Expanded health insurance may cost too much

A memorandum prepared by City of Austin staff reveals that a potential plan to expand health insurance coverage to temporary and contract employees could cost close to $13 million.

Human Resources and Civil Service Director Mark Washington sent the memo to Mayor Steve Adler and City Council members May 6 in response to a resolution passed in February.

That resolution, sponsored by District 5 Council Member Ann Kitchen, instructed staff to prepare an estimate of the cost of expanding health coverage to all city employees not currently eligible for city-sponsored insurance.

Covering the city’s nearly 2,000 temporary and contract workers as individuals would cost the city roughly $12.9 million, based on this year’s cost of coverage.

That number could render the plan stillborn given the significant cuts Council is considering in order to pay for shortfalls created by Adler’s signature 20 percent homestead exemption proposal. That tax cut could carve out a $32.5 million hole in the budget at the forecast tax rate if it is implemented all at once.

Kitchen’s policy aide, Ken Craig, told the Austin Monitor on Tuesday that the health insurance expansion is still very much in the formative stages. He said it is right now just on a “fact-finding level.”

“We were trying to get a handle on what the costs would be,” Craig said. “The next part is asking: Are there savings to be had as a community by including people who would otherwise be uninsured?”

Craig indicated that he does not expect the cost of coverage expansion to factor into the city budget discussions that are currently picking up steam.

“One of the things we wanted is to not to be forced into traditional trade-offs,” he said. “I’m not ready to say this is too expensive or imminently doable, and not sure (Kitchen) would say that either.”

Adding more fog to the fate of the plan: Washington’s memo was merely an update on ongoing research. It declares that staff will deliver the final results to Council on May 27, a full 30 days after the deadline called for in the original resolution — which does not appear to include language granting staff an optional extension. Washington did not respond to a request for an interview.

The memo did reveal that expanding the city’s medical plan would put Austin in an exclusive category. According to Washington, staff researchers surveyed 22 other public sector employers in Texas to gather benchmark comparisons. While the memo leaves out the complete list, it does mention that only Fort Worth extends coverage to temporary employees, with the requirement that they have one full year of service under their belts and work more than 30 hours a week.

None of the responding government employers insure contract workers, but the City of Houston requires certain contractors to either provide their own coverage or “pay $150 per month, per employee, to offset the cost of providing health care to uninsured residents of Houston/Harris County.”

The final report is being prepared by the Human Resources Department, the Austin Health and Human Services Department and Austin-Travis County Emergency Medical Services.

This story has been corrected. Originally, it said that providing insurance could cost close to $16 million, not $13 million.