Modesto has big, costly health care problem

Jan. 31--The city of Modesto has a big health insurance problem.

One of the city's carriers -- which provides coverage for 713 of the approximately 1,200 employees -- informed Modesto a couple of weeks ago that unless the city agrees to an 87 percent increase in premiums, it would cancel coverage March 1, according a city spokesman.

Fortress Health Insurance also "has been slow or unable to meet the financial demands related to medical claims," according to a Tuesday memo from Human Resources Director Norma Santoyo. "The city is now working directly with those practitioners to ensure payment on your claims."

City spokesman Thomas Reeves said Thursday that Modesto is determining how many claims have not been paid and the amount. He added that he heard of employees receiving collection notices over unpaid claims.

Modesto plans to switch to another health insurance provider, but that also will be expensive.

Reeves said Modesto and the employees covered by Fortress pay the company $6.8 million annually in premiums. He said the new insurers the city is considering will charge premiums that are roughly 50 percent higher than that. But Reeves stressed that is the overall increase and premium increases would vary among individual employees.

He said the city has been upfront with employees about the increased costs but added the City Council could make adjustments in how those higher premiums are apportioned.

"(P)remiums are anticipated to increase significantly," City Manager Joe Lopez wrote in a Wednesday memo, "and we are doing all that we can to ensure fair rates going forward."

Reeves refused Thursday to provide a copy of the letter that Fortress sent to the city a couple of weeks ago until a copy had been provided to the City Council. Officials with Fortress' parent company -- Bakersfield-based Riverstone Capital Insurance Services -- declined to comment or did not respond by deadline.

The council met in closed session 3 p.m. Thursday to discuss this matter. The agenda states the council would confer with its labor negotiator regarding all of its labor groups and will discuss two cases of anticipated litigation, one that the city could initiate and another that could be brought against the city.

Reeves said city officials are working to ensure there are no lapses in coverage for employees in the switch to a new insurance carrier and on how the city can support employees with unpaid claims. He said the Fortress letter came not long after employees had enrolled for health care coverage for 2019.

"The city, along with the heads of all the labor groups, are (sic.) are now urgently working on creating a set of options for medical coverage for those who are using Fortress," according to Santoyo's memo. "... I want to make clear that our city employees will not suffer a loss of coverage due to this situation."

Modesto also has health insurance through Kaiser. Fortress offers coverage through two preferred provider organization plans. Reeves said Fortress has provided Modesto employees with health insurance since January 2017. He said the company did not provide a reason in its letter for the premium increase.

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