Proposed 2011 Medical Plan Design May 25, 2010. Background Challenges Recommended Strategy ...
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Transcript of Proposed 2011 Medical Plan Design May 25, 2010. Background Challenges Recommended Strategy ...
BCC Comptroller Tax Collector Supervisor of Elections Expressway Authority Housing Finance Authority OBT Development Board Metroplan Orlando Property Appraiser Lynx Clerk of Courts Research and Development I-Ride Trolley
Background
8,344Covered Employees
Total Plan Members:18,536
Background
2009: HR In the Loop airs its first “webisode” communicating HR information to County employees each pay day.
2008: Implemented the County’s first online open enrollment.
2007: County plan goes self-funded saving $6.5 million in the first year.
2007: By 2007 a total of six fitness centers were available to employees.
2009: Implemented a Diabetes Management Pilot Program to employees as a result of the Wellness for Life Screenings.
2008: Began Wellness for Life Credit and Screenings increasing employee engagement in personal health.
2007 2008 2009
2009: Implemented the healthy pregnancy program to waive delivery co-pays.
2009: Implemented generic differential for prescriptions and carved out pharmacy with Express Scripts.
Background
9.20%
11.50%
8.20%
5%
1.35%
5%
0%
2004 2005 2006 2007 2008 2009 2010
Annual Premium Increases
Moved to Self-Insured (Proposed increase 8%)
Background
Since becoming self-insured, projected savings of over $26 million to date
Medical claims and pharmacy costs continue to increase at 10.4%
Significant savings have been realized through reduced administrative costs
Background
2010: Began assessing a surcharge to tobacco users on the County’s medical plan.
2010: Orange County became a Tobacco-Free County, prohibiting tobacco use on County property.
2010
2010: Changed inpatient co-pays to $300 on day one, and $100 for days two – four.
2010: Increased hospital based outpatient surgery from $100 to $200.
2010: Implemented prescription step therapy and voluntary select home delivery.
2010: Began a Dependent Audit to remove ineligible dependents from the County’s medical plan.
Background
Since February 23, 2010 BCC Presentation:
Weekly Medical Plan Oversight Committee Meetings
Multiple staff level meetings
Employee Benefits Committee meetings
Challenges
Overall cost of claims is trending at 10.4% and is expected to increase without major plan design changes
Unable to sustain funding for large increases year after year
Need to address total cost of plan and increase share of cost paid by employees
Challenges
The County’s premium cost share is more generous than other employers
More evenly share the costs of health insurance premiums
Decrease the overall cost of our health insurance plan
Orange County
Employees
87%Employer
Florida Industry Norm
76%Employer
24%
Employees
13%
Challenges
Disproportionate cost share for medical services
True costs hidden from both the health care provider and the plan member
Average Annual Costs
Measure Average Total Cost
Employee Co-Pay
Average Plan Cost
% Spent Annually
Primary Care Visits $108 $15 $93 8%
Specialist Visits $210 $25 $185 23%
Ancillary MRI/CT $481 $25 $456 1%
Home Healthcare $482 $0 $482 1%
Outpatient Visits $1,159 $100 $1,059 17%
Inpatient Visits $13,413 $600 $12,813 25%
Challenges
Nationally, between 50 and 85 percent of all diseases are linked to the health choices you make.
For every 100 employees, many have lifestyle-related health risk factors:
Risk Factor Nationally Orange County
Overweight or Obese
66 80
Diabetes 6 10
Smoke 21 6
Challenges
$17.2 Million Deficit
Revenues / Expenditures
If current plan is kept…
Million
s
$107.7M
$90.5M
Challenges
Premiums will increase by at least 50%
Bi-weekly premium increase as much as $100 for family coverage
Co-pays will increase substantially
Financial challenges will continue to compound
If current plan is kept…
Challenges
The trend will continue to rise due to the disconnect between cost and awareness
Premiums will continue to increase year after year at very high rates
Coinsurance would be needed for some services
Deductibles would be instituted at some point in the near future
If current plan is kept…
Challenges
Implementing a Major Plan Restructure will…
Lessen premium increases (held to approx. $15 per pay period)
Address the underlying problem to begin to reverse the trend
Create informed consumers
Focus on Wellness and Preventive care
Recommended Strategy
Consumer Driven Health Plan
Preventive Care at 100%
Preventive Medications outside
of deductible
Individual Health Savings
Account (HSA)
High-Deductible Health Plan
Remove disconnect between the
member and the true cost of
services
Recommended Strategy
Two Major Plan Components HSA Account
Funding Vehicle/Partially Funded
$750/$1,250 County contribution
High Deductible Health Plan Deductible : $1,500/$3,000 20% Coinsurance Out of Pocket Max
($3,000/$6,000)
Recommended Strategy
An HSA is... An account to help you meet
your deductible and out of pocket maximum
A great investment and savings vehicle
Your Money Your Account You Own It You Manage It A Tax Savings Vehicle
Recommended Strategy
With an HSA, you can... Receive a County contribution
if you complete the wellness screening
Decide how much you will contribute, if any
Earn interest Opt to invest (once balance is
over $2k) Take it with you when you
leave employment Use it now, or save for later Relax... because the funds
rollover year to year
Recommended Strategy
Deductible $1,500 Employee Only $3,000 Family
Amount paid by covered member before plan begins
Member pays full cost of the negotiated rate, until deductible
Can be paid from the HSA
Recommended Strategy
20% Co-Insurance
Starts after deductible is met
20% to be paid by member each time a medical service is accessed
80% remaining is paid by the Medical Plan
Can be paid from the HSA
Recommended Strategy
Out of Pocket Maximum $3,000 for Employee only
$6,000 for Family
Designed to protect member in the event of a catastrophic illness (safety net)
Once the out of pocket max is met, all services are covered at 100% by the Plan
Summary
10.4% annual increase in healthcare cost is not sustainable
Fundamental changes to the health plan are needed
Recommend transitioning to a Consumer Driven Health Plan to control costs, change behavior, and begin to reverse the trend
Summary
BCC Consent Agenda June 8, 2010
Communication campaign beginning in June
Open Enrollment for 2011 in October 2010
Implement health plan changes and fund HSA accounts in January 2011
Recommended Strategy
Premiums Portion paid each pay period by
employee and county
Proposed 2011 Annual Premium Schedule
Coverage Total $Orange
County $ Employee $
Employee Only 5,854 5,490 364
Employee + Spouse 12,246 10,244 2,002
Employee + Child(ren) 11,290 9,470 1,820
Full Family 16,739 12,709 4,030
Recommended Strategy
Employee Annual Contribution ComparisonEmployee
Only Employee + Spouse
Employee + Child(ren) Full Family
2010 Contribution 0 1,564 1,406 3,604
2011 Proposed
Contribution364 2,002 1,820 4,030
County Paid HSA 750 1,250 1,250 1,250
Net Savings
$386 $813 $836 $824
Summary
$17.2 Million Deficit
Revenues / Expenditures
If current plan is kept…
Million
s
$107.7M
$90.5M
Summary
$17.2 Million Deficit:
1. Keep current plan and significantly increase premiums
2. Find other areas in the budget to fill the $17.2 million shortfall
3. Implement a major plan restructure