Houston's new health insurance plan hits financial snag

October 31, 2012 4:33:58 PM PDT
A health insurance plan Mayor Annise Parker promised would save $20 million will now cost the city more.

It was a big fight a year and half ago for the city to switch from health insurance policy to another. But now that they've actually made the switch, they're not sure it actually saved anyone money.

Longtime city employee Fredrica James-Davis likes having health insurance, just not the current system.

"Price is a major difference, and I'm just not that satisfied with the services," she said.

Eighteen months ago, the city switched from a Blue Cross Blue Shield insurance plan to a Cigna managed self insurance plan. It was supposed to save the city money and improve service.

"It went up about $30," James-Davis said.

But more than a year later, it turns out not only are employees paying more, but the city isn't saving nearly as much. In fact, they're bringing in $17 million less than what they budgeted for.

"It's been hard on some of our employees. We're forcing them to take control of their own health," Parker said.

Mayor Parker says there are several factors contributing to the shortfall. The city went from a treatment-based plan to one that emphasizes preventative care. It's seen an increase in medical treatments that were unexpected, and the there's been an unexpected increase in pregnancies.

"We could be going through just some hiccups, some transition hiccups, and it is a hefty change to go from a true insurance company to a self-insured side," Houston Comptroller Ronald Green said.

There is still about a year and a half left on the current self insurance contract, and city leaders say that $17 million gap should decrease. They're just not sure how much it will shrink before they have to find the money in the city coffers to pay for it.

"Millions of dollars more than we anticipated we will have to fund," Parker said.

Right now, we expect the gap to fluctuate as different employees come and go, and others get their health issues flushed out.


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