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10/22/1997 - City Council Human Resources CommitteeAGENDA CITY COUNCIL PERSONNEL COMMITTEE MEETING CITY OF EAGAN Wednesday October 22, 1997 8:00 a.m. Eagan Municipal Center I. ROLL CALL II. AFFIRMATIVE ACTION UPDATE III. COMPARABLE WORTH UPDATE IV. HEALTH INSURANCE UPDATE V. PERFORMANCE APPRAISAUCITY ADMINISTRATOR VI. OTHER BUSINESS VII. ADJOURNMENT CLIA i MEMO city of eagan TO: MEMBERS OF THE PERSONNEL COMMITTEE FROM: CITY ADMINISTRATOR HEDGES DATE: OCTOBER 17,1997 SUBJECT: PERSONNEL ITEMS FOR OCTOBER 22,1997 COMMITTEE MEETING The following are the personnel items which will be discussed at the Personnel Committee meeting on October 22, 1997: Item 1. Affirmative Action Update — City Councilmember Awada has requested the review of current national developments regarding affirmative action and how these developments would or should affect the City of Eagan's current Affirmative Action Plan. Enclosed on pages Z through 3 is a copy of a memo from Assistant to the City Administrator Duffy summarizing recent developments nationally regarding affirmative action and also summarizing the development and provisions of the City's current plan. Item 2. Comparable Worth Update -- City Councilmember Awada has requested an update on the City's comparable worth system. Enclosed on page __Y._ is a memo from Assistant to the City Administrator Duffy briefly summarizing the development of the system and the State's legal requirements as they relate to'comparable worth reports. Item 3. Health Insurance Update — City Councilmember Wachter has requested a review and update on health insurance costs. Enclosed on pages .S through _0 _ is a copy of a memo from Assistant to the City Administrator Duffy regarding the health insurance plans that the City of Eagan offers its employees, a summary of rates for those plans, a summary of city contributions toward health insurance premiums, and information regarding health insurance premiums in general. Item 4. Performance Appraisal/City Administrator — A formal performance appraisal of the City Administrator was last done in late 1992. City Councilmember Masin has requested that the Council consider another performance appraisal at this time. Topics for discussion at the Personnel Committee meeting include the purpose, philosophy and method for the performance evaluation of a City Administrator. Item 5. Other Business — If there is time and if there are any other personnel items the committee wishes to discuss, it would be appropriate to bring them up during this meeting. S/Thomas L. Hedes City Administrator 1,31 510T W city of eagan TO: CITY ADMINISTRATOR HEDGES FROM: ASSISTANT TO THE CITY ADMINISTRATOR DUFFY DATE: SEPTEMBER 15, 1997 SUBJECT: AFFIRMATIVE ACTION Affirmative Action National1v Over the past year, significant attention has been given to affirmative action in the State of California, by the President, in Congress and in the court systems: Proposition 209 was passed by voters in California on November 5, 1996. It prohibits the state from granting preferences in public hiring, contracting, or education. It would have ended state sponsored affirmative action in California but was not immediately enforced because on November 6, 1996, civil rights groups brought suit to enjoin enforcement of the measure arguing that Proposition 209 denies minorities and women equal protection of the laws. The United States District Court issued a preliminary injunction based on a belief that the civil rights groups would win on the merits. However a three judge panel reversed the District Court. This month, the full Court of Appeals for the Ninth Circuit upheld the law. On September 4, 1997, the Supreme Court denied a stay for implementation but has not yet decided whether or not it will hear the case in its 1997-98 session. The City of San Jose has just been sued under Proposition 209, and the governor of California is urging the legislature to repeal statutes that are illegal under the Proposition. Over twenty states are currently looking into developing similar laws in their states. • President Clinton supports a "mend it, not end it" approach to affirmative action which has drawn criticism from some Republicans in Congress. They have since introduced bills that would significantly limit affirmative action by prohibiting preferential treatment on the basis of race, color, national origin, or sex in all federal activities. Hearings were held during June and July but no formal action was taken. • In its 1997-98 term, the Supreme Court has agreed to review the case of Piscataway Township Board of Education v. Taxman (over the objections of the Clinton Administration). This is a reverse - discrimination suit filed by a white high school teacher, Sharon Taxman. Taxman was laid -off when the Board of Education of Piscataway, New Jersey decided to eliminate a position in its Business 2 Education Department. Lay-offs must be conducted by seniority, but in this case, Taxman and a black teacher, Debra Williams, were tied in terms of seniority. Rather than resort to a coin -toss, the Board decided to rely on its affirmative action plan in choosing to lay-off Taxman. The third Circuit Court of Appeals ruled in favor of Taxman and the School Board appealed to the Supreme Court. City of Eagan Affirmative Action Plan Prior to 1988, Minnesota Statutes 363 required that private businesses with over 20 employees doing business with or receiving funds from the State of Minnesota in excess of $50,000 have an Affirmative Action Plan which had been approved and certified by the Minnesota Department of Human Rights. In 1988, the legislature amended the statutes to require the same for public jurisdictions, including cities. I, therefore, developed a plan for the City of Eagan which was approved by the City Council, submitted to the Department of Human Rights in October of 1988 and certified by them in January of 1989. The requirements for a certified plan were very specific including requiring state approved affirmative action plans for businesses with more than 20 employees with which the City did business over $50,000. If our plan had not been certified by the state, we would have lost state funding such as all MnDOT funds. In 1989, the legislature reversed itself and eliminated the requirement for cities to have state certified Affirmative Action Plans; however, it was the direction of the Council at that time that the City of Eagan continue its state certified Affirmative Action Plan. Therefore, since then, the plan has been subsequently updated and submitted every two years for recertification. The latest certification was received from the state in July of 1996. In addition, at the direction of a previous City Councilmember, when the City's Personnel Policy was revised in 1992, the City's Equal Opportunity/Affirmative Action Statement was included as a part of the policy. This section refers to employment and not to vendors. This year, at a special City Council meeting held on January 28, the Council voted to remove the section of the Affirmative Action Plan requiring contractors and vendors to supply evidence that they had an affirmative action plan. This means we no longer have a state certified plan, which, as previously mentioned, is not legally required. However, we do still have the sections relating to employment matters. The City's Affirmative Action Plan does not include quotas or preferences for minorities or females for employment related matters. Its main thrust regarding employment is to attract a wide range of qualified applicants for vacant positions, including minorities and females. Therefore, in its current form it probably would not be affected by a law such as Proposition 209. However, as previously stated, the City is not required by law to have an Affirmative Action Plan. If the City Council should decide to repeal the plan, the City of Eagan would still be an Equal Opportunity Employer, which means that all applicants would be treated equally (as they are now). If you need further information, please contact me. k Assistant to -A City Administ for 3 city of eagan TO: CITY ADMINISTRATOR HEDGES FROM: ASSISTANT TO THE CITY ADMINISTRATOR DUFFY DATE: SEPTEMBER 17,1997 SUBJECT: COMP WORTH UPDATE MEMO In 1984, the Minnesota Legislature passed the Local Government Pay Equity Act (M.S. 471.991- .999). Local governments were given until December 31, 1991 to comply with the law and were required to file reports with the Department of Employee Relations (DOER) by January 31, 1992. All jurisdictions were then placed on a three year reporting cycle with a third of them reporting each year beginning in January of1994. The act required that all jurisdictions adopt a system for evaluating the worth of all job classes. The City of Eagan joined with over one hundred other jurisdictions and jointly developed our current Time Spent Profile (TSP) system. TSPS were then developed for each job class at the City of Eagan in 1986. New or revised TSPS were processed when new positions were developed at the City or when an employee or supervisor felt a position's tasks or the amount time spent on tasks had changed significantly. A review of all positions' TSPS was completed in 1993. Since that time individual TSPs have been reviewed when a new position was created, when there was a reorganization in a department and when requested because it was felt that a position's responsibilities had significantly changed. The City of Eagan did file its report with DOER in January of 1992. The City was notified by DOER that summer that its compensation system was in compliance with the Pay Equity legislation. As required, the City of Eagan again filed its report with DOER in January of 1996 and again was notified that the City was in compliance. The next report is due to be filed in January of 1999. If you need any further information, please contact me. lwko.4 LL"1*6L Assistant to thl City Adminis ator 4 MEMO ' city of eagan TO: CITY ADMINISTRATOR HEDGES FROM: ASSISTANT TO THE CITY ADMINISTRATOR DUFFY DATE: SEPTEMBER 12,1997 SUBJECT: HEALTH INSURANCE COSTS The City of Eagan last sent out Requests for Proposals for health insurance in 1993 for the period beginning January 1, 1994. We are required to do this at least every five years. The City chose to go with both Medica Choice Select and HealthPartners plans (employee choice of plan). It was also decided to "blend" the premium rates, especially for family coverage so that employees would choose the doctors and plans they liked best and would not change back and forth because of cost. This is advisable because it helps to keep premiums down because there is less "adverse selection" change year after year. Attached please find a summary of the rates for both plans, for both single and family coverage, along with any percentage increases in the rates, and for the employee's and City's share of the family rates for the years 1994 through 1997. Also included are the rates we just received.for 1998. Medica increased their premiums by 3% and HealthPartners by 4.6%. Both increases are below the amounts expected. Trends had indicated that most health care premiums in Minnesota would see 5% to 15% increases. The total blended monthly family premium amount was $15.50 above that of last year. This increase will be split in half and added to both the City's and employees' share of the premium. Also attached is a copy of a TUG survey listing the cities' 1997 contribution toward family health insurance in twenty-five Metro area suburbs. You will note that most are above the City of Eagan's 1998 contribution as shown on the first comparison sheet. I've also included articles from the Star Tribune and Pioneer Press related to proposed premium increases and an article which appeared in the Star Tribune regarding the reason for higher insurance prices. Please let me know if you need any further information. Assistant to tht City Admini JT MONTHLY HEALTH INSURANCE PREMIUMS FOR MEDICA AND HEALTHPARTNERS CITY EMPLOYEE YEAR MEDICA SINGLE MEDICA FAMILY INCREASE % HEALTH SINGLE HEALTH FAMILY INCREASE % FAM SHARE PREM FAM SHARE PREM 1994 244.38 398.33 -9.0% 216.91 425.96 N/A 288.21 119.88 1995 244.38 398.33 0.0% 224.60 441.07 3.5% 291.93 123.58 1996 251.25 409.55 2.8% 230.71 454.75 3.0% 298.02 129.68 1997 251.25 409.55 0.0% 230.71 454.75 0.0% 298.02 129.68 1998 258.80 421.85 3.0% 241.00 475.05 4.46% 305.78 137.42 A 1997 MONTHLY CONTRIBUTION TOWARD FAMILY HEALTH INSURANCE PREMIUM CITY CONTRIBUTION ANOKA $320.00 APPLE VALLEY $390.00 BLAINE $340.00 BLOOMINGTON $395.78 BROOKLYN CENTER $355.00 BROOKLYN PARK $345.00 BURNSVILLE $300.00 CRYSTAL $341.60 COON RAPIDS $310.00 EAGAN $298.02 EDINA $330.00 FRIDLEY $345.00 LAKEVILLE $271.11 TO $353.80 MAPLE GROVE $310.00 MAPLEWOOD $316.05 TO $344.38 MINNETONKA $328.50 TO $337.50 NEW HOPE $302.00 PLYMOUTH $380.00 TO $460.00 RED WING $342.90 RICHFIELD $365.00 ROBBINSDALE $310.00 TO $350.00 ROSEVILLE $300.00 ST LOUIS PARK $360.00 TO $440.00 SHOREVIEW $310.00 WOODBURY $383.00 7 ]Business Tuesday APRIL 1, 1997 Health care As higher medical costs and the pressure to keep premium increases down put plans in a bind, it looks likely that premiums are bound to rise — for employers and consumers. last year was the leanest financially since 1988 for the industry, data released by a trade group showed. '96 hard on health, plan industry Tough year for health plans In a disappointing year, seven of the nine Minnesota health plans reported losses in 1996 from operations as medical costs outstroPed premium increases. However: most operational losses were offset by gains from investment income. Heath plan - Pet Surplus from Net 0diarsin thmsamb) Enro me d dkg opersdonti vj*n > Ift YF 1,035934 9D -$354153 $44122 > He&V#Wt nws 701.949 63 48.135 $6291 > Blue Pitts 433,011 30D -$5.586 .$L745 > Ucare MktrM 58207 489 $154 $3102 > Metropolitan Health Plan 30,455 19 -5662 4662 > centrd N16. MW Group Heats Plan 17A47 14.7 -$3,866 -$1283 > FkA Plan 14.549 43A $13 $207 > Mayo Heath Plan 5.255 222 -$152 $21 > Nm Um. n Plakts Heath Plan 456 — 4152 -$146 Source Mrnesota Counci of Health Plans PLANS from Di Many health plan executives say premiums bound to rise Scandrett said greater use of doctors by members, skyrocket- ing drug prices and the costs of new technologies are mainly re- sponsible for the increased expenses. Premiums increased an aver- age of 2.8 percent in 1996, he said. The combination of low pre- miums and high costs was re- sponsible for the losses at most plans. All of the health plans, which are nonprofit and have most of their business regulated by the state, maintain financial reserves to cushion against losses. "Health care is very cyclical." said Scandrett. "We go through these three-year cycles where costs trend up and peak and then trend back down." Competitive pressure, though, is likely to keep premium in- creases from ballooning to make up for the losses. Scandrett and others said. Average premiums could go up anywhere between 4 and 8 percent, but health plans will find other areas to cut costs. "All of the organizations are making the adjustments neces- sary to ensure that they have better operational performances in 1997," said David Strand, president of Minnetonka -based Medica Health Plans. Cost-cUttlltg me8Rll a Medica, for example, began a campaign last fall to cut $30 mil- lion from its 1997 medical costs. It has targeted prescription drug costs and laboratory and radiolo- gy procedures, and it has de- creased the amount of money it pays some doctors. It also will cut administrative costs by $8 million. 0 By Glenn Howatt Star Tribune Staff Writer Last year Minnesota's health plan industry had its leanest fn- nancial year since 1988, accord- ing to data released by an in- dustry trade group Monday. Although none of the health plans is on shaky financial ground. the 1996 results echo what industry officials have been publicly saying since last fall: Health plans are being squeezed between higher medi- cal costs and the competitive pressure to keep premium in- creases down. Many health plan executives concede, however, that premi- ums charged to employers and consumers are bound to rise as a result. especially since four of the nine health plans had hot - "Higher costs ahagip aatean higher premiums. The cast of care has been goiaVereragwhile heed� up premium anW at can't condni� that —George Halvorson. HeathPart- ners Medica, the state's largest health plan, also began raising premiums last year. It reported average 1996 premium increases of 4.7 percent. But despite the financial pres- sures. Strand said the nonprofit nature of the industry — which is unique to Minnesota — meant that health pians were able to spend more money on care rath. er than paying dividends to in. vestors. "Medica paid more out in medical benefits this year than it ever has." Strand said. Medica, which collected $1.6 billion in premiums in 1996, lost about S35 million from oper. tom -line losses in 1996. Three others lost money on operations but were able to off- set those losses by income from investments. "Higher costs always mean higher premiums. The cost of care has been going up while premiums have remained flat, and that can't continue," said George Halvorson, chief execu- tive of HealthPartners; based in Bloomington. "Ail of the plans are experi- encing an upswing in their ex- penses," said Michael Scan- drett, executive director of the Minnesota Council of Health Plans, the trade group that re- leased the financial results on behalf of the nine health plans. 7hrn to PIANS on 02 jar. — Cutting costs. ations but was able to report a bottom-line surplus of $4 million because it earned $39 million from its investments. HealthPartnets, with 51.2 bil- lion in premiums, had an opera- tional loss of $8 million, but in- vestment gains left ft with a sur. plus of S62 million However, Blue Plus, the state's third-largest HMO, re- ported a bottom-line loss of $1.7 million, despite the $3.8 million it earned on investments. Much of the loss was attributed to startup costs for enrolling a higher-than-expected number of people in the new managed care program for MlnnesotaCare en- rollees, said Greg Bury, Blue Plus spokesman. Overall, enrollment in the nine health plans increased 12 percent to more than 2.2 mil- lion. the trade group said. The total enrollment figure includes people in HMOs as well as those in self-insured plans, in which the employer pays all health care costs directly. s t Z ry •. P in p - Y G E -i o �Y A 67 Op ai ° d C m m O '06•O p >' y C C O N �+ v e o am C O ay s . 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L 'C ) o O d 4 pp �rL.. ar3 A c0+w .�. .Ti ..L., CLi ert v=i vOi .O.. —.0 w 6y7 �•'9 .O-� Q d v UDO.- 6 �t B MONDAY, JULY 21 01997 STAR TRIBUNE • PAGE A9 A forum for opinions, reactions, dialogue and disagreement Commentary: Higher costs, but better care George C. Halvorson Three years ago. a patient with depression would have been treated with a tricyclic antidepressant such as Elavil—a drug that cost roughly $10 per month. Now, that same patient would receive one of the SSRI (Selective Serotonin Reuptake Inhibitors) antidepressants—much more effective drugs with fewer side effects. The cost for the SSRIs run from S60 to $100 per month. Three years ago. most patients undergo- ing chemotherapy would probably have been given Compazine to reduce nausea and vomiting. Compazine cost roughly S10 to $20 per cycle of chemotherapy. Today. these same patients would be given Kytril—a much more effective drug that costs approx- imately 5270 per cycle. Three years ago. a patient with severe angina would have undergone an angioplasty with as much as a 50 percent chance of fail- ure. Today. that failure rate is reduced by half and functional outcomes for patients are better with the use of a new intracoronary stent. That stent adds roughly S3.000 to S5.000 to each procedure. Three years ago a patient with ventricular fibrillation, a lethal cardiac rhythm distur- bance. would have had no effective therapy available. Today, a new S20.000 device is used to control these cardiac rhythm distur- bances. A few years ago. roughly half of the patients with breast cancer would have undergone a total mastectomy plus chemotherapy. The cost of those procedures was S12.000. Today. those same patients would most likely be treated with a partial mastectomy, combined with new chemother- apy drugs and radiation therapy. That proce- dure is strongly preferred by most patients. It creates a total cost in excess of 825.000. That same pattern applies over and over again in today's health care environment. Risperol. at 5200 per month has replaced Haldol. at $3 per month for treatment of schizophrenia. Gemcitabine, at S400 per treatment has replaced 5 -Fluorouracil at S20 for the treatment of pancreatic cancer. Taxol, at S 1.500 per treatment. has replaced Cytoxan at S15 for the treatment of ovarian cancer. Dozens of new drugs work better to kill cancer cells and prevent cancer recur- rence, to alleviate depression and to cure infectious diseases. New drugs also work better than old drugs to relieve hypertension and to relieve hyperacidity. These new and better drugs, typically. cost significantly more money than the less effective older drugs that they replace. Drug companies, typically, will not negotiate sig- nificantly lower prices for those expensive new drugs. New, less invasive surgical procedures also work better than old procedures and give patients faster recovery times. These new and better surgical approaches also very often cost more. In some cases. the existence of an improved surgical method has significantly increased the number of cases that are done. Arthroscopic knee surgery. for example, is being done far more frequently than the old. less effective, more painful and more inva- sive scalpel -based knee surgery. More cases. of course, mean more expense—but much better knee function and quality of life for more people. New screening and imaging procedures also give doctors much better diagnostic tools. As that happens. the 550 X-ray is being replaced by the $500 MRI scan. The use of various kinds of transplants is also increasing. as their clinical success improves. We are doing twice as many autologous bone marrow transplants in 1997 as we did in 1995. for example, at a cost that ranges from $100.000 tp $300.000 per case. Better care, more cost. The net impact of all of these changes is that health care is getting better, patients are benefiting. and health care costs are going up. The rate of cost increase for health care premiums—driven almost entirely by new drugs, new and more widely used proce- dures, and new technology—will run from 5 to 15 percent in Minnesota this year. These cost increases are not being driven by increased doctor fees. Physician pay- ments for most procedures have actually decreased in Minnesota over the past sever- al years. A gallbladder surgery that generat- ed an $860 physician fee in 1995 only earns a 5730 fee in 1997, for example. By contrast, hospital prices have gone up—but only at single -digit inflation levels. Health plan administrative costs— anoth- er expense that sometimes gets blamed for health care cost increases—have actually dropped—to less than 10 percent of the total health care dollar in Minnesota for larger plans, compared with more than 15 percent nationally. HMO and health plan financial margins have also been erroneously blamed for the cost increases. These margins, in fact, have now shrunk to negative numbers for most local plans—with the largest plans in Minnesota in total actually running aggre- gate operating losses of more than $100 mil- a lion last year as the cost of providing new and better drugs, procedures and medical technology to their members increased sig- nificantly. So the current health care cost increase trend is not being driven by doctor fees. hos- pital charges, or health plan administrative expenses. These increases are being driven almost entirely by improvements in the quality of care—improvements that are both benefi- cial to patients and expensive for consumers. The issue for consumers is value. Is the improvement in care quality that results from new drugs, new technology and new medical procedures worth the 5 to 15 per- cent increases in health care premium costs? Or should we somehow freeze care quality at current levels—and not use an of the more expensive new drugs, new technolo- gies, or new medical procedures that are being made available almost on a daily basis? That is the issue we will need to wrestle with as a society. We've squeezed many of the inefficiencies out of the system already. Can we squeeze more? Should the length of hospital stay for appendectomy—already down from 5 to 2.9 days—be cut to one day, to offset the cost of buying new drugs and new technology? Or do we say. "We've squeezed enough. Two days is barely long enough for an appendectomy, or for a mater- nity stay. Let's not send the patient home even earlier to offset the new costs. Let's pay the costs, instead. and raise premiums rather than squeeze care." Over the next six months to a vear. the public focus on health care costs will increase dramatically— as costs go up. We need to center the upcoming debate on the real issues—quality and cost—and not drop into a public agenda of unsubstantiated blame and misplaced anger. When all the facts are in, my hope and prediction is that consumers and the employers who purchase health care cover- age will ultimately choose quality, rather than a freeze in care. We all. however. need to recognize that decision comes with a cost attached. Let's not delude ourselves about the issues. We can only have 1980's health care prices if we settle for 1980's care. Kytril or Compazine? It's an easy choice... but it comes with a price. George C. Halvorson is president and chief executive officer of HealthPartners, a 750,000 -member, consumer -governed, not- for-profit. Minnesota-based health plan. Reprinted with permission of the Star Tribune. Minneapolis -St. Paul.