01-0880R

RESOLUTION AUTHORIZING EXECUTION OF AGREEMENTS WITH BLUE CROSS AND BLUE SHIELD OF MINNESOTA TO PROVIDE ADMINISTRATIVE SERVICES AND STOP LOSS INSURANCE TO THE CITY GROUP HEALTH PLAN DURING YEAR 2002, AT AN ESTIMATED COST TO THE CITY OF $1,234,000.

BY PRESIDENT EDWARDS:

        RESOLVED, that the city is hereby authorized to execute agreements with Blue Cross and Blue Shield of Minnesota under which that company will provide administrative services and stop loss insurance to the city group health plan during calendar year 2002 for an administrative fee of $29.37 per single employee or per family per month and a fee for stop loss coverage of $14.85 per single employee per month and $39.68 per family per month, for a total estimated cost of $1,234,000, which shall be paid from the group health fund.



STATEMENT OF PURPOSE:  This resolution authorizes the city of Duluth to execute agreements with Blue Cross and Blue Shield of Minnesota to provide administrative services and stop loss insurance to the city's group health insurance plans for 2002. Blue Cross and Blue Shield provided administrative services and stop loss insurance to the city's group health plans in 2000 and 2001.

The cost of administrative services will be $29.37 per month for single employees and for families, for a total estimated cost for administrative services of $744,000. The cost of providing stop loss coverage will be $14.85 per month for single employees and $39.68 per month for families, for a total estimated cost for stop loss coverage of $490,000.

The cost of the administrative services and stop loss insurance will increase for 2002 by $148,062.98. This cost of administering the group health insurance plans represents an estimated 11% of the total cost of the group health insurance plans, with claims estimated at 89% of the total cost. Because Blue Cross and Blue Shield has negotiated agreements with medical providers which reduce the cost of claims by an estimated 25.35%, there is an overall savings to the city.

The city's insurance consultant will be available at the agenda session to answer questions.