By next year, the national debate over rising health care costs will hit home as some Berkeley city employees will face up to a 22 percent increase in their monthly health insurance fees.

For some city employees, this increase could translate to almost $100 more per month.

The city offers its employees the choice of health coverage under either Kaiser Foundation or Health Net plans, which are raising their rates 7.06 and 11.1 percent, respectively, for active employees, city officials said.

Per its contractual obligation, the city will pay the equivalent of the Kaiser increase for all benefited and active employees, totaling $940,000 to be taken from the Payroll Deduction Trust Fund in fiscal year 2010.

In anticipation of an increase in health care costs, the city established this fund prior to these increases to prevent having to take money from essential city services.

But employees covered by Health Net insurance--including some of the city's low and mid-level staff--must fund the difference themselves, said Margarita Zamora, senior human resources analyst for the city of Berkeley.

For some employees, this could mean an almost 22 percent increase in their monthly premiums, depending on family size and insurance carrier. Employees with family coverage under the Health Net HMO plan, for example, will see their out-of-pocket price increase from $441 to $537 per month, Zamora said.

Employees are concerned with the drastic hike, said David Hodgkins, the city's director of human resources.

"They're not happy they're going to be paying more out of pocket," he said.

Multiple city employees declined to comment, citing the sensitivity of the issue.

Additionally, both Kaiser and Health Net have raised rates for retirees. These increases will be subsidized by the city through the Retiree Health Premium Assistance Plan Trust, although funding is capped at a 4.5 percent increase annually. The remaining charges will be paid out of pocket by retirees, amounting to an increase of around 4 to 15 percent in their health care premiums.

To minimize the hike in rates, city officials underwent months of negotiations with the health insurance companies and hired a benefits broker, Keenan & Associates, for assistance.

In September, officials presented labor organizations with alternative benefits models for the Health Net plans. The alternative proposal sought to lower monthly rates but increase emergency room and prescription co-pays, Zamora said.

"We met with all the unions and offered a series of options that would result in a reduction of the premium," she said. "Because it's a negotiated benefit, we're required to meet with the unions. The consensus was not to change the benefits, so the result is the higher Health Net premium."

Jeff Apkarian, business agent for the Public Employees Union, Local One--a labor organization for city employees that represents approximately 160 individuals--said even though the rate increases were not substantial enough to re-open benefits negotiations in this case, they have larger implications for the future of public jobs.

"Everywhere you go in California with public agencies, these are hard times, and there is bargaining going on in a variety of places because of the economic climate," he said. "I think it's a bigger issue than just health care. You go after public employees, their pensions and their benefits, (and) you have to wonder if you're going to be able to attract good people to serve in these positions."

Tags: KAISER PERMANENTE, HEALTH NET