Health care debates aren’t just for Congress anymore.

A more than $1 million deficit in the city’s health insurance fund has some City Hall leaders now questioning the generosity of the health care benefits offered to city employees.

“I think we all recognize that the train has left the track in some ways,” Mayor Mike Amyx said.

Unlike many private companies, the city operates its own “self-insured” health insurance program. The city collects premiums from its employees and uses those premiums to pay out claims, although the city does have a separate insurance policy that assumes the city’s liability if claims reach a certain amount.

Also, unlike many private employers, the city pays 100 percent of the health care premium for city employees. Employees only have health insurance premiums deducted from their check if they wish to add a spouse or family member to the health plan.

But now City Hall has run into a math problem. The amount the city’s paying out in claims and expenses is exceeding the amount it is collecting in premiums.

Shrinking safety net

According to a new report, the city’s health insurance fund had a $1.2 million shortfall in 2009, which was about twice what the city had expected. Another $1.2 million deficit is projected for 2010. By 2013, the deficit is expected to grow to $2.7 million. The city’s health insurance fund still has about a $6 million reserve, but there is concern that safety net soon will become too small unless changes are made.

At least one commissioner is saying the place to begin the discussion is with the idea of making employees pay at least a portion of their health insurance premium.

“I’m pretty disappointed that we didn’t at least consider that,” City Commissioner Rob Chestnut said after commissioners last week approved policies for the 2011 health care plan.

Chestnut said requiring employees to pay a portion of their premium would provide more revenue to the plan. But he also said it could cause employees to be more careful in how they use their health insurance, if they know future rate increases would be shared. The amount of claims the city paid out increased by 21 percent from 2008 to 2009, despite the city having fewer full-time employees. Since 2005, claims are up 86 percent.

“We have to work with employees to make sure they understand that this is not an entitlement,” Chestnut said. “It is a benefit, and it is a benefit that comes with a cost.”

Thus far, though, a majority of city commissioners have been reluctant to make the change.

“It is something we’re going to have to look at, but the public sector is different than the private sector,” City Commissioner Aron Cromwell said. “In general, we don’t pay as well as some areas of the private sector.”

Taking a hard look

But the debate over whether to charge employees for their health care is likely to re-emerge. Chestnut recently asked for and received information about how other cities treat employee health care.

City staff members found that five of the seven cities they surveyed no longer pay 100 percent of their employees’ health care coverage. Lee’s Summit, Lenexa, Olathe, Overland Park and Shawnee all require employees to pay about 25 percent of the premium’s costs. Only Topeka and Kansas City, Kan., still paid the full amount for employees.

Closer to home, Douglas County also no longer pays 100 percent of the premium for its employees.

But the city’s health care committee — made up of city employees — has not recommended that the city change its policy. In fact, as the deficit grows, the health care committee recommended that rates stay steady for two of the three largest health care plans. For the city’s employee plan plus spouse, the amount deducted from each paycheck will remain steady at $72. For the employee plus child program, it will remain steady at $64 per pay period.

In both cases, the city at large will be picking up a larger percentage of the total cost. For the employee-plus spouse program the city at large cost will grow from 70 percent of the premium to 72 percent of the premium. For the employee plus child program, the city will pick up 70 percent of the premium, up from 67 percent.

The employee’s cost for the family plan will increase by 11 percent — from $102 per pay period to $113 per pay period. The plan for city retirees, who are allowed to stay on the city’s plan until they qualify for Medicare, will increase by 9 percent.

Already, though, the city’s top administrators are looking at the possibility of increases for 2012.

“The alarms already have gone off for 2012,” City Manager David Corliss said.