McAllen, McAllen City Commission, McAllen Public Utility Board, employee health plan, Jolee Perez, Higginbotham, United Healthcare, Leinity, Frontier Direct, pharmacy, Los Encinos, Texas Artificial Turf and Design, McAllen Heritage Center, Convention Center, fire alarm, Villas at Tres Lagos, Javier Villalobos, Isaac Tawil
Arnoldo Mata
McAllen TX - The McAllen City Commission held a joint workshop with the McAllen Public Utility Board and a regular meeting Monday, July 27, 2026, approving significant changes to the city’s employee health plan, awarding contracts for a turf field and fire alarm system, and advancing several rezoning items.
Workshop: Employee Health Plan Review
The workshop featured a detailed presentation on the City of McAllen Employee Health Plan by Benefits Director Jolee Perez and Tommy Taylor, vice president and managing director of Higginbotham Insurance and Financial Services.
Perez told the commission that without any changes, the plan faces a projected shortfall of approximately $2.8 million in Fiscal Year 2026-2027. With the recommended changes, the plan projects a net positive margin of approximately $2.2 million, which would allow the city to begin building reserves and make a partial payment of $475,000 toward an existing $1.9 million interdepartmental loan, with the plan to make that payment over four consecutive years.
Health Plan Trends
Perez presented a 10-year trend analysis showing that between 2015 and 2025, industry-wide health expenses increased by 73%, while the city’s expenses increased by 69% over the same period. She credited the Frontier Direct primary care program, launched in 2022, with helping keep the city below industry benchmarks.
“Between 2022 and 2025, what we see is expenses have stabilized. They’ve remained just below industry trend projections and experiences,” Perez said.
The city currently has five high-dollar claimants being tracked. Two alone have generated approximately $4 million in claims, with one claimant approaching $3 million and another surpassing $1 million.
The city also received a stop-loss reimbursement check of $2.3 million, exceeding the anticipated $1.4 million. Perez noted that the city recently deployed a third-party analytics firm, Veracity, which determined that the Frontier Direct primary care program generated approximately $8 million in reduced claims costs over its first two years.
Taylor praised the city’s approach to benefits management. “The city of McAllen is probably one of the most actively managed plans that we see. It was put together very well.”
Frontier Direct Primary Care
Approximately 66 to 67% of city employees are currently utilizing the Frontier Direct primary care program, which the city funds at a subscription cost of approximately $1.8 million annually. The program provides zero-cost primary care access to employees and their families and has contributed to significantly lower inpatient hospital admissions and readmissions among participating members. Among the diabetic population enrolled in the program, A1C levels improved in 40% of patients over the past one to two years.
Pharmacy Costs
Perez described pharmacy as the plan’s most significant ongoing challenge, driven primarily by specialty medications, GLP-1 drugs such as Ozempic and Mounjaro, and cancer treatments. The city has implemented international pharmacy sourcing, saving $4.9 million over three years, and has reduced the per-patient cost of GLP-1 medications by 22 to 42%.
Taylor described the three main levers the city uses to manage pharmacy costs: manufacturer assistance programs, rebates from name-brand medications, and international importation.
Health Plan Recommendations
The commission was presented with three recommendations, all of which were approved at the regular meeting:
Premium increases for active employees of $12 per paycheck, with the city contributing an additional $77.50 per paycheck. Combined, these changes are expected to generate approximately $4 million in additional revenue. Retiree premiums were not increased, as staff cautioned that a premium increase would likely cause a significant drop in retiree enrollment, worsening the retiree plan’s financial position.
Renewal of United Healthcare as the plan’s medical administrative services only provider for three years with two additional renewal options. Staff cited United Healthcare’s willingness to deepen integration with the city’s direct primary care program and provide access to expanded data as key factors in the recommendation.
Award of pharmacy benefit management services to Leinity, which offered a contractual guaranteed savings of $1.2 million per year for three years, with Leinity responsible for making up any shortfall. The agreement also allows the city to customize its drug formulary and conduct annual market checks.
City Manager Isaac J. Tawil said the philosophical shift in how the city funds the plan was a deliberate decision. “I don’t want to sweep this deficit under the rug. I want to show the liability moving forward because I want to track that number and know what I need to make up.”
Regular Meeting: Rezoning Items
The commission approved the following customer-initiated rezoning items, all carrying favorable recommendations from the Planning and Zoning Commission following a July 7 review:
Rezoning from C-3 to C-2 at 4811 N. Ware Road
Rezoning from C-2 to C-2 at 721 N. McColl Road
Rezoning from C-2 to C-2 at 5600 N. Ware Road
Rezoning from R-3A, C-3 to R-3 at 2801 N. Jackson Road
Rezoning from C-3 to C-2 at 4400 N. 23rd St. and multiple lots
The commission also approved city-initiated rezonings of 954 parcels, bringing the city’s overall transition to the Unified Development Code to 16.9%. One commissioner abstained from the city-initiated rezoning item, citing personal property holdings within the affected parcels.
Conditional Use Permit
The commission approved a conditional use permit for Precopa Bar at 306 S. 17th St. for a period of six months due to a prior incident at the establishment.
Consent Agenda
The commission approved consent agenda items A through M, with item I pulled for separate consideration. Notable consent items included a resolution authorizing a $750,000 grant application to the Texas Parks and Wildlife Department for the Local Park Grant Program to benefit the champion golf course, and purchase of Fire Department emergency mobile radios.
Bids and Contracts
The McAllen Heritage Center new storage building contract was approved following a rebid. City Manager Tawil noted the rebid produced lower bids than the first round. He also indicated the city is open to negotiating a longer-term lease with the Heritage Center and invited the executive director to initiate those discussions.
The commission approved the award of the Los Encinos Turf Field contract to Texas Artificial Turf & Design LLC, a multi-purpose synthetic turf soccer field in City Commission District 4.
The commission approved the purchase and installation of a new fire alarm system for the McAllen Convention Center at a cost of $198,311. Staff noted the existing system is obsolete and can no longer be serviced or replenished with replacement parts.
Variance
The commission approved a variance request for interior street right-of-way and paving width requirements for the proposed Villas at Tres Lagos Phase II Subdivision at 5600 Tres Lagos Blvd., described by staff as a continuation of the existing approved subdivision design.
Executive Session
The commission entered executive session to discuss economic development matters, legal aspects of contracts, and pending litigation. Upon returning to open session, the commission authorized the city manager and city attorney to proceed as described in executive session on item 6B. No action was required on items 6A and 6C.