Weight-loss drugs help fatten Oldsmar's health care costs

OLDSMAR — The growing use of pricey weight-loss drugs is apparently hitting City Hall, too.

Oldsmar is facing a 19.2% increase in employee health insurance premiums next year after two years of costly medical claims and rising prescription drug expenses, the City Council was told at its Aug. 17 meeting.

And GLP-1 medications — think Ozempic and Wegovy, two of the best-known drugs used for diabetes and weight loss — are showing up more and more on the city's tab.

The overall premium increase led the city to shop around for a better deal.

There wasn't one.

Cigna, the city's current insurer, initially proposed a 24% increase. The city sought bids from other major insurers, but most declined to make an offer. Cigna eventually agreed to lower the increase to 19.2%.

That will add about $485,000 to annual premiums, pushing the total from about $2.53 million to just over $3 million, according to city figures.

The council unanimously approved the insurance plans, which take effect Oct. 1, the start of the city's next fiscal year.

Shawn Fleming, vice president and senior benefits consultant at the Gehring Group, said a small number of expensive medical claims have hit Oldsmar especially hard during the past two years.

He cited cancer and other serious illnesses, along with high-cost prescription drugs.

“Really not a whole lot that we can do other than react in the short term,” Fleming said of the costly medical claims.

An agenda memo said the increased costs were driven largely by catastrophic claims and “the growing utilization of GLP-1's as well as other high cost pharmaceutical medications.”

Some of the best-known brand-name GLP-1 drugs carry list prices ranging from roughly $900 to $1,400 a month, although health plans may pay substantially less.

In 2016, Oldsmar's medical and prescription drug costs totaled about $945,000. During each of the past two years, they reached about $2.6 million to $2.7 million.

The city's recent claims also made other insurers wary of taking it on, Fleming said.

He said insurers are paying closer attention to whether expensive claims are likely to continue. In Oldsmar's case, they saw high prescription drug costs that could continue into future years.

“They don't know what that risk is, so they look at it and they're not comfortable taking that risk,” Fleming said.

City employees will have a new choice next year to help deal with the higher costs.

They can keep their current health plan and pay more for it, or switch to a new high-deductible plan with a health savings account.

Employees who choose the high-deductible plan won't see an increase in the amount taken from their paychecks. The city also plans to put money into their health savings accounts to help cover medical expenses.

Fleming said the city didn't want to force everyone into the new plan at once.

“We felt there was a little too much change in a short period of time,” he said.

Council member Cyndi Olmstead agreed that employees may be hesitant of the new option.

“I think it's just the fear of the unknown, right?” Olmstead said. “So it's very scary to change something that you've been doing for a long time.”

But Olmstead encouraged employees to learn how the high-deductible plan works before ruling it out.

“The more you understand it, the more sense it makes,” she said. “And the impact overall is not as overwhelming as it seems like it would be. So just take the time to ask the questions and understand about the plans. So I think it's a good move.”

The city isn't just thinking about next year, either.

Fleming said possible changes to Florida's property tax system could put more pressure on employee benefits in future years.

The high-deductible option is part of a longer-term effort to control costs and get employees more involved in their health care.

“We're all kind of in it together,” Fleming said. “The more we can take care of ourselves, the better the plan performs, the better the increases are.”

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