Collins, Rooke continue to push for reduction of insurance costs

Date: 4/23/2012

April 23, 2011

By G. Michael Dobbs

news@thereminder.com

SPRINGFIELD — If the city could save millions of dollars, wouldn't it be worth the effort to find out? That's the question City Council Timothy Rooke and School Committee Vice Chair Christopher Collins continue to ask about the city's health insurance costs.

Despite a memo issued last week by Mayor Domenic Sarno that said that the city would not go out to bid to see if it could lower its health insurance costs, both men are going to push the issue further.

On April 18, Sarno issued a written statement on the request from Rooke and Collins to go out to bid. He said, "Based upon these facts it makes no sense to go out to bid at this point in time because it would put more strain on the city's general budget creating additional costs to the tax payers. Review of the proposal from Blue Cross Blue Shield indicates an increase in premiums, which would cause the city to make more cuts to other services such as police, fire, DPW, [Department of Public Works] parks and libraries. The ability of the city to participate in the GIC [General Insurance Commission] was part of the municipal relief package put forth by the governor and state Legislature. This GIC plan gives us budget predictability and sustainability."

A memo by William Mahoney, the director of Human Resources and Labor Relations, accompanied Sarno's statement. In it Mahoney wrote, "We are going out to bid. We are just going out to bid with the GIC. The GIC will be going out to bid next year. As the GIC has approximately 300,000 members and the City of Springfield has 8,000 members it is quite clear that the GIC has significant greater purchasing power than the city. Additionally, it is noteworthy that the GIC is reportedly considering seeking a national PPO [preferred provider organization] for next year. This will provide our retirees who are out of state with a less costly alternative to purchasing an indemnity plan. Finally there is no reason for the city to assume the cost of going out to bid when the GIC will. Two brokers contacted for estimates for preparing a bid, getting it out on the street, analyzing the results against our current 19 plan options and making a recommendation ran from $40,000 to $80,000."

Collins and Rooke disputed several of Mahoney's statements. Rooke noted the city has about 10,000 members and Collins said the cost for putting out a bid at $40,000 to $80,000 was inaccurate. Collins and Rooke said that according to three different consultants the cost would be closer to $5,000.

Mahoney also wrote in the memo the GIC plan offers "seven different options for retirees." Rooke said the number of options is three.

"The mayor is basing a potential savings for taxpayers on a two-page memo [from Mahoney,]" Rooke said.

Rooke also noted the informaiton that could have been given to Blue Cross Blue Shield for an estimate of costs was not released to the company by the GIC.

Collins said the city's unions are in favor of going out to bid and said that Mahoney had promised to do so about three years ago. In his memo, Mahoney wrote that if the city was to go out to bid, the process should have been started in February. Collins asked that knowing that, why didn't Mahoney do so, especially in light of his promise to union members?

Collins said that in the last five years with the GIC, the cost to the city have risen from $75 million to more than $80 million. There have been significant reductions, Collins added, in benefits with increased co-pays.

The other variable, Collins, said, is that now there are about 20 percent fewer people on the GIC in the city. He added the GIC could shift benefits at any time.

"I don't know why you wouldn't check," Collins said. "It defies logic."

Not being part of the GIC is not uncommon in the region with West Springfield and Chicopee finding less expensive programs in the private sector. Collins noted the Hampshire Council of Governments' cooperative purchasing group did a survey of the insurance programs in those communities and all but two were less expensive than the GIC.

Collins added that Philip Puccia, the first executive director of the Finance Control Board, made a point of urging the city to go out to bid every three years to make sure the city was receiving the best deal.