Recap of Committee Meeting Discussion Surrounding Appleton Housing Authority Insurance

In light of the Common Council’s decision to keep the Appleton Housing Authority on the city’s group medical insurance, I went back and watched the Human Resources and Information Technology Committee Meeting held on 12/09/2020.

TheAppleton Housing Authority seemed to be well represented at the meeting and presented their case that the city should not drop them from the group health insurance plan.

A man from AHA who did not identify himself but was later referred to as “Aaron” spoke first. He disagreed with HR Director Sandy Matz’s position that the city takes on more risk by including Housing Authority employees on their health insurance plan. He stated that typically, with a self-insured plan, the more people you have on the plan, the less risky it becomes.

He went on to explain that losing city of Appleton group coverage would be costly for them. He stated that they would “have” to switch over to the State of WI health insurance plan which would cost them an additional $36,000 to $60,000 a year. Employees also would see an increase of about $3,000 per family from switching over to the state HSA plan from the city’s HSA plan. [It was not clear to me what he meant when he stated they would “have” to switch over to the state insurance plan. Typically, a business with only 17 employees would not be required to provide health insurance at all (in which case their employees would probably qualify to purchase subsidized insurance as laid out by the Affordable Care Act), or, if they wanted, they could utilize the Small Business Health Options Program (SHOP) through Healthcare.gov to provide coverage to their employees. However, as an independent governmental agency, I’m not sure if there are other rules that guide what they can and cannot do in regards to insurance.]

Debra Dillenberg, the Executive Director of the Appleton Housing Authority then spoke. The City of Appleton, in line with State statutes, created the housing authority in 1967 with the mission of blight renewal and to provide decent, safe, and sanitary housing to the city of Appleton. “And that’s just what we’ve been doing all these years.” In her opinion they do a pretty good job. They’re kind of a “secret, hidden gem”. They serve over 1,000 families a month in the community.

Per Debra, Sandy Matz approached them and let them know that she was going to recommend only a one year agreement, but the Housing Authority is looking for at least another two year term. They want to be able to serve the number of families that they are currently serving and more. She stated that the Baby Boomers are going to be needing affordable housing. But in order to provide those services, the AHA needs the support of the city of Appleton.

Debra believed it was important to provide health insurance for their staff because they need educated, knowledgeable, and certified staff and attracting and retaining good employees is essential to the success of any kind of company. Debra stated that she’s always thought of AHA not as a non-profit, which they are, but as a recognizable company with company business practices. Back in 2017 there was a significant cut to their agency which resulted in them having to go without a front desk receptionist which Debra believed negatively impacted their effectiveness.

She pointed out that they receive funding through HUD and the state of WI but they receive no municipal dollars from Appleton–“never have never will”. [Although, it should be pointed out that, if they receive more in health insurance benefits than they pay in health insurance premiums, then they have received municipal dollars.]

Debra asked for another two year agreement. She didn’t see why it needed to just be one year. Two years would give them time to look at alternatives, if there are other options.

She stated that Oshkosh removed their Housing Authority from their city’s group insurance, but she wanted to draw a distinction between the Oshkosh Housing Authority and the Appleton Housing Authority. She wished that she had the money and funds that Oshkosh has. Appleton’s programming is very different. Oshkosh has more money. She didn’t want to be compared to other Housing Authorities. The AHA has been successful all these years and has had a good relationship with the city of Appleton.

In amongst that, she also mentioned that Housing Authorities are created as separate, autonomous agencies so that they stay out of any politics.

After Debra finished her address, someone named Tom spoke. He stated that the AHA has had an over 50 year relationship with Appleton. Back in 1967 the Common Council decided that AHA would be their vehicle for addressing low income housing needs in the city. In his opinion, it’s been a very productive, beneficial relationship for both parties and AHA’s clients. If they have to go out and spend $36k-$60k more on insurance that’s going to result in a similar cut to the programs they offer their clients. He did not believe they could make up that amount of money through donations. He stated that the AHA was asking for the city’s continued support. Per Tom, the need for their services had become greater…and then the pandemic hit. The segment of the population that has been most negatively affected by the pandemic are the AHA clients. In his opinion, a vaccine is not going to solve the problems their clients are facing. He did not believe their problems would be solved in one year, probably not even two years. Tom wanted at least a two year renewal so the AHA won’t have to cut back on services to their clients.

After those statements from AHA representatives they opened things up for questions.

Alderperson Fenton wanted to know if there are any additional costs to the city other than the stop-loss for a catastrophic claim for a person covered by insurance.

Per Sandy Matz: AHA pays the funding level for anticipated claims. The city tries to do its best, based on medical trends and the increase in costs and assuming they had the same claims next year as they had this year, to estimate what their future costs will be. They make their best guess to establish a budget for the upcoming year. Based on that estimate, they then establish a funding rate, on a per family and per single basis, to make sure they have enough money. If they have a high claim year and fall short, the city has to cover those claims. The reverse is also true. If they have a good year and don’t pay as much money as they expected, they don’t refund anything to the Housing Authority.

Sandy went on to say that her concern is that, over the years, the stop-loss amount has gone from $75k to $250k which means that if someone has a catastrophic claim, the city is on the hook for $250k before their stop-loss insurance kicks in. Appleton had a couple of years where they saw a very big spike in their medical claims. There were two separate claims that ended up costing the city half a million dollars total. Those were not specific to the Housing Authority, but if they had been Housing Authority employees that would have been $500,000 the city would have spent on Housing Authority employees.
Her concern is that if an AHA employee is the one who hits the stop-loss, the city would be the one bearing that cost both in the claims, and in increased rates.

She went on to state that when the AHA was first created, there were no other insurance options for them. They do now have the state option, although it would result in additional costs for them. There have been changes since the AHA first started using city insurance [both it would seem in options for the AHA and in the costs born by the city]. Appleton is also bracing for some tough budget years ahead.

Alderperson Fenton wanted to know how many AHA employees are covered by city insurance as well as how many city of Appleton employees are.

Per Sandy: in 2013 AHA had 12.6 employees. This year they have 17. 1 isn’t eligible, 2 have waived coverage, and the other 14 take it (10 families and 4 individuals). Of the city’s 630 employees, almost all are enrolled in the medical plan.

Alderperson Martin wanted to know over the 50+ years the AHA has been in existence, what kind of a risk factor has the Housing Authority been?

Sandy stated that the risk is what the stop-loss is. The only way to check if the AHA specifically is a risk or benefit would be to look at their claims and how much they’ve paid in vs how much they’ve received. But the city doesn’t separate out members of the group like that.

The benefit to the AHA to be on Appleton’s group plan is that, as a small entity, a catastrophic claim could really bankrupt them, so they’re able to spread that risk across the rest of the city and the city bears the premium rate.

Alderperson Firkus wanted to know if AHA employees as a group were any more risky than the average Appleton city employee due to perhaps having many individuals in a known higher risk pool such as age.

Sandy didn’t think they presented any more risk than would a city of Appleton employee.

Chairperson Thao thanked AHA for the services they are providing and then made an amendment to allow their participation in the city of Appleton’s group medical plan through 2022 instead of 2021, at which time AHA participation in city insurance would end.

Alderperson Firkus thought this made sense in light of Covid. He believed they needed to be responsible with taxpayer money, but they also should be taking care of the Housing Authority so they could provide services.

Alderperson Fenton agreed with the amendment also because of the current situation with Covid.

The amendment was approved, and then the amended item was approved, but as we then saw at the Common Council meeting, the Common Council ended up removing the language stating that AHA’s participation in the group health insurance would end at the end of 2022.

View the full Human Resources and Information Technology Committee Meeting here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=814895&GUID=F6DEA0E9-E0C7-4BDC-A2D2-4A259FE72E36&Options=info|&Search=