Health insurance woes

Pam Figge watched Washington’s health-care debate with interest, but she never expected the issue to hit so close to home.

“It’s in my house,” she said during a sit-down interview earlier this week.

Figge retired from her post as the city of Chico’s principal planner in 2004. As a retiree, she buys into the city’s health-insurance plan, paying the full premium. At first, she opted for a PPO. Over time, though, as that plan’s premium increased, she settled for the less-expensive HMO. That coverage was pretty good, too. She had a low co-pay during her doctors’ appointments and the insurer picked up 80 percent of most expenses. Still, the plan didn’t come cheap. Figge paid about $400 out of pocket each month to cover herself alone.

Then, in the spring, along came word of Chico’s looming budget crisis and a subsequent rise in health-insurance costs that comes down especially hard on retirees.

Back in April, city officials predicted a whopping $4.5 million deficit for the upcoming fiscal year. That news came at about the same time that the city’s health-care provider—Blue Shield—announced the company would be raising its premiums by more than 40 percent starting today (July 1).

In May, Figge, and other retirees who buy into the plan, as well as current city employees, were given options: Keep the current Blue Shield plan, amend the coverage, or dump the company altogether and go with a joint-powers authority (an insurance plan composed of 200 other public agencies that equally share the costs of providing health care). Going with latter, the California State Association of Counties (CSAC), would save the city more than $400,000 a year, noted city leaders.

According to Teresa Campbell, the city’s human-resources and risk-management director, the change would also help the city maintain some financial stability because the provider guaranteed its rate for 18 months.

The City Council paved the way for a switch by voting in favor of it 7-0. The final decision, though, would be decided by a vote of everyone covered under the current plan. To many, including Figge, the choice was a no-brainer. That’s why it’s so difficult for some to understand how the proposal failed.

According to an election tally provided by Campbell, the decision was at first a close one. The CSAC option received four more votes than the option to stick with the current Blue Shield plan, 199 to 195, respectively, while the alternative of changing the existing plan appealed to only 14 people. A run-off was required, however, since none of the options took a majority of the vote. In a second round of voting (with just the top two options), employees chose to stick with Blue Shield.

City Councilman Scott Gruendl was “stunned” by the outcome.

Gruendl made that statement at a regular council meeting following the results of the secret ballot, and he’s still perplexed. The long-time city councilman, who buys into the insurance coverage, voted to change to a new plan.

“[The vote] virtually guarantees employees are going to pay more,” he said during a recent phone interview.

Interestingly, one employee bargaining group, the firefighters union, took issue with retired city workers participating in the decision. The IAFF Local 2734 filed multiple grievances with the city, including one claiming that allowing retirees to vote is not part of the union’s memorandum of understanding. (That issue became moot since a majority of voters opted to retain Blue Shield.)

Ironically, retirees will be most affected by the change.

Figge, for example, faced with a monthly premium of close to $600 to keep her current plan, has instead opted for so-called catastrophic coverage. She’ll be paying out of pocket for all of her own medical bills until she reaches a $3,000 deductible, and she’s still responsible for that $400 per month premium. The 62-year-old retiree and cancer survivor has few options but to buy into city’s coverage; she’s too young for Medicare and she cannot go uninsured.

Making matters worse, her husband, Steve Scarborough, lost his job last month when Longfellow Lumber closed its doors. Fortunately, at 65, he does qualify for Medicare. Figge, who also retired in May from a part-time position teaching at Chico State, couldn’t have predicted the loss of her husband’s income. The couple are now living on her modest retirement.

Figge said she feels fortunate because she knows there are a lot of people around the country who don’t have access to health insurance. Moreover, close to home, she knows of other city retirees who are in worse shape.

Still, something about the vote doesn’t set right.

Keeping Blue Shield was an odd move at a time when the city is searching for ways to balance the books. Negotiations between employee unions and the city are ongoing. Not surprisingly, in addition to proposed across-the-board salary concessions, current employees are being asked to pay a greater portion of their health-insurance premium (40 percent rather than the current 25 percent).

“The city can’t absorb what turned out to be a huge amount of money,” Campbell acknowledged, noting the vote adds more than $400,000 to next fiscal year’s budget deficit.

Campbell and Figge could only speculate why employees would opt for Blue Shield, saying that perhaps it was a fear of change. Either way, Figge pointed out, the end result is that the cost will be passed on to the taxpayers.

“The citizens of Chico are the ones who are going to be bearing it,” she said.