The Vanguard

Village Health Care Plan...A really good deal gone bad, reeeeeeeeeeeeally bad!

Posted by Jefferson Davis on Aug. 13, 2008

village health care plan

Brief Update on The Vanguard

A short note of thanks for your ideas, input and visits.  Our cumulative postings will have well over 9,000 hits by the end of this week on our way to 10,000 and beyond.  That seems like a really good number, but we don't have anything to compare it to.  The first five (5) weeks have been outstanding.  Thank you for reading our blog.

We appreciate your communications.  We promise to keep covering newsworthy items that for whatever reason the three local papers chose not to.

Village Health Care Plan 

A number of readers have asked why hasn't there been any coverage in the three local newspapers or discussion by the Village Board of the Village Health Care Plan over the last couple of years.  With health care plans being the subject of newspaper articles on an almost daily basis everywhere else, it seemed only fitting to look into the Village's Plan as the taxpayers are asked to foot the $3 million bill out of their pocket for the some 200 +/- Village Employees at a very minimal cost (approximately $150,000) to the employees on an annual basis.

Readers also asked for a truthful review of what really happened with the Plan several years ago by Village Administrators and the Village Board.  That seemed like a fair request in order to have their government be open, honest and transparent to the taxpayers who annually pay $30 million for the privilege of living, working or domiciling a business in Menomonee Falls.

This posting is not about the good people who work for the Village that for the most part do a really good job of providing services, but it is all about the public policy of  Village Administrators and the Village Board.

Health Care Statistics 

To properly understand and appreciate health care, it is important to find the areas that can be agreed on before any further insight is provided for the Village's Health Care Plan.

America, without a doubt and without question, has the best health care in the world and is the envy of everyone when it comes to providing care.  People from around the world flock to America for the best care from the best providers.  Yes, there will always be ways to improve and enhance health care.  But that is the American way and a challenge for us on a daily basis that we accept and welcome with open arms because we are Americans and we will meet, beat and exceed any challenge that is put before us (http://money.cnn.com/2008/08/26/pf/bottom_line.moneymag/index.htm?postversion=2008082618).  

The following health care statistics are commonly understood and accepted by all interested parties:

• Americans annually spend approximately 16% ($2.2 trillion) of our Gross Domestic Product (GDP) ($14 trillion) on health care costs. 
• 80%-90% of our annual health care costs are driven by only 10%-20% of our population (300 million +) on an annual basis.
• There are only 4 reasons to use the health care system: sickness, disease, accident/injury or poor lifestyle choices.
• Poor lifestyle choices make up for over 70% of the reasons why Americans use the health care system on an annual basis.
• The poor lifestyle choices are: too much smoking, too much drinking, too much illegal use of drugs, social diseases and eating the wrong kind of food.

The following parties are the players in the health care market and nothing will change unless these parties can collectively agree to make the necessary changes without fear of retribution or consequences from turf battles:

• Americans - we must work toward becoming healthier and to find ways to use the health care system less through incentive wellness education efforts implemented on an annual basis if not more often.
• Facilities - hospitals, nursing homes, clinics and hospices must be transparent with their billing, caring, services, staff, collection, records, information technology, etc. (http://www.jsonline.com/story/index.aspx?id=786629)
• Attorneys - lawsuits have to be limited and awards need to be capped.
• Legislators - mandated coverage has dramatically increased the cost of health care.  Fiscal notes (cost) need to be attached to all new coverage mandates.
• Providers - physicians need to constantly be aware of their care costs and to provide those services in the most affordable cost effective way. 
• Technology - advancements in health care are great, but they come at a huge cost and we must either be willing to pay for them or just say no.
• Pharmacy - drug companies and pharmacists need to constantly be aware of their products and services and to provide them in the most cost effective way.
• Fraud and abuse - Americans themselves have to stop trying to "cheat" the "system".  Better oversight and accountability are desperately needed.
• Insurance companies - they are only a conduit for the consumer (patient) to the provider (doctor).  They must always be looking for ways to keep costs down while working within the system that we have now.
• Competitiveness - in a free market capitalist society, consumers need to be given as many options and flexibility as possible.  Health care is no exception to this rule.  This will drive costs down dramatically if the chains of restriction and inflexibility are lifted.

This challenge can easily be met and taken care of in very simple ways if we only had leaders that would be willing to do so.  If we don't, socialized medicine is just around the corner with a payroll tax to all workers (similar to social security) and the quality of health care will dramatically be compromised similar to that of Canada's, England's, Germany's, France's, etc.  

25 Years of Having the Same Health Care Provider for Village Revealed

In late 2003, the Village Board in a closed session was asked to accept the recommendation of Village Staff members who handled the daily administration of the health care plan to renew the Village Employee Health Care Contract with Blue Cross Blue Shield for the some 200 +/- village employees and their some 400-500 extended family dependents for a total of some 600-700 covered members at a renewal cost of approximately $3 million.

Members of The Vanguard were intimately involved and familiar with the renewal process because they served on the Village Board at the time.  

The Village Board, in a closed session, was not provided by Staff with any spreadsheets, cost analysis, claims information, historical rates, claims/loss ratios, etc.  The Village Board was simply asked to accept Staff's recommendation of the 6.4% increase by Blue Cross Blue Shield.  This would later raise many more questions.

Several members of the Village Board were giddy about the increase and wanted to immediately sign off on the renewal without getting any competitive bids on the $3 million contract that made up about 10% of the entire Village Budget.  Others on the Village Board, newer members, put the brakes on and started to ask Staff a lot of questions that revealed some very interesting information.

The Village Manager at the time stated that Blue Cross Blue Shield had been the Village's insurance carrier for about 25 years without, to his knowledge, getting any competitive bids from other carriers.

Blue Cross Blue Shield is undoubtedly a very good insurance company, but things and circumstances do change over 25 years (1978-2003).  After all, Ronald Reagan defeated Jimmy Carter during this time period, cell phones became a prevalent communication tool, communism in Eastern Bloc countries fell, we had to put up with Bill Clinton for 8 years, e mails came along and our country was savagely attacked by thuggish terrorists to name a few of those circumstances.

Everything in business, government and in the home needs to be reviewed on a regular basis.  Certainly more often than every 25 years.

Members of the Village Board Approached by Insurance Representatives

A number of new Village Board members were approached in early 2003 by a number of different Insurance Representatives asking for the privilege to review the Village's Health Care Plan to see if there were alternatives to the Village's current plan at a more affordable cost to the taxpayers with equal to or greater insurance benefits for village employees.

The new Board members welcomed the idea, but were perplexed by what the Insurance Representatives said at the time when they informed the different new Board members that this was a refreshing approach to what they had experienced in the past by not having phone calls returned and doors closed in their face by Village Staff for many years over the Village's Health Care Plan.  These representatives stated that they couldn't even get a simple appointment.

One Insurance Representative, a long time resident of Menomonee Falls, told the new Board members that they were the inside wholesaler for Blue Cross Blue Shield before they went out on their own and was responsible for the Village's Plan.  They stated that Blue Cross Blue Shield "loved" the Village of Menomonee Falls because they never asked any questions or asked for comparisons or options over the years, they just paid the renewals each year.

The Board members immediately gave the Insurance Representative's information to Staff and asked them to pursue with these representatives what options might be available for the Village's Plan in time for renewal considerations later that year by the January 1, 2004 deadline.

When the Board, in closed session later in 2003, was asked by Staff to approve the 6.4% increase with Blue Cross Blue Shield without any supporting documents, several of the new Board members then asked if any of these Insurance Representatives had been contacted for comparison purposes and the Staff's answer was of course, "No." 

When asked by Board Members in closed session why not, Staff said, "We don't work with insurance salesman because they get paid a commission.  We work directly with the insurance company to save money.  We think this is a favorable renewal."  When asked if they had worked with any other insurance companies for a competitive bid on the Village's Plan for renewals, the answer of course was, "No."

The Board, in closed session, unanimously then asked Staff to contact these representatives to see what options would possibly be available for the Village's Health Care Plan before the January 1, 2004 deadline.  Staff asked if it was ok with the Board to work with a certain firm to get this done and no one objected to Staff's recommendation.

It was later found out through an Open Records Request, that this Closed Session Board Meeting Agenda in October of 2003 was not properly agendized by the Clerk's Office to discuss the health care renewal with Blue Cross Blue Shield and that the minutes of the meeting from the Clerk's Office did not reflect any details of the Staff and Board's discussion of the Village's Health Care Plan which is absolutely required by State Law and could be considered to be a punishable offense for not doing so.

Taxpayers Foot the Bill for the 1999-2003 $1.3 Million Health Care Plan Increase

Working for the first time in the Village's history with a professional benefit analyst at no cost to the taxpayers, some interesting information and suggestions became quite evident as to what should be done with the Village's Health Care Plan in late 2003.

The cost increase analysis of the professional benefit analyst immediately revealed what had been asked of the taxpayers for the previous five (5) years with the Village's Health Care Plan.

The following will illustrate those renewal increases with apparently no comparisons from the free market place or questions being asked by the Village Board or Staff of the insurance company:

• 1999 $1,138,116
• 2000 $1,200,711 an increase of  $62,595 or 5.5%
• 2001 $1,649,784 an increase of $449,073 or 37.4%
• 2002 $2,111,721 an increase of $461,937 or 28%
• 2003 $2,447,488 an increase of $335,767 or 15.9%

That was a total increase of $1,309,372 for the taxpayers or an average of 21.7% a year.

Approximately 10-12 insurance carriers were approached at the time to provide a competitive bid on the Village's Plan with only 2 submitting an actual bid while the rest of the carriers declined because of unions and retirees.

New Plan Implementation Delayed  

The Village's Benefit Analyst, who received their compensation from the chosen insurance carrier and not the taxpayers, worked feverishly to save the taxpayers money and to provide the Village Employees with an excellent health care plan in late 2003 in order to meet the renewal deadline of January 1, 2004.

Unfortunately, the benefit analyst was met with numerous and unnecessary delays from Staff having to involve a Village Board Member(s) for the simplest requirements of information to get the new plan implemented.

Upon learning through the benefit analyst that the Village's Health Care Plan might be moved to another carrier, Blue Cross Blue Shield immediately lowered their 6.4% renewal increase to 4% for 2004.

Even with Blue Cross Blue Shield lowering their increase to 4%, the Village Board voted unanimously several times in early 2004 to save the taxpayers $259,442 by accepting Staff's recommendation to award the Village's Health Care Plan to United Health Care.

Had the Village stayed with Blue Cross Blue Shield in 2004-2005, which several members of the Village Board wanted to do at the time because of unreported news coverage and pressure from the unions, the taxpayers would have had to pay an extra $590,498 in 2005.

That is a total savings of $849,940 to the taxpayers thanks to the benefit analyst going to the free market which had not been done in the previous 25 years and several new members of the Village Board pushing for this reform.

Other Interesting Behind the Scenes Trustee and Union Efforts Exposed to Block Implementation of New Plan

The benefit analyst provided the Village Board a thorough and in-depth comparison analysis of the Blue Cross Blue Shield/United Health Care Plans in anticipation of criticism and challenges from certain Village Board members and the unions at no cost to the taxpayers.  

Unfortunately, the Village Manager and certain members of the Village Board would not accept this analysis and then took thousands of dollars of the taxpayer's money to ask an "outside" consultant for a comparison which ended up being identical to the one that had already been provided at no cost saying the same exact thing.

After numerous information and orientation meetings with Staff and employee groups/individuals from January-March of 2004, the benefit analyst was ready to launch the new plan on April 1, 2004.

The day (March 31, 2004) before the new plan was to take effect, the unions all filed grievances with the Village because of the new health care plan.  These grievances were later either dropped, dismissed or lost.

Several law enforcement employees were particularly upset because their doctors were not in the new network which turned out to be a mute point because the benefit analyst had made provisions to take care of this concern.

Some of the Board members, in an effort to embarrass other members of the Board for supporting the change and being beholden to the unions, tried the "Three Blind Mice" approach by going to the newspapers saying that they didn't recall voting on any of these proposals or benefit analyst and that this information wasn't explained to them.

This was later proven to be totally false even though the newspapers didn't print that part of the story after it was disclosed that they actually had voted several times to approve the new plan(s).  This may have served the self interests of these three trustees, but it certainly didn't help the community when these same three trustees have had many years to do the right thing for the taxpayers only to be beholden to the unions in effort to "go along to get along" and get re-elected every two years to the Board.

The benefit analyst also discovered unnecessary coverage for a benefit that was rarely, if ever, used and costing the taxpayers some $20,000-$25,000 annually for oral surgery coverage.  The benefit analyst simply suggested to self insure this benefit at no cost to the employees for a couple of years to see what the claims were.

As is turned out, the benefit analyst was right.  The taxpayers saved a ton of money and those that had this procedure done, 1 in 2004 and maybe 2 in 2005, were completely taken care of providing the same excellent care.

Again, the "Three Blind Mice" went to the newspapers with alarm and dismay.  One Trustee was so concerned that he referred to it as "ortho" surgery of which there is no such procedure or surgery.  Of course the gang of three were proven to be wrong once again and of course the newspapers didn't follow up on any of this as well. 

Then of course there was the false accusation(s) of one of the gang of three's surrogates, who has since moved to Texas, that one Board member was benefiting from the new contract which they new to be totally false because of letters they had received from the benefit analyst's firm and the insurance company at the time and before the new plan was implemented.

Shame on the gang of three.  It again may have served their selfish self interests in the newspapers by trying to embarrass a targeted Board member that didn't tow the line and automatically agree with them on everything that they wanted, but it certainly didn't help our community.

Trustee Ellis during this whole debate even went as far as to suggest to a fellow Trustee at the time something to the effect that in her words, "I'm going to work as hard as I can with other members of the Board to destroy the Village President politically, personally and professionally so that when we're done with him, he will have no choice but to leave the Village."

This vendetta by Trustee Ellis was born out in a communication with yet another Trustee at the time when she told the Trustee that she was going to "seek legal action" against the Village President because of her missing so many Board meetings.

This vendetta was also born out in a newspaper article at the time with Trustee McDonald stating, "If he (Davis) thinks this is bad, he hasn't seen anything yet.  This is our first shot across the bow."  

The Village Board, under the leadership of former Village President Joe Greco, attempted to form a consortium with other communities to "eliminate" insurance companies in 2000-2003 because of out of control spiraling health care costs with no relief in sight.

This attempt cost the taxpayers thousands of dollars to "study" and there were many articles in the local newspapers extolling the virtues of such a wonderful and glorious idea that would provide excellent health care, eliminate the insurance companies and save hundreds of thousands of dollars. 

Many meetings were held by the leaders of local communities and many public promises were made as this was promoted as the "trend" for the future.

The only problem is, this idea totally flopped and the taxpayers were once again left holding the bag with empty promises and ideas.  The consortium's failure was never covered after so many glowing articles were previously written by the local newspapers.  It just quietly went away without any follow up.

If Menomonee Falls had participated in this grand scheme, the insurance premiums would have gone up 62% the first year.  Don't think so.  This is something that should definitely be left to the professionals.     

Benefit Analyst Provides Quality Care for Employees at Substantially Reduced Costs for Taxpayers

The track record of the benefit analyst for 2004-2007 through free market options and minor tweakings (office visit co-pays, prescription costs, urgent care and emergency room) of the plan for employees resulted in average annual 2.9% increases for 4 years in a row.  A far cry better than the 21.7% increases the previous 4 years.

The taxpayers, through the incredible efforts of the benefit analyst, are currently paying about the same amount for the Village's Health Care Plan that they did in 2004 while everyone else is complaining about double digit percentage increases over the last 4 years for health care premiums. 

The benefit analyst also implemented the following reform ideas for the plan to incorporate the concerns and ideas of administrators, employee groups, unions and Village Board:

• Provided claims/loss ratios that hadn't been done before.
• Provided demographic information about the Plan that hadn't been done before.
• Looked at prescription options instead of just paying for them.
• Implement a Wellness Program with economic incentives.
• Work toward 3 year union contracts instead of 2 year contracts for favorable financial and cultural outcomes.
• Explore HSA Accounts for great coverage at a much lower cost.
• Restructure Sick Leave Policy with short term disability plan.
• Strengthen Insurance Committee for costs, updates, claims, renewals, etc.
• Have an employee newsletter for overall better communication.
• More cost sharing ideas with employees to keep increases down.    
• Look for options for village retirees on the plan.

The benefit analyst also found out that only 2 companies would bid on the Village's Health Care Plan in the future because of unions and retirees.  Blue Cross Blue Shield, the Village's carrier for 25 years, no longer bids on the contract when some Board members in 2003-04 strongly wanted to stay with them no matter what.  Imagine where the Village would be today without a carrier for the employee health care plan.

Village Employees pay about $250-$300 a year for a single $6,000 plan and about $750-$800 a year for a $15,600 family plan on a tax deductible basis or about 5% of the total $3 million annual premium.  The taxpayers pick up the rest of the bill.  We would like to provide as accurate information as we can, but our request for this information has been with the Village Manager for quite some time now. 

According to the Village Manager in 2003, 61% of Village Employees reside outside Menomonee Falls and 39% live in Menomonee Falls.

Trustee Ellis Leads the Way to Fire the Benefit Analyst in 2006 for "Pure Political Reasons"

The 3 year Village contract, that the Village Board unanimously voted to approve in 2003-04, for the benefit analyst came up for renewal in 2006.

Normally under any circumstance involving a situation of this matter and magnitude, the Village Staff reviews the options and makes recommendations to the Village Board for approval.  This is a $3 million annual decision for the some 200 +/- Village Employees implemented by Staff on a daily basis with the assistance of the benefit analyst.

The Vanguard has learned that this decision was taken out of the hands of those administrators at the Village by Trustee Ellis and that she led the way to fire the benefit analyst with her "evaluation" system that she required the other Board members to participate in because of in the words of the Village Manager to the benefit analyst when he was fired, "...were for pure political reasons."

The Vanguard also learned that Trustee Ellis lead the way to ignore the recommendations of Village Staff to keep the existing benefit analyst and to fire him in favor of someone else.

Trustee Ellis' evaluation system discloses some very interesting information.

Against the recommendation of Village Staff to keep the existing benefit analyst, Trustee Ellis led the way to make sure her evaluation system apparently favored a different benefit analyst according to the Trustee forms reviewed through an Open Records Request.

The Trustees were asked to evaluate the three benefit analysts in 11 areas on a scale of 1-5 with 5 being the highest and 1 being the lowest.

Remember, the Village had 3 years of experience with the current benefit analyst and no experience with the other 2.  Also remember, the current benefit analyst had kept increases to 2.9% a year for 4 years in a row (2004-2007) compared to 21.7% increases the previous 4 years (2000-2003) saving the taxpayers hundreds of thousands of dollars for great benefits to the employees. 

The Trustee rankings of the three analysts from 2006 are as follows:

                                Ellis        Farrell          Steliga         McDonald     Rechlicz          Jeskewitz

Analyst A                  4.5              4                  5                     5                     5                     5

                                4.75            5                   5                     5                     4                     5  

                                5                3                    5                    5                     5                     5 

                                4                5                    5                    5                     5                     5

                                5                4                    5                    5                     5                     5

                                5                5                    5                    5                     5                     5

                                5                3                    5                    5                     5                     5 

                                4.5             5                    5                    5                     5                     5

                                5                4                    5                    5                     5                     5

                                4.5             3                    5                    5                     5                     5  

                                4.5             3                    5                    5                     4.5                  5

Analyst B                 4                3                    4                    4                    3.5                   5  

                                5               4                    4                    4                     5                     5 

                                4.75          5                    4                    5                     5                     5  

                                4.5            4                    4                    5                     5                     5  

                                4.75          3                    4                    4                     5                     5

                                4              4                     4                   4                     4                     5     

                                4.5           4                     4                   5                     3.5                   5

                                3              4                     4                   4                     3.5                   5 

                                3              5                     4                   3                     3.5                   4.5

                                4              4                     4                   5                     5                      5  

                                4.5           4                     4                   4                     5                      5   

Current Analyst         4             5                     1                   1                    4                      5  

                                 4             5                     1                   1                    2                      4

                                 4             5                     1                   1                    4                      4

                                 4             5                     1                   1                    3                      5  

                                 4             4                     1                   1                    4                      4

                                 4             5                     1                   3                    5                      5 

                                 4             5                     1                   3                    3                      5      

                                 4             5                     1                   3                    5                      5

                                 4             5                     1                   2                    4                      4.5

                                 4             4                     1                   2                    3                      5 

                                 4             5                     1                   1                    3                      5

Trustee Newman did not evaluate any of the analysts.

Judging from the Trustee evaluations, it doesn't take a genius to figure out that the "fix" was in for the current benefit analyst.  All of the analysts agreed to accept the same compensation schedule from the insurance company.  It appears that the only objective evaluator was Trustee Farrell.  

How could anyone in good conscious give evaluations of 1's and 2's even 3's to a firm that accomplished what the analyst had like those of Trustees McDonald and  Steliga along with Village President Rechlicz?

Trustees McDonald and Steliga bragged to members of the Citizen's Budget Advisory Committee (CBAC) in the fall of 2006 that they had "gotten rid" of the current benefit analyst in closed session when no vote had been taken by the Board yet, because he was brought in under the Davis Administration.  A citizen member of the CBAC contacted The Vanguard with this revelation.

Because of what appears to be inappropriate, prejudiced and unethical behavior by Trustees McDonald and Steliga, the Village Attorney advised them to not vote on the benefit analyst contract later that year even though he didn't feel they had done anything wrong.

Obviously the weighted score for the analysts was so skewed because of Trustees McDonald and Steliga's political vendetta that the current analyst didn't have a chance.

Because of Trustees McDonald and Steliga's obvious "political punishment" to the current benefit analyst, the weighted score put him in last place out of 3 firms.

There has been very little if any coverage of the Village's Health Care Plan for nearly two years when the 3 local newspapers have known all about this for a long time. 

The taxpayers have a right to know what is going on especially since they pay for about 95% of the apparent annual $3 million premium. 

Village Manager Asked for 2007-08 Health Care Numbers   

Members of The Vanguard started meeting with the Village Manager a year ago for updates on the Village's Health Care Plan regarding annual premiums, employee cost share amounts and rate increases paid for by the taxpayers.

Getting that information has proven to be a very difficult experience over the last year.  When it is obtained, it will be published.

Because we have no idea what the costs are for 2008 or 2009, it would be nice to have them sooner rather than later to see if the Village Board has reverted back to the old way of doing things like they did from 1978-2003 with former Village Presidents Greco and Steliga.

Tell us what you think

By using the comment section below to answer questions, you can have a voice as to what you would like to see done with this matter.

Question 1

Should the Village Government be more transparent with the Village's Health Care Plan by releasing the numbers and costs of the Plan?

_____yes

_____no

Question 2

Should Village Employees pay more for their health care plan benefits?

_____yes, at least 10% of the annual premium if not more.

_____no, 5% of the annual premium is plenty for employees to pay.

Question 3

Should the Village Board implement the reform ideas proposed by the former benefit analyst to bring costs down for the taxpayers while maintaining excellent benefits for the employees?

_____yes

_____no

Next week..."Is the doctor in?  I think I'm sick."  An in-depth look at the sick leave policy of the Village.

Will retiring State Representative Sue Jeskewitz waive her free medical coverage in retirement like Menomonee Falls Senators Darling and Kanavas are along with State Representative Pridemore?