Consultant encourages city to self-insure

The Augusta Convention Center sign has been installed above the entrance. The Augusta Commission is reviewing documents on the building's operations.

Going self-insured means Augusta would have greater control over employee health insurance premiums, but it also means slightly more risk if claims exceed what the city budgets for them, a consultant encouraging the shift told commissioners Monday.

Over the past three years, Augusta and its employees have paid Blue Cross Blue Shield about $20.4 million in premiums, while claims have averaged around $18 million, said Lisa Kelley, a consultant with Wells Fargo Insurance Services.

The city could earn interest off the difference and further limit the claims if it went self-insured, she said at a commission work session.

“On those months when you take in more in premiums … where claims aren’t as much, that’s to your good,” she said. “Your employees really won’t see a difference.”

Most governments hire a third-party administrator to manage the pool, at a much lower expense than paying for full coverage, and the city would immediately save a 2 percent tax on insurance premiums, she said.

Control over claims would come from wellness and prevention programs targeted to Augusta’s needs, she said.

“You have the wellness resources that Blue Cross puts out there, but there’s nobody really overseeing the program or calculating the return on investments,” Kelley said.

Once governments change, however, it’s tough to return to full coverage of all employee pre-existing conditions at an affordable price, she said.

“At that point, you’re going to be at every carrier’s mercy,” Kelley said.

If claims exceed the pool, stop-loss coverage covers the difference, but cities that repeatedly run over their budgets might find stop-loss coverage rates pricey, she said.

Commissioners asked about the stop-loss coverage and the impact of the change on employees with primary-care physicians in Blue Cross’ network.

Kelley said that even if it self-insures, Augusta must remain with the Blue Cross provider network to keep those physicians in-network.

She said she’ll be back Oct. 8 with a recommendation for self-insurance and full coverage from companies responding to the city’s request for proposals.

IN OTHER BUSINESS

• Commissioners received a thick packet of legal documents governing the downtown convention center from Jim Plunkett, the special counsel for the convention center and parking deck projects. Paul Simon, the president of Augusta Riverfront LLC, which will run the center and the parking deck under the Marriott brand, urged the commission to approve the 15-year documents by mid-October to allow management to hire and train staff and obtain an alcohol license in time for the center’s first event, a January convention of police chiefs.

• After a closed-door meeting with attorneys, the administrative service committee took no action on Commissioner Bill Lockett’s call to hold Mobility Transit in default of its contract to run the city bus service. “As far as we knew, it had been cured,” said Robert Hagler, Mobility’s Augusta counsel, who attended the meeting with Mobility Chief Operating Officer Joe Davis. Davis said he’d seen the item on the agenda but had “no clue whatsoever” what the concerns were. Augusta issued a notice to the company in May for not paying vendors, breaking reporting requirements and other issues. “We think things are going well,” Hagler said.

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