Lexington Urban County Government employees will pay more for their health insurance under a plan presented to the council at its work session Tuesday.
The monthly premium for a single employee enrolled in the Platinum plan — which 89 percent of the city's employees are currently enrolled in — will increase from $356 this year to $633 beginning Jan. 1. Families who stay in that plan will see their premiums increase to $1,330, from a current cost of $745 a month.
Each employee gets a "pool" of money from the city to put toward their health insurance or other benefits each month. Non-union employees get $356 a month to use to offset the cost. Employees in the police, fire and corrections bargaining units get more.
This year, the city will spend about $33 million on health care for employees, their families and retirees.
That's $14 million more than the amount of premiums collected, said Briggs Cochran, president of Benefit Insurance Marketing, a consulting company hired by the city to find solutions to hold down health care costs and provide quality care.
In past years, the city budget was able to deal with such shortfalls. But with revenues down and the city cutting costs in every department, mayor Jim Gray has said repeatedly that shortfalls in the health-insurance budget could not continue.
In an email to city employees in September, the mayor wrote, "We must act. We know the cupboard is bare. The city can't afford these costs."
Under the new structure, the city will contribute about $16 million toward health care premiums in 2012, and the remaining costs will be picked up by employees, who will choose among five plans.
Regardless of which plan the bulk of employees choose, the premiums collected will be enough to cover costs, Cochran said.
Currently, the city-subsidized plan offers more generous benefits than 99 percent of all public and private insurance systems, city officials have said. Most city employees pay no deductibles, and premiums are considered very low.
"Employees have not been exposed to the true costs of health services," city spokeswoman Susan Straub said. Under the new plans, "costs are more in step with other people's plans."
During open enrollment Nov. 7-27, city employees will choose from five health plans, all administered by Humana. Three are preferred provider organizations (PPO), and two are high-deductible plans with health savings accounts associated with them.
Cochran told the council that he expects many of the 2,959 employees and retirees enrolled with the city's insurance plan to choose less expensive options — such as a PPO plan that will cost single employees $424 a month and families $890 a month — rather than sticking with the most expensive plan that mirrors the Platinum plan most of them have now.
The least expensive alternative being offered for 2012 is a health savings account plan that would cost $366 a month for single employees and $764 for families.
Cochran said 65 percent of the city's employees consumed less than $1,000 worth of health care last year, which means a plan with less in benefits might make sense for many of them.
"People will start recognizing the value of the wellness structure," Cochran said.
But council members said they're getting many calls from employees who are worried about the changes.
"Their costs are doubling in many cases," said Councilwoman KC Crosbie. "Lots of people are very nervous about this."
Gray told the council that "distress and anxiety" are to be expected.
"People are going to be disturbed," he said.
A campaign has started to educate employees about the new plans and how using a new city-sponsored wellness center and on-site pharmacy can cut health costs.
The city will schedule daytime and evening information sessions, provide videos for employees to take home and offer printed information.
Employees' health care costs can be lessened by using the new wellness center and on-site pharmacy. The wellness center will offer the kind of primary care found at a general practitioner's office. There will be no cost to employees for visits to the wellness center.
At the on-site pharmacy, employees can have prescriptions filled at a reduced cost.
A site for the wellness center and pharmacy will be announced soon. Both are scheduled to open early in 2012.
"Today is a lot like going to the doctor and getting bad news that there's really no other way around that you need a lifestyle change," Councilman Jay McChord said.
He said that in the past, the city has focused on "sick care." Now, he said, the focus needs to be on wellness.
"Maybe this is the opportunity we need" to work on preventing illness, McChord said. "This is kind of the line in the sand where we focus on being well and active."