Lincoln City Council
Part two:  Lincoln aldermen confused and irritated by actions of its insurance committee

 

[September 17, 2020] 

On Tuesday evening, aldermen of the Lincoln City Council debated in chambers pertaining to the selection of a broker for the city’s health insurance plans.

Last year at the request of the unions the city of Lincoln implemented an insurance advisory committee. That committee was to do the preliminary work of selecting insurance health plans for the new year and make recommendations to the council.

This week, the committee made an unexpected turn from that goal and brought before the council a request to hear from one potential new representative as well as the current representative.

Nathan Whiteman made a pitch on behalf of American Central Insurance. Nancy Schaub and Sara Schwantz were on hand representing the current broker agency, R.W. Garrett.

The presentations by the agency representatives were made early in the evening. Later in the evening, the council discussed the choices and recommendations of the advisory committee.

Mayor Tracy Welch told the council that they had two choices. First they could put both agencies on the voting agenda and pick one next week. Or they place one agency on the voting agenda for ratification.

City Administrator Beth Kavelman pointed out that regardless of which broker was chosen, the insurance rates would be the same, one broker could not offer cheaper prices over the other on identical plans.

Alderman Kevin Bateman talked about a letter that had been sent to aldermen by the local Fraternal Order of Police. He said he found the letter troublesome because it made a point of talking about where Whiteman lived and the fact that he paid property taxes, but made no mention of the same for the Garrett Agency.

Bateman said just to even the playing field, he had done his research and five of the 10 employees of R.W. Garrett live in Lincoln impacting local taxes.

In addition, he said that the Garrett Agency has an office building in Lincoln, they own the building and they pay property taxes for that building.

He said it was interesting to him that this would come up from the FOP because 48 percent of the Lincoln Police Department employees do not live in Lincoln.

Bateman said that he had also learned that during the committee meeting, there had been three votes taken in an attempt to get a solid recommendation for Whiteman. He said the first vote was a tie, the second vote was a tie, and in the third vote, the Whiteman supporters finally got one person to change their vote.

Bateman said that because his wife is the city clerk and works with the chosen broker, he will abstain from voting next week, but he was certainly going to offer his opinion now.

He said that the city has been pleased with Garrett and “if it’s not broke, don’t fix it.”

Steve Parrott asked how this whole situation had come about. Who had decided to go out and look for a new broker? Welch said it had been discussed in the prior year, but that “certain members” of the committee had reached out to Whiteman and asked him to get involved.

Parrott then asked for confirmation, that it was certain members who did this and not the full committee. Peggy Bateman said that was correct.

Parrott then said that he had overall issues with this committee. He said that there were problems last year, and now here was a new problem.

Treasurer Chuck Conzo said that Kevin Bateman had brought up good points about the property taxes. He also wanted to clarify there had been no third vote. He said instead, after the second vote, one member had been asked to change their vote.

Conzo also noted that the insurance premiums last year had been a big blow to the city and that R. W. Garrett and Schaub had worked hard to get the overall increase down to something the city could handle.

Bateman said he would like to know who made the decision to talk about brokers. That was not the role of the committee, they are supposed to choose and recommend insurance, not brokers. He added that he agreed with Parrott that once again this committee was a problem and that “the train has left the tracks.”

Welch summarized what had happened saying that some of the committee members were not happy with the “pace” in which things were moving. Those members met themselves and decided to search for a new broker.

Parrott asked when the 2021 rates would come out. Welch said that the city can get an estimate, but that the actual rate is determined by the city’s claims for the year. When those claims are closed, then the company will be able to give the city an accurate quote for 2021.

Nancy Schaub said that the 2020 claim history has been closed and that Health Alliance, the current provider, is working on establishing the new rate right now. The claim experience will be shared and other companies who will bid will have to file a “new business rate” report with the state before it can give an actual quote. She said all of that should be done by mid-October.

Parrott said he just wasn’t seeing the problem, so he wanted to know why the committee had taken this step.

Welch said he understood that part of the goal was to save the city money on commissions paid to the broker agencies. However, it was learned that the city does not pay those commissions. In the majority of cases, commissions are paid to the brokers by the insurance providers.

Parrott repeated the question, so why did they do this and more specifically who did it.

Welch said that the union members were the ones who had done this. He added that it could have been handled better, but he thought the intentions were good. He said that the conversation should have been brought to the council first, and the council should have been the ones to decide whether or not to seek out a new broker, not the committee.

Whiteman spoke to the council and asked them to consider at what point in time do they actually get those new rates? Are the rates quoted to the city ahead of time, or when it is time to vote? He said that the employees and the city should be getting this information before voting time in December.

He added that the employees don’t feel that they are given information ahead of time.

He said that the benefit to the city when it comes to cost is in the creativity of the broker and the recommendations he or she makes for insurance coverage. He said it wasn’t fair to say that all were the same because a broker can design a package that fits the needs of the employees and the budget of the city, and thus one can be less expensive than the other depending on how the broker works the plans.

Roger and Joshua Garrett was also in the room with Schaub and Schwantz. Roger spoke up saying his agency had always worked hard to represent the city well, and last year had been a big challenge that Schaub had taken on with Schwantz and that the two had “worked hard for you.”

He added that what the city bought was what the union had chosen, and that without those criteria in play, the agency might have been able to make different choices for the city.

Bateman said he felt like there was another mistake being made in placing blame. He said that the mess last year had been the fault of the city, not the fault of Garrett.

In 2020, the city chose insurance plans based on the recommendations of the committee. They voted on the plans and thought all was well. However, after the vote, it was brought to their attention that the three unions had different requirements for insurance coverage, and that the new policies did not comply with the requirements of all three.

Schaub had to go back to the drawing board and redesign the plan. The unions had been asked to make some concessions and had done so, and the in the end it worked out, but none of it was easy, and the approval of an official insurance program for 2020 wasn’t achieved until after the first of the year.

Bateman said that the city was at fault for not negotiating the insurance the same with all three unions and the committee was at fault for not recognizing this challenge when they were working with the broker the first time around.

Kavelman said the unions had also been somewhat neglectful. All three unions had signed off on the first proposals with their “T.A.” or tentatively agree. Then after the fact they had come back and said no, they couldn’t go along with the plans.

Also speaking to Parrott’s concern about the very existence of this committee, Kavelman said that the advisory committee was a stipulation of the unions, so the city had to utilize the committee in order to comply with the union contracts.

Kavelman went on to say that Welch had been absent at the last meeting, but had given his proxy vote. He had also been absent at the first meeting. It was at the first meeting that the committee had questions why it was not the ‘be all, say all” for the city with aldermen fully supporting their recommendations and just “sliding it in” the vote.

Parrott came back to who did what and said that the committee itself did not cause this issue; it was actually the union acting on its own outside the committee. Parrott concluded, “This doesn’t pass the smell test for me.”

Welch said he wanted to clear up the statement by Kavelman. Yes, he had missed the last meeting due to a conflict and had given his proxy vote. But, the first meeting he was not invited to attend. He said that he found out about the meeting one hour before it took place and he couldn’t possibly get there in time for the meeting.

Welch said that he feels both Whiteman and the R.W. Garrett Agency are good people who would do a good job. He said that he found value in the letter from the FOP because it gave his a vision of what the union wanted in their broker and laid out criteria.

Welch said the unions are aware that they must all be on the same page at the next negotiation when it comes to insurance, and that will happen.

Bateman repeated that he felt the problem was that Garrett was being blamed for something that was the city’s fault. He said that the committee was not a committee it was a posse.

Welch noted that his wife is on the county board and works with Whiteman. She has nothing but good things to say about him, so in his opinion either choice, Whiteman or Garrett would be good and would work for the city.

With the bulk of the discussion concluded, aldermen then had to decide what they would be voting on September 21st. There was a suggestion to hold the vote and continue the discussions at the September 29th Committee of the Whole. Peggy Bateman said that delaying the vote for a broker would also delay the arrival of insurance premium quotes and the city could find itself in a last minute mess again this year if they did so.

The aldermen then thought about putting both brokers on the agenda for vote, but Welch voiced concerns about the unlikely, yet possible case, where aldermen approved both brokers. Bateman also talked about the council being down on numbers right now and the greater likelihood that the votes could end in ties.

With Bateman abstaining and one seat vacant for ward two, plus the acting mayor voting as an alderman, there are an even number of votes – six, possible next week. The vote could easily go three and three. Bateman also noted that the council is ready to seat a new ward two alderman, but whether or not that new alderman would vote on this issue is unknown.

Ron Keller finally spoke up and said that the city should choose to vote on retaining R.W. Garrett and nothing else. If that vote passes then the issue is closed. If it fails, then the city will need to consider another vote in October to contract with a new broker and agency.

The next voting session will be Monday, September 21st and it is expected that the approval of R.W. Garrett Agency as the health insurance broker for the city will be on the agenda. As is always the case, the council has the right to table any vote if they feel they are not prepared to make an informed decision.

[Nila Smith]