Pasco pinched by health care cost increase

By Geoff Folsom, Tri-City HeraldApril 20, 2013 

PASCO -- Pasco city government is dealing with around $500,000 in unexpectedly high health care costs, and City Manager Gary Crutchfield is looking to make changes to keep the overruns from continuing to happen.

The city budgeted $4.1 million in medical costs for fiscal 2013, which already was a jump from the $3.5 million spent in 2011 and $2.5 million in 2009. But expected costs have ballooned by a half-million dollars.

Crutchfield said about $300,000 of that will need to be cut from the general fund budget, with the remainder from the city utility fund. The utility fund deficit can be dealt with by slight rate adjustments and an increase in users, he said, but cutting from the general fund will be more problematic.

A tax increase would be the last resort, he said.

"The first reaction is to look at the budget and see what we can cut," he said.

An aging workforce is a contributor to the health care cost increase, Crutchfield said. Employees also are using more prescription drugs and having more surgeries.

"The biggest reason is the increased claim level per person," he said. "The more prescriptions and the more injuries, the more health care costs."

The increased costs present two challenges, Crutchfield said. First, he has to find money in the current general fund budget to pay for them. He then has to find a way to pay for them next year.

"Claims aren't likely to go down much," he said.

Crutchfield said the city's health care costs remained flat in 2009 and 2010, only to spike in 2011 and 2012.

The 283 city employees in Pasco pay for 12 percent of their health insurance premiums, with the city responsible for the other 88 percent. Crutchfield is looking to increase worker contribution as part of upcoming labor contracts. Private sector workers tend to pay a greater share of their health care costs, he said.

"When you compare it to other cities, it's not low," Crutchfield said of the employee contributions. "When you compare it to the private sector, it's very low."

About two-thirds of city employees belong to police, firefighter and engineers unions, Crutchfield said. The city is in the midst of labor contract negotiations with the International Union of Operating Engineers, while discussions with the public safety unions are expected to start soon.

"We need to be clear with our employees at the bargaining table," he said. "I think the bottom line is there needs to be an increased cost shared by the employees. How we get there, I don't know."

Dean Bushey, assistant business manager with the operating engineers union Local 280, said he couldn't talk about the city's concerns about medical costs because the union is in the middle of negotiations with Pasco.

"I don't want to make negative comments right now, not that I wouldn't like to," he said.

Officials with the police and firefighters unions could not be reached for comment.

In addition to current employees, the city of Pasco has to pay for 42 retirees grandfathered in a short-lived program that required the city to pay for 100 percent of police and firefighter medical costs for life, Crutchfield said.

Pasco will continue to self-insure itself, which it has done since 1987, Crutchfield said. It isn't actively looking to join a program with the Association of Washington Cities that pools medical costs with other cities.

"Our costs are a little bit lower than the AWC's right now, so there's no reason to," he said.

City Councilwoman Rebecca Francik said the city should stay self-insured as long as it makes sense.

"It depends on, are their costs rising at the same time ours are?" Francik said of the association of cities. "We have really benefited as far as costs by being self-insured. As long as we continue to do that, we should stay self-insured."

Crutchfield plans to come back before the city council with recommendations on how the city can tighten its belt, he said.

"By itself, it's not going to put us into bankruptcy, but it's tough," he said.

Tri-City Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service