proposed 2011 medical plan design may 25, 2010. background challenges recommended strategy ...

Proposed 2011 Medical Plan Design

May 25, 2010

Background

Challenges

Recommended Strategy

Summary

Presentation Outline

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

$42M

Background

$42M

$96M

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

$96M

$229M

9% 9% 9% 9% 9% 9% 9% 9% 9% 9%

Background

0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0% Trend

Background

Since February 23, 2010 BCC Presentation:

Weekly Medical Plan Oversight Committee Meetings

Multiple staff level meetings

Employee Benefits Committee meetings

Background

Challenges


Summary


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

Keep Current

Plan

Major Plan Restructur

e

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


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


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

Background

Challenges


Summary



Implement a Consumer Driven Health Plan for 2011


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


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)


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


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


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


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


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

Background

Challenges


Summary


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


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


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


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

Proposed 2011 Medical Plan Design

May 25, 2010

proposed 2011 medical plan design may 25, 2010. background challenges recommended strategy ...

Documents

background challenges

trend slide

county plan

countys medical plan

total cost of plan

medical plan design

ride trolley background

share of cost