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City dumping medical insurance provider SJVIA

The city of Ceres took action last week to break off from the entity that has been supplying medical coverage for its employees since 2013.

Betina McCoy, the city of Ceres Director of Human Resources, won approval from the Ceres City Council to terminate its agreement with the San Joaquin Valley Insurance Authority (SJVIA) for medical benefits effective Dec. 31. The city will now look for a new provider to cover employees.

Members of the city's Employee Benefits Advisory Committee (EBAC) unanimously recommended the city terminate the agreement. They will also be working with McCoy and city staff to review options, presented by the city's broker earlier this month.

"During the last years it became apparent that there were some issues going on with the SJVIA," said McCoy. "Essentially there was a financial crisis due to some cash flow issues ... and were using reserves at a hefty pace." Additionally, the entire pool had what McCoy termed a "bad claims year."

The city joined SJVIA in 2013 to combat years of double-digit premium increases and carrier instability. It offered lower costs and more stable medical benefits through a large pool with other public agencies and shared-risk rating, which distributed claims experience across the pool. For years, the city experienced reasonable renewals but escalating financial problems resulted in the founding members of Fresno and Tulare counties to loan the SJVIA several millions of dollars, raising concerns about the SJVIA's solvency.

Actions taken by the board resulted in rate increases of 36.8 percent in the EPO (former HMO) and 4.5% in the PPO for non-founding members, a total increase of 25.1 percent.

"All of this pretty much culminated in us deciding that this is not a healthy relationship for the city to be in," said McCoy.

Had the city remained, city employees would have had to shoulder an increase of $750,000, mostly in employee out-of-pocket costs.

She said that of the city's 156 currently enrolled employees, 109 are enrolled in the HMO and stood to see a 36.8 percent increase in their premium as they changed to an EPO.