Harlingen saving $1M in health insurance costs with new plan

HARLINGEN — Despite soaring health insurance costs, the city's saving about $1 million on its new premium covering more than 650 City Hall employees.

After five years, officials returned to Blue Cross Blue Shield of Texas, offering an $8.1 million premium, while dropping United Healthcare, whose current plan carries a total cost of $8.8 million.

"I think it's great we're saving money this year instead of going the opposite direction," Mayor Norma Sepulveda said during a meeting June 18.

Under the plan, the company's offering a $350,000 "one-time transition credit," Scott Gibbs, the city's consultant with Dallas-based McGriff Insurance Services, said.

"It's how the market dictates it," he told commissioners during the meeting. "Down here, obviously Blue Cross feels very comfortable in their discount strategies and their hospital contracts and they actually put their money where their mouth is."

The new plan offers employees a health maintenance organization, or HMO, giving them their choice of primary care doctors, Gibbs said.

"You can go to any doctor you want to go to," he said. "You don't have to have a referral."

As part of the premium, the city will recommend the HMO plan while employees can choose higher-cost plans, for which they would pay the difference, City Manager Gabriel Gonzalez said.

Under the new plan, employees will pay $626 for individual coverage and $2,179 for family coverage.

Meanwhile, employee deductibles will start at $1,250, with family deductibles starting at $3,500.

While the plan offers $25 co-pays for doctor's office visits, it sets prescription drug co-pays at $10.

Out of five companies presenting proposals for the city's contract, Gibbs recommended Blue Cross Blue Shield over United Healthcare, describing their rates as the most "competitive."

While Blue Cross offered a rate that was 1% lower than the city's current rate, United Healthcare proposed a rate coming in 7% higher.

For years, officials have discussed developing partially self-funded insurance plans, aiming to cut the cost of fully insured plans.

But this year, Blue Cross' self-funded plan would have cost the city a total of $9.1 million while the company's fully insured plan would have come out to $8.9 million.

For the last five years, city employees' insurance claims have helped keep costs lower.

While most insurance carriers favor claim-loss ratios ranging from 90% to 92%, the city's ratio stands at 84.7% for its group of 852 participants, Gibbs said.

"Our plan has definitely continued to perform pretty well," he said. "We continued to be pretty consistent with about an 85% loss ratio. I think that these claims kind of helped us in the open marketplace."

For decades, the city's often turned to McGriff to handle its employee health insurance plans.

Last year, commissioners returned to McGriff after working with McAllen-based Valley Risk Consulting, which last offered a United Healthcare package whose premium climbed 4.9%, jumping costs by $389,519 over the previous year.

In 2022, commissioners turned to Valley Risk after dropping McGriff, which had handled the city's employee health insurance plans for at least 10 years.

Since at least 2013, the city had been contracting with McGriff, which in 2021 recommended commissioners select United Healthcare as the city's insurance carrier, dropping Blue Cross Blue Shield after five years.

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