bill in the form of some nebulous fee (tax) and increase other user fees and you'll be good-to-go!
I really appreciated the half-cent property tax analogy. That made it very relatable. Of course, the argument for increasing the city's cost is to actually make the insurance plan affordable (Affordable Care Act, after all) to the insured. While the single/no-dependent rate is quite a bargain, the family rate jumps up rather dramatically, especially for some of the low-wage city employees. My initial reaction to the use of "Obamacare" was akin to VWLover - it is most often used as a pejorative by its opponents, but since the President has embraced the term publicly it's hard to object to its use. It still feels weird, as it takes this large and complex piece of legislation, based on Heritage Foundation principles and old Clinton-era ideas and makes it sound like one person deserves all the credit or blame.
to see sanangelolive on my google news feed. I really like the layout and the local stories. Also nice to see the comments as it means you are getting readership. As far as the politically correct term for something that can't possibly be described, I know what's being talked about when the mess is called ACA or Obamacare. When "Patient Protection and Affordable Care Act" is used, I tend to be more thankful for acronyms and nicknames. Being a Texan,. I'm not sure what "howdy" is short for but I know what someone means when they say it. Best of luck with sanangelolive! I'm pretty sure It will become part of my daily read.

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