EAST PROVIDENCE — Dashing hopes that the city could save money this year on health insurance costs for its employees, City Manager Richard Brown says it wouldn’t be any cheaper to change health insurance plans.

Brown told the City Council Tuesday night that a search for alternatives to the current insurance plans for city workers and School Department employees came up empty.

“This is bad news for the city,” said Mayor Joseph Larisa Jr.

As a result of the study, the city will renew Blue Cross health insurance plan for non-school employees for another year at a cost of $7.2 million, an 11.1 percent or $800,000 increase over last year’s premiums.

The School Department has not yet decided what it will do. Schools Supt. Jacqueline Forbes said the department will extend its present self-insurance program – which is administered by Blue Cross for a fee – in the interim. If it is extended for a full year, the department’s health-care bill would be $9.55 million, a 2.5 percent decrease from last year.

“We have 64 fewer employees [compared to a few years ago],” Forbes said in explanation of the decrease.

In total, health care for all city employees represents 12 percent of the $138-million operating budget.

Forbes also said that while the department is now estimating there will be a decrease, under self-insurance it would only take a single “catastrophic injury” to push the costs up. With a self-insured program – which Forbes categorized as “riskier” than traditional plans with premiums – employers only pay actual claims submitted. Therefore, if all employees stay healthy, health costs drop, but if an employee has a major illness, the doctor bills – and the department’s responsibility to pay them – could balloon. Brown said that if the city had also gone to a self-insured program, it would have been cheaper at first but when city officials tried to add a few “standard provisions,” such as one that would cap a claim at $150,000, the cost to self-insure was more than the 11 percent increase in the Blue Cross plan.

City officials chose to renew for one year only – the present plan expires at the end of the month – so they could continue to review other options with the school officials. They also plan to educate the city’s employees with how to best use their health insurance.

“Although it is a big figure, 11 percent is less than what the market is,” outgoing Councilman Patrick Caine said. Caine, a lawyer and business owner, helped the city gather information on its options because of his familiarity with the health-care system. “Fourteen to eighteen percent is the average.”

But Larisa took a more pessimistic view: “United [Healthcare] and Blue Cross didn’t go at each other as aggressively as we thought they would.”