City officials told steep medical claims could force benefit changes or higher premiums
The City of Little Rock faces the prospect of sharply higher health insurance costs in 2027 after consultants warned Tuesday that the municipality’s plan has seen unusually large claim payouts this year. City leaders were briefed on options that could include increasing employee premiums, boosting the city's contribution or altering benefits.
Representatives of JTS Financial Services, the city’s employee benefits consultant, told members of the Board of Directors that the plan’s loss ratio over the past 12 months stands at 142% — meaning the insurer, Cigna, has paid about $1.42 in claims for every $1.00 received in premium. Based on preliminary figures, consultants said a renewal could carry a roughly 35% increase in cost for 2027.
"Some really ugly trends" have emerged so far this year, the consultant said, adding that a 35% renewal would be "an incredibly high number."
What the numbers mean for employees and the city budget
The city currently maintains a fully insured arrangement, in which Little Rock pays a fixed premium and Cigna pays claims. That setup insulates the city from claim variability during the plan year but exposes it to large premium increases on renewal when claims climb.
City staff reported there are about 2,300 covered employees and 3,460 covered members on the plan. The city expects to pay roughly $18.5 million in premiums during the current year, according to the city’s benefits and risk manager.
| Metric | Value |
|---|---|
| Loss ratio (12 months) | 142% |
| Potential premium increase (2027) | ~35% |
| Covered employees | 2,300 |
| Covered members | 3,460 |
| Projected 2026 premiums | $18.5 million |
Choices ahead: trade-offs and political considerations
Officials outlined the familiar trade-offs facing employers nationwide: pay more in employer contribution, require larger employee premium contributions, alter plan benefits, or use a combination of those steps. Mayor Frank Scott Jr. reiterated the city’s current posture that employees do not pay for their health insurance under the basic plan offered by Little Rock, though employees may opt to pay for higher-tier coverage and dependents on a plan are charged.
City benefits staff said they are reviewing possible adjustments and will continue to consult with JTS and the insurer ahead of renewal. The presentation highlighted that the city’s fully insured contract shifts the variability to premium-setting at renewal, and the consultant suggested exploring options to limit future volatility.
- Immediate impact: No change announced for 2026; city staff continuing analysis.
- Potential 2027 outcomes: premium increases, benefit changes, greater city contribution or combination.
- Why it matters: Higher costs could affect take-home pay for some employees and increase the city’s operating costs.
Nationally, insurers and employers have signaled rising medical costs for 2027, with some samples showing median proposed premium increases smaller than the one under discussion in Little Rock. Local leaders face a decision that balances the city’s budgetary capacity against the objective of preserving employee coverage levels.
Board members asked questions about the drivers of the loss ratio and requested more detailed modeling before taking any policy steps. City staff will continue to monitor claims trends and work with consultants to develop recommendations for the Board of Directors as renewal approaches.
The issue underscores the fiscal pressures municipalities face when healthcare claims spike and the limits of fully insured contracts to smooth costs over time. Little Rock officials say they will brief the board again with additional information before any changes are proposed.
