Sometimes I feel a little like the man on the seashore surrounded by thousands of beached starfish who is only able to throw back a few. There are so very many Appleton city government and AASD meetings, and between work and family obligations I am able to view but a few. When I read the agenda for the Human Resources and Information Technology Committee meeting I decided I would not spend time on a meeting about health insurance.
Well, the joke is on me, because if I had, I would have known what was going on prior to the Common Council meeting on 12/16/2020.
The employees of the Appleton Housing Authority have, possibly since the organization’s inception, been able to get health insurance through the group plan offered to city of Appleton employees. This is in spite of the fact that the AHA is an independent governmental agency that is funded (a) by the Department of Housing and Urban Development and (b) through the rent it makes on the properties it owns.
Sandy Matz, the city of Appleton’s Human Resources Director, reviewed with the Common Council a little of the history of AHA’s insurance arrangement. When Sandy first started working for the city of Appleton, there did not even exist a Memorandum of Understanding between AHA and Appleton. AHA employees simply had Appleton group health insurance with no formalized agreement. They went through some growing pains. For example, there were situations where AHA didn’t notify Appleton when an employee was leaving so that Appleton could start COBRA. That increased Appleton’s financial risk, because if you don’t give appropriate COBRA notification, it cannot be backdated and employees were able to have insurance coverage for longer than they ought to have. Sandy and the HR department worked through a lot of these issues with the Housing Authority and tried to provide them the same health insurance education that they provide to actual city of Appleton employees–for example on how to be better healthcare consumers, control spending, and avoid the emergency room. Finally, in 2014 Sandy worked with the attorney’s office to get a formal agreement in writing as to what the AHA got from the city, what their responsibility was, and what Appleton’s responsibility was.
Then in 2016, 2017, and 2018 Appleton had a couple of really bad years with their insurance because they had a couple of people who caused the city to hit their stop-loss limit (read about stop-loss here). Appleton’s stop-loss has changed from being around $50,000 until now it’s all the way at $250,000. That means that if an individual has a catastrophic claim, the city is on the hook for $250,000 before the insurance company steps in.
Ms. Matz explained to the Council that as the administrator of the city’s health insurance plan her job is to recommend to them that one of the ways to minimize the city’s risk of hitting their stop-loss limit would be to ask the AHA employees to not be on the city’s insurance plan anymore. She didn’t want a Housing Authority employee to have a catastrophic claim and the Council to then look at her and ask, “How did you let this happen?”
The AHA is only paying the funding rate, which for a family is around $1500 a month. If a family has $0 in claims for a month, then they’ve helped pay $1,500 toward the claims that were born by city employees; however, if that family incurs $2,000 in claims in a month, they’ve only paid $1500 and the city has to subsidize that additional $500 to have that family on the plan. After a few bad years, Ms. Matz is worried about having additional risk on Appleton’s health insurance plan. For that reason, she recommended renewing a Memorandum of Agreement with the Appleton Housing Authority that would specify that their participation in the city of Appleton’s group dental, life, long-term disability insurance, and voluntary insurance plans could continue through December of 2022, at which time AHA’s participation in the city’s medical plan would conclude.
This is the point at which I feel the members of the Common Council really dropped the ball and did not hold the best interests of the taxpayers of Appleton foremost in their minds.
Alderperson Kyle Lobner moved, seconded by Alderperson Coenen, that the memorandum be amended to strike the last line which stated “at which time AHA’s participation in the City’s medical plan will conclude”.
Alderperson Lobner thought it was unfair to create financial hardship for AHA during a pandemic by making them get their own insurance. He felt that the city needs to see AHA through the pandemic and then review things in 2022 to see if removing them from the city of Appleton health insurance still made sense. His intention was to remove the hard and fast end date and give them at least two more years. [I was left wondering if he was trying to set things up so that, in the future, he can push for them to remain on Appleton’s insurance indefinitely.]
Sandy Matz pointed out that the memorandum already allows them coverage until the end December 2022. That time was specifically given to allow AHA to look for a new insurance provider and raise funds to cover their insurance costs. If the Council removes the end date and doesn’t vote on terminating their insurance agreement until December of 2022 then they will have to give AHA a new deadline so that they can make new arrangements which means they will stay on Appleton’s insurance plan for even longer.
Alderperson Thao encouraged her colleagues to defeat this amendment. She recognized that AHA is very important, but she felt the risk Appleton is taking on with them is a huge liability. The memorandum already gives them two years to find insurance and she felt that was plenty of time to prepare and find other options.
Alderperson Reed agreed and thought the Common Council should think long and hard before voting against what directors and officers recommended.
I think that both Alderpersons Thao and Reed made good points. While I understand that not all recommendations should be rubber stamped, I did find it concerning that the Common Council was so ready and willing to discard the advice of someone who clearly possesses a lot more knowledge and expertise about health insurance than they do. Throughout the entire discussion of this issue I didn’t hear any alderpersons ask questions that would indicate to me that they have a decent understanding of insurance or of the issues they were considering. Instead, the discussion seemed driven by feelings of sympathy for the employees of AHA and a general sense that it was somehow mean to tell them that they need to make new health insurance arrangements. For example, Alderperson Wolff thought that it would be reasonable sometime in the future to remove them from city health insurance but he felt that with Covid currently going on these people could use the peace of mind that came with removing that set end date. [A lot of people could use peace of mind during Covid, but city government has not been nearly so deferential to most of them.] I saw no real discussion regarding what this could potentially cost the taxpayers of Appleton or any attempt to determine whether having them on the city’s insurance plan has been a net benefit or a net loss up until this point. [Note: I am trying to find that out.]
A majority of the Common Council seemed to think that the hardship of a pandemic warranted removing a deadline requiring these people (currently 10 families and 4 individuals) to get new insurance in 2023, but why should the 14 employees of the Appleton Housing Authority receive special largesse from the city? Are not all the residents of Appleton struggling right now? Earlier in that very meeting, Mayor Woodford acknowledged that some residents have had to make “downright sacrifices” due to the pandemic, and both he and the entire Common Council are aware that ½ of small businesses are looking at going under if spending doesn’t return to normal by the end of the year. Many people have seen their hours cut, their jobs lost, their benefits reduced or eliminated. Through all of this suffering has the Common Council reduced taxes? Lowered utility rates? Done anything to reduce hardship across the board for all residents?
Why have they chosen to favor 14 specific households? Particularly when favoring these people could potentially leave taxpayers on the hook for $250,000 in insurance costs for people who are not even city of Appleton employees and at a time when vast swaths of the populace are struggling financially?
I am trying to learn more and will keep you apprised.
If you wish to contact your alderperson or the entire Common Council about this or any other matter, you can reach them here: https://www.appleton.org/government/common-council
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