Minneapolis, St. Paul hit by higher health insurance costs

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Health and dental insurance costs for city employees in Minneapolis are rising, according to Council Member Gary Schiff.  In a recent newsletter, Schiff released information that at the current rate of increase, employee health care costs will surpass salaries as the city’s biggest expense by 2021.  

CORRECTION: We received the following correction to Minneapolis city budget numbers from Heather A. Johnston Director of Management and Budget at the Minneapolis Finance Department after the article was published.

I recently read your October 26th article entitled “Minneapolis, St. Paul hit by higher health insurance costs” and wanted to provide you with some corrected information. My office had provided some information to CM Schiff’s office for his newsletter that mixed the General Fund and information with all City funds.  Specifically, the “noting that health insurance costs are now 16 percent of the city’s budget” was inaccurate.  When looking at the City’s entire $1.4B budget, the percentage related to health care is 4.5%.  However, the “all City funds” includes things like the City’s debt payments and grant funds, so City staffing costs become a much smaller portion of the total.

What most people think of as the City’s budget, the General Fund (where we have most of the Police, Fire and street maintenance costs) has 8.3% of its costs devoted to health insurance of $30.7M (versus the $58.8M “all funds” number in the article)—an increase from 4.8% of the General Fund in 2002.  This percentage is probably much more comparable to other cities.  We are budgeting health insurance costs to increase 20% annually.  It’s fair to say this outstrips the increases for any other part of our budget.

“In the past year, health insurance expenditures increased from $56 million to $62 million”, the newsletter stated, noting that health insurance costs are now 16 percent of the city’s budget,

In St. Paul, Chris Eitemiller of the city’s financial services department, said employer-paid health care costs went from $21,552,965 in 2008 to a projected $25,360,500 in 2010.

Schiff also wrote that an increase in emergency medical calls to the fire department is an indication of the rising cost of health care.  He pointed to a New York Times article that indicated that a reliance on fire departments for primary health care could be a national issue. 

“As the number of uninsured Americans rise, so do the number of emergency medical calls that fire departments are asked to respond to,” Schiff writes.  “We can’t afford to cover the gaps in our national health care system with regressive property taxes.”

Minneapolis Assistant Fire Chief Cherie Penn said that Emergency Medical calls have risen to from 22,192 incidents in 2007 to 22,492  incidents in 2008, while actual fires dropped from 1,859 fires in 2007 to 1,489 fires in 2008.  While Schiff concluded that the rise in EMT calls, which accounted for 65 percent of the fire department’s calls last year,  shows that Minneapolis firefighters are increasingly serving as primary care providers, Penn said in a phone interview that the increase “still falls in the usual ratio of EMT calls to actual fires.”