On first glance, it seems like a logical use of Youngstown’s American Rescue Plan funds — especially considering the money was awarded after the COVID-19 pandemic negatively affected the US economy and that of America’s local communities.
Youngstown city officials are considering allocating nearly $650,000 in federal ARP funds to cover the bill for the self-insured city’s costs incurred due to employee COVID-19 infections.
The expense raises questions that should be examined.
City Council’s finance committee is considering using the ARP funds to cover $649,912 in employee medical expenses directly connected to COVID-19 in 2021. The biggest expenses were for hospital and doctor costs for city employees who got COVID-19, with smaller amounts for COVID- 19 testing and vaccinations, according to Finance Director Kyle Miasek.
After discussions last week, the committee decided to plan for further discussion before moving the request to the full legislative body.
We appreciate that the finance committee is moving cautiously on allocating ARP funds for this large expense. We especially appreciate this statement by Councilwoman Samantha Turner, D-3rd Ward: “We have the ability to empower ourselves, but I don’t want to lose sight” that the $82,773,370 the city was awarded from ARP is for the community.
It is clear to us that Turner, and probably many or all of the finance committee members, have the right attitude about spending these funds with great caution.
At the end of the day, though, the expense exists and isn’t going away. The city should allocate the funds from ARP and pay the bill.
After that, however, there is homework to be done going forward. Specifically, Council must evaluate the cost effectiveness of the city’s self-insured status.
Relatively new to the self-insured health care arena, Youngstown had been hoping to save money when it decided to move to a self-insurance plan about a year ago.
When the city converted, about 650 city workers were receiving health insurance from the city.
Council, at that time, had weighed potential cost savings that included significant savings in state insurance premium tax, and loss of markup costs for insurance companies handling the city’s plan.
Undoubtedly, city leaders should regularly be examining the benefits and drawbacks of the self-insurance program. Large health expenses, like the COVID fees in question, are among the financial risks of self-insuring. Certainly, there are others. While we don’t suggest council make a knee-jerk reaction, we do urge a review, at least annually, of the costs, comparing them with estimated costs if the city were not self-insured.
Additionally, regardless of whether the city chooses to remain self-insured, the next round of labor contract negotiations would be the right time to begin reviewing whether employees are paying a large enough portion of their insurance premiums.
Youngstown city workers pay 10 percent of their insurance premiums. Studies have shown that in 2020, on average, US employers paid about 83 percent of premiums and employees pay about 17 percent.
For now, the city should pay the $650,000 bill. After that, city leaders need to do their homework.