Health insurance changes save Niles more than $2M

By Jordan Cohen


City council, in need of good financial news in a time of fiscal emergency, got $2 million worth of it from its health-insurance broker Wednesday.

Michael Zaluski, president of Specialty Insurance, said substantive changes to health care coverage he instituted since becoming the city’s insurance broker last July made the savings possible.

“You paid [more than] $5 million total health care costs in 2015, but your cost will only be $2.7 million if the city continues to average $200,000 a month in medical claims,” Zaluski said. That would amount to a savings of more than $2.3 million from the previous year.

Zaluski said 445 people are insured by the city. Of that figure, 165 are employees, and the rest are spouses and children. The city is self-insured.

Zaluski said much of the savings came from changing the leasing of hospital networks to going to them directly – a change he immediately initiated.

“You saved $900,000 in medical claims this way,” he told council. “I have nine clients, and none of them lease.”

Higher deductibles and co-pays were instituted after meetings between the city and its unions.

Council members wondered why the city leased all those years, and questioned why the excessive costs were allowed to continue. Steve Papalas, D-at large, said previous insurance brokers were awarded the contract by then-Mayor Ralph Infante without competitive bidding. By contrast, Zaluski won the contract after he and three other companies submitted bids.

Papalas said he and council President Robert Marino brought up the bidding issue with Infante several years ago.

“We asked [him] to put this out for bids and he did not,” Papalas said. “Something just wasn’t right.”

“The costs seemed extraordinarily high to me,” Marino said.

Law Director Terry Dull said he could not recall whether there had been any health insurance bidding during the infante administration.

Zaluski also told council that the city will receive an $80,000 rebate for the quarter and expects the rebates to continue. It is the first time the city has received a health insurance rebate and several council members questioned why it did not happen previously, given the money it was spending on health care.

“I don’t know why you never received a rebate before,” Zaluski said, adding that leasing may have been a factor in the city losing out on money it should have gotten.

Mayor Thomas Scarnecchia indicated he will investigate the rebate issue after a resident encouraged it during the public comments portion of the meeting.

“I am willing to entertain that idea,” he replied.

The Scarnecchia administration hopes to increase those savings through collective bargaining when it calls upon the unions to pay some of their health care premiums. The city has been paying 100 percent of the premiums. Employee contributions are a key part of the mayor’s financial recovery plan.

Zaluski said there will have to be more increases in deductibles, co-pay and higher levels on out-of-pocket maximums if the city is to continue the savings long-term.

Council members including Barry Steffey, D-4th, are supportive of Zaluski’s efforts.

“You’re saving the city a lot of money and at the time we need it,” Steffey said.

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