The city of Pittsburgh will save $17 million over three years by making Highmark Inc. the sole provider of health insurance to its employees and some retirees.
"It is a significant savings for us, as a city that continues to do more with less," Mayor Luke Ravenstahl said while unveiling the arrangement yesterday.
Some 2,800 city employees, plus retired police and firefighters, currently can pick from plans offered by Highmark, UPMC Health Plan and HealthAmerica. The city is spending $42 million on health insurance this year under that arrangement, and had expected that number to balloon to $50.3 million by 2010.
The new arrangement compels all employees and retirees to use Downtown-based Highmark, starting in January. The city's unionized employees have no say in their health-care provider as long as the level of benefits doesn't change.
The certainty of a large number of enrollees allowed Highmark to offer a discount, and the cost will be $35.6 million next year, rising to only $44.3 million by 2010, the mayor said.
UPMC and HealthAmerica joined forces to submit a rival proposal, but Highmark's saved the city much more money, he said.
The premiums paid by city workers, and the variety of doctors and hospitals they can use, will not change, the mayor said. Highmark will also work with the city to provide a fitness program for employees, said Personnel Director Barbara Trant.
The announcement of the new health plan, six months in the works, follows last week's summit of mayors throughout the state regarding rising pension costs. Mr. Ravenstahl said the events reflect his administration's efforts to address the city's three big budget problems, which are pensions, health insurance and debt. Those three costs represent more than 40 percent of the city's $419 million budget.
Rich Lord can be reached at firstname.lastname@example.org or 412-263-1542.