Number
260260
Version
SUBSTITUTE 1
Reference
Sponsor
THE CHAIR
Title
Substitute resolution authorizing the Department of Employee Relations to issue a request for proposal for Stop Loss Insurance for the City’s medical and prescription health plan.
Body
This resolution authorizes the Department of Employee Relations to issue a request for proposal for stop loss insurance for the City's self-insured medical and prescription drug plan. Following the request for proposal process, the Department of Employee Relations will provide the Finance and Personnel Committee with a recommendation for a stop loss insurance carrier and coverage level.
Whereas, The City of Milwaukee provides health care and prescription drug benefits to eligible employees and retirees and the City continues to self-insure those health plans, representing approximately $163,000,000 in gross medical and prescription drug claims for the 2025 calendar year; and
Whereas, There is risk to self-insured entities such as the City because health and pharmacy plan experience can be volatile causing annual expenditures to significantly vary from year to year; and
Whereas, Volatility results from variations in normal utilization levels as well as the number of individuals who experience large aggregate medical and pharmacy expenses in any one year and
the costs associated with those claims; and
Whereas, The City currently operates without specific stop loss insurance coverage and instead relies on a health care reserve fund, currently maintained at approximately $7,000,000, to protect the health care budget from expenditure variations; and
Whereas, The City has seen an increase in the number and severity of high cost claims, with claims reaching and exceeding $1,000,000 or more on an annual basis; according to Gallagher's Historical Large Claimants report for the City, the number of claimants exceeding $500,000 has ranged from 5 to 8 per year between calendar years 2021 and 2025, generating a cumulative gross claim amount of approximately $23,643,141 over that five-year period, with individual claims as high as $1,515,268 in 2024; and
Whereas, The rise of high-cost gene therapy treatments and specialty medications, which often carry price tags in the hundreds of thousands to millions of dollars per patient, has significantly increased the financial risk associated with catastrophic claims and is expected to continue increasing claim frequency and severity going forward; and
Whereas, Stop loss insurance coverage provides an additional layer of protection to self-insured plans by covering costs for catastrophic claims exceeding predetermined levels, thereby capping the City's financial liability for any single individual's medical expenses; and
Whereas, Stop loss insurance would augment the City's health care reserve fund and prevent the City from assuming total liability for expenditures arising from extremely high medical and pharmacy claims, improving budget predictability and stabilizing financial planning; and
Whereas, As the City approaches its January 1, 2027 medical renewal, it is fiscally prudent and in the City's best interest to conduct a request for proposal process to solicit competitive stop loss insurance bids at multiple specific coverage levels, including but not limited to $500,000, $750,000, and $1,000,000; and
Whereas, The Department of Employee Relations will retain the services of Gallagher Benefit Services, Inc., the City's benefits consultant, to lead the request for proposal process on the City's behalf at no additional cost to the City; now, therefore, be it
Resolved, By the Common Council of the City of Milwaukee, that the Department of Employee Relations is authorized to issue a request for proposal for stop loss insurance coverage, at coverage levels including but not limited to $500,000, $750,000, and $1,000,000, for the City's medical and prescription health plan; and, be it
Further Resolved, By the Common Council of the City of Milwaukee, that the Department of Employee Relations is authorized to issue a request for proposal for stop loss insurance coverage for the City’s medical and prescription health plan; and, be it
Further Resolved, That following the request for proposal process, the Department of Employee Relations shall provide the Finance and Personnel Committee with a recommendation for a stop loss insurance carrier and coverage level prior to the City's January 1, 2027, medical plan renewal.
Drafter
Department of Employee Relations
Molly King
7/3/2026