080307 Employee HealthcareHealth Care Update
Health Care Update
and Recommendation
and Recommendation
Outline
Outline
Healthcare Updates
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Plan Year 2006 Results
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Plan Year 2007 Trends
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GASB 45
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Plan Year 2008 Vendor Selections
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Staff Recommendations
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Plan Year 2008
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Plan Year 2009 and Beyond
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Questions
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Plan Year 2006 Results
Plan Year 2006 Results
Increase in costs from 2005:
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Actual 4.5%, Projected 10.3%
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Unit cost increase 8.5%, utilization decrease 4%
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Plan design changes were effective in moderating the
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overall trend
Pharmacy
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Increased copay for 2tier
? nd
Introduced co-insurance 3and 4tier
? rdth
Diagnostic Imaging
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Increased copay
?
Plan Year 2007Trends
Plan Year 2007Trends
(through May 2007)
(through May 2007)
Increase in costs from 2006
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New projection 6% or less -original projection 11%
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Additional plan design changes in 2007
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Emergency Room
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Introduced co-insurance
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PCP and Specialist Visits
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Increased copays
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Infertility Services
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Capped coverage
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Chiropractic Care
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Added coverage
?
GASB 45 Update
GASB 45 Update
Favorable experience in 2006 and 2007 projected to
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reduce Retiree Health Care liability
Recommend a new valuation this fall
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GASB 45 Update
GASB 45 Update
Current Estimated
GASB 45 Valuation GASB 45 Valuation
Funded Status
(data through (data through
($Millions)
June 30, 2006)May 31, 2007)Reduction
City SchoolsTotalCitySchoolsTotalCitySchoolsTotal
Actuarial Accrued Liability$87.9$112.7$200.6$79.1$101.4$180.5$8.8$11.3$20.1
Annual Required Contribution$12.0$16.7$28.7$10.8$15.0$25.8$1.2$1.7$2.9
Expected 2007 Costs (budgeted)$3.5$6.2$9.7$3.1$5.6$8.7$0.4$0.6$1.0
Cash Flow Increase
(additional funds required)$8.5$10.5$19.0$7.7$9.4$17.1$0.8$1.1$1.9
Plan Year 2008
Plan Year 2008
Vendor Selections
Vendor Selections
Medical (Optima Health
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TPA -Self Insured)
DentalMetlife
?
(Fully Insured)
Stop Loss InsuranceHCC Life
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Staff Recommendations
Staff Recommendations
Plan Year 2008
Plan Year 2008
Eliminate “free”premium for single subscriber
?
coverage
Decrease City/Schools contribution by 5.7% from the
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$5,750 approved in the budget to $5,400.
(This is a 3.3%
increase from the 2007 level of $5,225).
Increases Employee/Retiree costs
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Premiums
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Out of pocket maximums
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Co-insurance for additional services
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Staff Recommendations
Staff Recommendations
Plan Year 2008
Plan Year 2008
Decrease Employee/Retiree costs
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Annual Wellness exam
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Preventive Care
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Continue equal City/Schools contribution to all eligible employees and retirees.
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Direct savings in budgeted funds for health care toward a prudent reserve of $4
?
million ($2 million each for City and Schools) in the Health Fund and, if
available, to consider putting towards funding the Annual Required
Contribution for GASB.
Impact of Recommendations
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Reduces City/Schools budgeted health care costs and health plan costs
?
Reduces the implicit subsidy
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Incorporates some Task Force recommendations
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Increases costs to Employee/Retirees
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Plan Year 2008
Plan Year 2008
Recommendations
Recommendations
2008 Staff
Task Force
2007 Current PlanRecommendation
Recommendations
Employer Contribution$5,225---$5,400
Employee Premium for Single Subscriber Coverage$05% *5% *
HMO Plan Design
DeductibleNoneNoneNone
Out of Pocket Max per calendar year$1,500 member /$3,000 family$2,500/$5,000$2,000/$3,500
Primary Care Physician$20 copay /100% coinsurance$20/90%$20/100%
Annual Wellness Exam$20 copay /100% coinsurance$20/100%100%
Specialist$40 copay /100% coinsurance$40/90%$40/100%
Preventive Care$20 copay /100% coinsurance$20/100%100%
Outpatient Surgery$100 copay /100% coinsurance---$100/90%
Emergency Room$100 copay /90% coinsurance---$100/90%
Inpatient$250 copay / 100% coinsurance$250/90%$250/90%
Dependent Age252323
Financial Impact
City/Schools Savings---$3.5M *$7.0M *
Employee/Retiree Premium Increase
(except single subscriber coverage)------10%
*
Subscriber Only 5% savings of $2.2M based on 2007 premium rate
Example
Example
Hospital (Inpatient) Bill$100,000
Optima Negotiated Rate$ 80,000
Co-Insurance at 10%$ 8,000
Minus $250 copay$ 7,750
Maximum out-of-pocket per year$ 2,000
Member Cost $ 2,000 or less
Per Year 2009 and Beyond
Per Year 2009 and Beyond
Recommendations
Recommendations
Research, analyze, and propose means to:
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Reduce the GASB 45 actuarial liability
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Maintain adequate and competitive coverage for employees
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Introduce additional choices to employees for coverage
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Set appropriate rates and means of supporting health care for all
?
employees
Address retiree coverage
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Address dependent coverage
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Timeline of Actions
Timeline of Actions
Finalize Plan Year 2008 in August for Open
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Enrollment this Fall
Conduct a new GASB 45 Valuation this Fall
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Provide City Council and School Board with
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options for Plan Year 2009 and beyond by the end
of December
Include funding requirements in the FY 2009
?
budget process in February for decision in May
2008
Timeline of Actions
Timeline of Actions
Provide opportunity for employee, retiree, and
?
public input
Develop GASB 45 liability funding policy in
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Spring 2008
Discuss funding vehicle options in Spring 2008
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Report GASB 45 Annual Required Contribution
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on financial statement for fiscal year ending June
30, 2008
QUESTIONS
QUESTIONS