However, Augusta commissioners say they won't raise taxes to make up the shortfall.
Employees can expect to pay more in premiums and have higher deductibles for less coverage, commissioners were told last week by their employee benefits consultant, Benalytics of Marietta, Ga.
Blue Cross Blue Shield of Georgia will pay $5 million more than anticipated covering the 2,500-person Augusta work force, whose claims the company had projected would run $18.1 million but which will be more like $23.4 million this year and $25.7 million next year.
The projections are for active employees and retirees younger than 65. Premium cost estimates for retirees older than 65 were not given during the presentation, during which commissioners directed Human Resources Director Rod Powell to devise a plan with options to bid out to insurance companies nationwide.
One option not on the table is higher property taxes to maintain the current coverage, said Commissioners Bill Lockett, Alvin Mason, Don Grantham, Joe Bowles, Joe Jackson, Corey Johnson, Jimmy Smith and Jerry Brigham.
"I would not be willing to increase taxes," Lockett said. "Human resources is going to have to go out and see what is available. And at that juncture, each individual employee is going to have to decide if they want to buy a Mercedes-Benz, a Chevrolet or go to the bottom and buy a Volkswagen."
To make up the government's portion of the $6.9 million premium shortfall, commissioners would have to raise property taxes 1.17 mills, which would add $41.13 to the tax bill on a house valued at $100,000 with homestead exemption.
"We may have to raise premiums," Johnson said. "We can't raise taxes. We can't make everybody pay the costs for a portion of the constituency base of the county. It's a tough situation. There's no easy way to deal with it."
Employees are going to be upset, especially if the coverage is reduced by $6.9 million, Powell said.
Grantham said Powell will give commissioners several options with increases in the percentage of the premium employees pay.
"Right now, the government is paying 77 percent, and the employee is paying 23 percent," he said. "More of the cost is going to have to be borne by the employee, and the deductible they pay will increase. With a $7 million increase in premium costs, we have got to explore all avenues, and a portion of our coverage is going to have to be self-insurance."
SELF-INSURANCE ALLOWS a government to protect itself by buying coverage for catastrophic costs but pay claims from money it puts in an escrow account. In such an arrangement a third party, such as Blue Cross Blue Shield, administers the program.
"A drawback is that if the money in the escrow account runs out before year's end, you're out of luck," Grantham said. "So it's a gamble."
Blue Cross Blue Shield of Georgia gambled that Augusta's costs would not exceed $18.8 million and lost. Because the city is fully insured, the company had to make up the difference.
Johnson and Jackson said the city should consider becoming self-insured and reaching an agreement with University Hospital or Medical College of Georgia Hospital to treat city employees at reduced rates.
"Why couldn't we be self-insured and work a reduced rate with University Hospital?" Jackson asked. "Why couldn't we approach University Hospital or MCG? The options are out there."
Johnson said the city has an opportunity to look at building partnerships with University, MCG and Trinity Hospital.
"There's got to be some way we can implement using local facilities as another means of managing the health care of our employees," he said.
Bowles said he has been saying since he came on the commission that commissioners need to tier rates based on an employee's health and wellness.
"Employees that take care of themselves need to be rewarded, and those that don't need to bear the brunt of the costs," he said. "Overall, the healthier your employees are, the lower your insurance costs are. We've done the opposite keeping Blue Cross Blue Shield. We're getting exactly what we deserve."
LT. BRYAN PATTERSON of the Richmond County Marshal's Office said Augusta's health insurance costs have been stable for the past few years and that employees had to see rates were going to increase.
"Employees are going to have to pay an increase in premiums," he said. "It's no different than when the insurance on your car goes up. It's going to hurt to pay more, but try buying insurance on your own."
Employees should look at the increase the way other taxpayers do, he said. "If they're not employed by the city, they say, 'I'm just paying additional taxes to support somebody else's health insurance.' "
Reach Sylvia Cooper at (706) 506-8875 or email@example.com.