CITY OF STOCKTON EMPLOYEE MEDICAL BENEFITS

Transcription

1 CITY OF STOCKTON EMPLOYEE MEDICAL BENEFITS Presented by: Dianna Garcia Director of Human Resources May 11, 2010

2 PURPOSE OF TONIGHT S PRESENTATION: Provide information to Council: Self insured vs. fully insured Industry trends Benefits and budget What impacts the cost of benefits Other questions

3 SELF INSURED vs FULLY INSURED What is the Difference? Self-insured plans Employer pays the claims and administrative costs. Fully insured plan Employer pays a monthly premium established by the insurance company or healthcare provider.

4 ADVANTAGES OF SELF-INSURED vs FULLY INSURED 1. Lower administrative costs: No carrier profits, risk charges, or other operating expenses associated with fully insured plans 2. Premiums include cost for carrier to maintain reserves 3. Employer can purchase insurance (stop-loss) for protection again catastrophic medical claims to lessen risk

5 DISADVANTAGES OF SELF-INSURED vs. FULLY INSURED 1. Employer assumes risk for all claims, including unanticipated, high-dollar medical claims 2. Budgeting more difficult as expenses vary from year to year e.g. FY Budgeted $27 million, actual cost $30 million

6 SELF-INSURED Employer-Sponsored Plans Nationwide* 80% of employees of large firms (employing 1,000-4,999) are covered under self-insured plans 59% of state/local government employees are covered under self-insured plans * Source: The Henry J. Kaiser Family Foundation and the Health Research & Education Trust (Kaiser/HRET) Survey of Employer-Sponsored Health Benefits

7 INDUSTRY TRENDS Self-Insured vs. fully Insured Wellness Programs (Health Management) show sharp growth: Health Risk assessments ( %, %) Behavior Modification ( %, %) Nurse Advice Line ( %, %) Percentage of employers offering Preferred Provider Organization (PPO) plans increasing (39% in 1999 vs 60% in 2009) Health Maintenance Organization (HMO) enrollment has steadily decreased over the last ten years (28% in 1999 vs 20% in 2009) due to cost increases High Deductible Health Plan (HDHP) are becoming more popular with employers, due to lower premium costs and more employee out-of-pocket (4% in 2006 vs 8% in 2009) * Source: The Henry J. Kaiser Family Foundation and the Health Research & Education Trust (Kaiser/HRET) Survey of Employer-Sponsored Health Benefits

8 CITY OF STOCKTON Current Medical Plan Offering One self-funded medical plan for full time employees Preferred Provider Organization (PPO) Plan (Anthem/Blue Cross Network) Annual Deductible: $150 per person / $450 per family Office Visits: 80% coverage (patient pays 20%) Hospital/Lab & X-ray: 100% Prescription Drugs: Currently $3/generic & $8/brand (30 day supply)

9 SURVEY OF OTHER PUBLIC AGENCIES San Joaquin County (2 self-insured PPO plans, 1 fully-insured HMO plan) City of Tracy (1 PPO plan, 2 HMO plans, all fully-insured) City of Sacramento (2 HMO plans, 1 PPO plan, all self-insured) County of Sacramento (3 HMO plans, 2 HDHP plans, all fully-insured) City of Lodi (3 PPO plans through CalPERS) City of Modesto (1 PPO plan, 1 HMO plan & 1 HDHP, all fully-insured)

10 SUMMARY OF PLAN BENEFITS Survey of Other Typical Public Agencies CITY OF STOCKTON PPO Plan Predominant PPO Plans Predominant HMO Plans HDHP Annual Deductible $150/person $450/family $250 & $500 N/A $3,000 & $6,000 Office Visits 80% 80% $20 co-pay then 100% 100% Hospital (Inpatient) Plan pays 100% 80% $0-$250 co-pay then 100% 100% Lab & X-rays Plan Pays 100% 80% $0 $10 co-pay then 100% 100% Prescription Drugs Co-pays $3/generic & $8/brand $10/generic & $20/brand (formulary) $10-$15/generic & $20-$50/brand 100% Maximum Out-of- Pocket $1,000/person $2,000 & $4,000 $1,000 & $2,500 $3,000 & $6,000

11 EMPLOYEE CONTRIBUTIONS Stockton vs Surveyed Public Agencies Rate Tier Stockton PPO Plans HMO Plans Employee only $0* $0 - $ $0 $ Employee + 1 $0* $80 - $ $ $ Employee + family $0* $104 - $1,433 $ $1, * SPOA & SPMA members contribute $100 per employee per month

12 CITY OF STOCKTON: Demographics (coverage) Em plo ye e 18% * Tiered Rates Calculated by Actuary: Employee: $602 Employee + 1: $1,204 Employee + Family: $1,565 Employee + Family 53% Employe e % * June 2009 Actuarial Valuation

13 CITY OF STOCKTON Funding Health Benefits Composite Funding Rate Actuary determines department charge to fund benefits for employee, eligible retirees, and dependents Charge for active employee includes retiree subsidy: Current Composite Funding rate: $1,875 per employee/month 2010/11 Composite Funding rate: $2,187 per employee/month

14 CITY OF STOCKTON Other Funding of Health Benefits Employee Contributions: SPOA & SPMA members contribute $100/month Retiree Premiums: Monthly premium to cover dependent children Stop Loss reimbursements: Insurance policy reimburses City for claims paid in excess of $250,000 per person per year Subrogation: Reimbursement from third-parties responsible for medical expenses (i.e. car accidents, workers compensation)

15 HEALTH CARE REFORM AND OTHER LEGISLATION New legislation impacting health plans possibly this year: Extend maximum age for dependent children Eliminate lifetime maximums currently applied to health plans

16 HEALTHCARE REDUCING COST Cost Shifting 1. Higher Co-pays / Deductibles 2. Various Plan Options 3. Employee Contributions Healthy Employees and Dependents 1. Wellness Programs 2. Managed Care Delta Health Systems, effective July 1, 2010

17 OPTIONS FOR COUNCIL TO CONSIDER 1. Self-Insured or Fully Insured 2. Offer Multiple Plans 3. Level of employee contribution 4. Investing in Wellness Programs 5. Others...?

18 QUESTIONS?