Modesto health insurance fix could take huge bite from workers’ wallets

Feb. 04--Forty-one-year-old Russell Gudino has been a Modesto sewer worker for a half dozen years. He makes about $60,000 a year before overtime, and said the city has been very good to him.

But he said he doesn't know how his family will afford the jump in his health insurance premiums under a proposal Modesto is considering to get itself out of a mess with a current insurance provider, which includes medical claims not being paid.

Gudino said what he pays annually in premiums could increase from about $1,250 to nearly $9,500 for the same coverage. He said a less expensive plan would cost about $6,600 annually.

"We don't live like crazy out of our means," said Gudino, who has two children at home and a wife who attends school. "We live in a cheap, old neighborhood. We are not extravagant. But when I pay all my bills, I don't have a lot of money left. I don't know how I'm going to afford it."

Gudino is among hundreds of city employees who will be affected when the city moves to a new health insurance provider.

The City Council on Tuesday is expected to replace insurance broker Peter C. Foy & Associates with a new broker, Alliant Insurance Services, as well as Fortress Health Insurance with CSAC Excess Insurance Authority, a joint powers authority that provides insurance to local governments in California.

City officials say Modesto has been scrambling to find new insurance after Fortress notified them recently that unless the city agreed to an 87 percent increase in premiums it would cancel coverage March 1.

The authority would provide Modesto with health insurance through two Anthem plans, but the premiums would be 49 percent higher in total than what the city and its employees have been paying Fortress.

The council meets at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St. This matter is the last item on the agenda.

The City Council could soften the blow to employees by picking up the difference between the low premiums they now pay Fortress and the higher Anthem premiums through June 24. Employees would then pay the full increases.

Gudino said he now pays $48.02 every two weeks when he gets paid. He said the Anthem premium for the same coverage is $364.68 every two weeks. Employees also have the option of switching to Kaiser, but those premiums are higher, though the council could pick up the difference through June 24.

Modesto offers employees health insurance through Kaiser and Fortress. City spokesman Thomas Reeves has said about 700 of the city's roughly 1,200 employees have Fortress. Employees also can opt out of city health insurance.

Gudino said he understands he and his family have a good deal, but said the city's contract with Fortress was for three years and supposed to end in December 2019. He said Modesto should do more for its employees. "This is a major thing," he said. "I'm not hating on them, but I think they should help us out through the end of the year."

Reeves said Monday he understands how distressing this has been for employees. (He also faces a big increase in premiums.) "It's incredibly disheartening that we (the city and its employees) are in this situation."

But he said the new premiums are much more reflective of what is happening in the insurance marketplace. Reeves has said Fortress has offered Modesto health insurance since 2017. Riverstone Capital Insurance Services sent Modesto a Jan. 11 letter recommending premiums increase by 87 percent as of March 1 in part to cover the payment of claims.

Reeves has said Riverstone owns Fortress, but Riverstone Chief Operating Officer Travis Bulgi said Monday that is not true. He said Riverstone is one of Modesto's insurance consultants and directed questions about Fortress to Peter C. Foy & Associates, Modesto's insurance broker. An official with the broker did not respond to requests for comment.

Bulgi said Modesto has not set aside enough money to cover its health care claims and other costs. He said his company has tried to raise that issue with the city. "The problem was a lack of communication," he said. He said Modesto also is using higher-cost health-care providers and it could move to lower-cost providers without compromising care.

Reeves said he could not speak in detail to Bulgi's assertions but said Modesto has paid the premiums it agreed to pay starting in 2017 and has honored it part of the agreement.

Modesto switched to Foy & Associates in 2017 because it was facing steep premium increases through one of its health insurance providers. A city report from then said the new plan through Foy & Associates would offer a 25 percent reduction in premiums.

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