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City deal clips push for broader pact

Formation of a health insurance consortium among the city of Rochester, the Rochester City School District and Monroe County is off the table for at least three years after the city this week inked an exclusive deal with MVP Health Care. 

Under a contract signed this week between the city and MVP, the city’s 2,965 employees are to be insured by MVP. Currently city workers are in community-rated plans provided by MVP and Excellus Blue Cross Blue Shield, with a majority enrolled in Excellus’ plan. The exclusive experience-rated contract with MVP would save $30 million over three years, city and labor union officials said. The $10 million in annual savings is to be split 50-50 between the city and police, fire and civil service unions. The unions’ share is to go to pay members’ premiums. 

Funded by an $84,000 state grant, the city, county and school district had been looking into formation of a three-way health-insurance consortium since the first quarter of 2008. The partnership could have reaped an estimated $140 million in savings for the local governments and the school district, officials said last year.  

Formation of such a consortium is not out of the question, Rochester Mayor Robert Duffy said this week. But since the school district and county already have longstanding exclusive deals with Excellus, a three-party consortium cannot be formed while the city/MVP health insurance contract is in effect. Excellus and MVP vied for the city contract, he said. 

"They are both excellent companies that put in good proposals," Duffy said. "In the end, the unions preferred MVP." 

It took union and city officials a year of tough negotiations to hammer out a deal that would be acceptable to all, the mayor said. Brown and Brown of New York Inc., which also consulted on the consortium, advised the city in the MVP deal. Rates were the main factor in choosing between Excellus and MVP, Duffy said. 

The deal with MVP comes five years after the school district and county made similar deals with Excellus, shaving millions in costs off their health care bills annually. In 2008, costs to provide health benefits stood at $40 million for the approximately 5,000-worker county and $50 million for the 5,300-employee school district. The city at the time was spending $48 million a year to insure 2,800 workers.  

The city had looked into penning a cheaper, single-provider contract as far back as 2004, Duffy said, but, for reasons unclear to him, did not manage to strike a deal until this year. 

The MVP contract takes effect for union workers Sept. 1 and for non-union city employees Jan. 1. Under current plans, city workers pay some 15 percent of premiums. Under the MVP contract, union employees would not have to pay monthly premiums but would be responsible for co-pays.

Whether the city’s 200 to 300 non-union workers, which include the mayor and his top aides, administrators and professionals, would continue to bear some premium expense has yet to be decided, Duffy said. 

rbj@rbj.net / 585-546-8303

08/21/09 (C) Rochester Business Journal. To obtain permission to reprint this article call, 585-546-8303.

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