Insurance change may save Lodi $400,000 per year

The City Council on Tuesday directed city staff to renegotiate employee contracts so the city can obtain new, cheaper medical insurance.

If the city pulls out of its current agreement with the California Public Employee Retirement System, City Manager Dixon Flynn estimates Lodi can save nearly $400,000 per year -- enough to preserve six city jobs.

If council members choose PacifiCare, city employees will also save as much as $15 for some prescriptions, $15 to visit the emergency room and $10 for mental health services.

The change would affect more than 500 current employees, retirees and most City Council members who also use the city's benefits.

"Overall PacifiCare matches or provides more than PERS," Flynn said.

Rates are based on the age and gender of employees.

Calling the system's treatment of cities "shabby," Mayor Larry Hansen spoke for most council members when he said he wanted out of the CalPERS medical benefits system.

"The city of Lodi cannot be held hostage by PERS," he said.

The city is facing an Aug. 21 deadline to pull out and change providers. Although PacifiCare is the only one that has presented rate quotes, Vice Mayor John Beckman said he wanted to gather rate information from other providers.

Councilman Keith Land disagreed.

"I don't have to be a brain surgeon to figure out if we can save $400,000 in the first year, let's move forward with negotiating with PacifiCare," he said.

Flynn hopes to secure a three-year contract with the provider.

He has already met with union representatives and plans to talk to retirees this week. A change in providers requires renegotiating employee contracts.

Cities including Galt and Modesto already use PacifiCare, consultants who spoke at Tuesday's special meeting said.

Lodi isn't the only city looking to cut ties with CalPERS. The change reflects a new regional rate plan designed to save money for the state retirement system.

Across Northern California, health coverage premiums are expected to soar above 23 percent for thousands of local government workers next year while costs should drop in the southern part of the state.

Health plan costs in this area are rising because a lack of competition leads to more expensive medical care in the region. In the southern part of the state, however, costs will drop as much as 8.7 percent because of cheaper medicine there.