CITY OF DEERFIELD BEACH
SPECIAL CITY COMMISSION MEETING MINUTES
Tuesday, April 25, 2001 at 5: 15 P. M.

Mayor Capellini called the meeting to order at 5: 30 p. m. on the above date in the
City Commission Room, City Hall.

Roll Call:
Present: Commissioner Gwyndolen Clarke-Reed
Commissioner Steve Gonot
Commissioner Amadeo Trinchitella
Vice Mayor Peggy Noland
Mayor Albert Capellini, P. E.

Also Present: Larry Deetjen, City Manager
Andrew Maurodis, City Attorney
Ada Graham-Johnson, City Clerk

Discussion of the City Employees Health Insurance

Mayor Capellini stated that the City Commission has expressed concerns in
regards to the high increase of 41% to the employees' health insurance. And
requested that the Administration and Staff advise the Commission what is being
done to reduce the increase to include the maximum out-of-pocket of $1,250 to
2,000. He further stated that the Commission would like to know what steps are
being taken to review other carriers who could provide coverage that is equal to
what employees are currently receiving.

Larry Deetjen, City Manager, distributed to the Commission a comparison survey
of other cities regarding group health insurance.

Mike Norcia, Risk Manager, stated that the Administration and staff reviewed the
City's shortfall and has taken the necessary action to reframe from going into
debt any further. With this in mind, the Risk Management and Human
Resources Departments met with the City's outside consultant to assist them in
redesigning the health insurance plan and increase the revenues entering into
FY2002 Budget.

Mayor Capellini referenced the comparison survey of other municipalities and
commented regarding the difference in pay for HMO and PPO coverage for
family and single coverage.

Mr. Norcia continued by outlining the comparison report and entertained
questions by the Commission.
Continuing, Mayor Capellini stated that the purpose of this meeting is to find out if
there are alternatives other than Blue Cross and Blue Shield and asked if other
insurance providers have been contacted, and if so, have proposals been
received from them?

Mr. Norcia stated that included in the Commission's backup material are letters
from several other insurance providers, which include Humana. He said that
each provider has advised that there is an underwriting process that is required
due to the size and amount of coverage for the City. Therefore, time would be
needed to collect the appropriate information and analysis prior to submitting a
proposal.

Mayor Capellini stated that prior to the significant increase and the change of
employees' health insurance benefits, the Administration and staff should have
obtained prices from various providers.

Mr. Norcia stated that it was difficult for staff to obtain the necessary census data
that was required; in addition, he was advised that everyone was satisfied with
Blue Cross and Blue Shield.

Mayor Capellini asked is it possible for the City to maintain the same health
insurance plan and benefits for a less expensive rate than what Blue Cross and
Blue Shield is offering?

Mr. Norcia replied that he is not certain at this time and would not be able to
answer this question until the underwriter data is received.

Mayor Capellini stated that this should have been done prior to frightening the
employees with the significant increase. He said that the City should not take
Blue Cross and Blue Shield word, but consider other providers so that Blue
Cross and Blue Shield will see that they have competition and thereby lower their
prices.

Commissioner Clarke-Reed stated that approximately two years ago the issue of
health insurance was discussed at which time she recommended that other
providers be considered, however, staff was not able to advise her why other
carriers were not considered. And now there are similar concerns, but yet other
carriers still have not been considered.

Mr. Norcia stated that at this time staff is recommending that other insurance
providers be considered.

Commissioner Clarke-Reed stated that the employees have until April 30, 2001,
to make a decision what insurance they will select, and if a decision is not made,
they will not have coverage. She said that many of the employees have family
members that are currently receiving treatment, and with the significant increase
that is being offered, they do not have a choice and are being placed in a position
that is not acceptable.

In addition, Commissioner Clarke-Reed recommended that the employees'
health insurance remain "as is" until information is received from other carriers.

Vice Mayor Noland stated that many of the employees have met their deductible
and with the proposed insurance they will have to pay a significant increase to
meet the new deductible amount.

Mr. Norcia stated that due to the concerns of the Commission, there is a
possibility that the deductible would not increase but remain at $150.

Commissioner Clarke-Reed asked how could that be done, when the employees
have been told that the deductible would increase by an additional $900?

Mr. Norcia replied that every component of the program would be reviewed to
determine where cost could be altered.

Mayor Capellini stated that staff should have contacted other providers' months
ago prior to placing the employees in this situation, of a 41% increase. He
continued by commenting on the survey, which compares other cities health
insurance rates with what the City of Deerfield Beach is paying, and said that this
is something that needs to be reviewed.

Mr. Norcia replied that the survey reflects the numbers for last year, however, the
City of Deerfield Beach numbers reflects the renewal numbers. He said the other
cities renewal process would take place on October 1, 2001.

Mayor Capellini stated that if the City's numbers reflect the renewal numbers,
then the same should have applied for the other cities.

Further, Mr. Norcia requested authorization to interview several insurance
carriers and request proposals from same.

Commissioner Clarke-Reed recommended that the employees' health insurance
remain "as is" until October 1, 2001. And have Staff review other insurance
providers and recommend during the budget workshop what insurance, plans
would be offered to the employees.

Mr. Deetjen stated that the Commission adopts the budget in September for the
upcoming year; and the insurance cost/ rates are forecasted to insure that the
revenue meets the expenditure cost for health insurance. He further stated that
the cost of health coverage is increasing. However, the administration and staff
is willing to make adjustments due to the concerns of the Commission,
nevertheless, the rates must reflect the cost.
Commissioner Trinchitella stated that if Blue Cross and Blue Shield is aware that
there is a possibility that the City will not renewal their contract due to the
significant increase in insurance cost, they will have their representatives meet
with the City administration and staff to accommodate the our needs.

Vice Mayor Noland stated that she previously asked questions, 1) how did it get
to this point? 2) How much contribution does the employee put in? 3) How much
did the City pay out? She further recommended that the recovery for the
shortage not be paid in one year, but over a period of years.

Mr. Norcia replied that the City collects approximately $500,000 annually by
contribution from the employees. And the City contributes one-third of said
amount. He said that $2.2 million was paid out.

The Commission recommended that Mr. Norcia submit the requested information
in writing at a later date.

Mr. Deetjen stated that the total cost for health care for the City's workforce is
experiencing $2.3 million. He said that the City is self-insured, therefore, it hires
a third party administrator, Blue Cross and Blue Shield, and they receive a fee of
$600,000. So, Administration and Staff agree that the other carriers should be
considered, however, the employees have indicated that they are satisfied with
Blue Cross and Blue Shield. The same doctors and hospitals would be used,
and the only change would be the administrations cost if the budget is not
adjusted. He said it is the Administration and Staff's goal to keep the health
insurance cost as low as possible, however the cost has increased across the
board.

Commissioner Gonot asked what is the deductible increase for an average
employee for PPO with family coverage?

Mr. Norcia replied $625; the deductible has increased from $300 to $900. He
further stated that risk management are considering rolling the deductible back to
$300 and have the out-of-pocket expenses remain the same.

Thereafter, Mr. Norcia continued to entertain questions by the Commission and
introduced Matt O'Connor, USI International, the City's insurance consultant.

After further discussion, Commissioner Clarke-Reed recommended that the April
30, 2001 deadline be dismissed until the Commission has received definitely
answers to their questions. She said the employees should not be asked to do
the impossible, which a 41% increase would be the impossible for some of them.

Mayor Capellini directed the Administration and Staff to obtain bids within the
next week. He said the Commission wants to see comparison prices with the
comparable service.

Mr. O'Connor stated that they were hired as the City's consultant.
Vice Mayor Noland asked who hired Mr. O'Connor and what was the cost? She
said the Commission was not aware that an insurance consultant was hired.

Mr. O'Connor replied that they have not been paid at this time, however, the Risk
Manager and the City Manager hired them.

Mr. Norcia replied that Mr. O'Connor's consultant fee would be approximately
$25-$ 30,000.

Vice Mayor Noland stated that Mr. O'Connor was hired without the approval of
the Commission.

Mayor Capellini stated that the City Commission must approve the hiring of any
consultant with a fee of $10,000 or more. He said that a fee of $20 $30,000
should not be broken up to be less than the $10,000. And expressed opposition
to the Administration approving such without the knowledge of the Commission
and requested that it not be done again.

In addition, Mayor Capellini recommended that this item be placed on the May 1,
2001 City Commission Agenda, and that risk management be prepared to
present the comparison of other insurance carriers.

MOTION was made by Vice Mayor Noland and Seconded by Commissioner
Trinchitella to close the Special City Commission meeting. Voice Vote: YEAS:
None. NAYS: Commissioner Clarke-Reed, Commissioner Gonot, Commissioner
Trinchitella, Vice Mayor Noland.

ADJOURNMENT
There being no further business, the meeting was adjourned at 6: 05 p. m.

__________________________________
ALBERT R. CAPELLINI, P. E., MAYOR

ATTEST:

______________________________________
ADA GRAHAM-JOHNSON, CMC, CITY CLERK