Report on the State of Wyoming Cost Comparison Study for Wyoming School Districts and the State Employees Group Insurance Plans.

Transcription

1 Report on the State of Wyoming Cost Comparison Study for Wyoming School Districts and the State Employees Group Insurance Plans Delivered on November 1, 2005 and Presented to the State of Wyoming Joint Appropriations Committee November 3, 2005 Buck Consultants, LLC th Street, Suite 1200 Denver, CO 80202

2 TABLE OF CONTENTS Section I. Introduction and Scope of Study Section II. Plan Cost Estimates. 5 Section III. Tier-Structure Considerations Section IV. Pros and Cons 13 Section V. Next Steps 16 Appendices Appendix A- School District Funding Data A1-A4 Appendix B- Information Gathering Spreadsheets. B1-B24 Appendix C- Summary of Key Medical Plan Designs. C1-C3 Appendix D- Summary of Dental Plan Designs... Appendix E- Summary of Life Insurance Plan Designs.... Appendix F- Summary Chart Package.... D1 E1 F1-F43 Appendix G- Schools and State Medical Plan Cost Comparison.. G1

3 SECTION I. INTRODUCTION AND SCOPE OF STUDY Introduction and Scope of Study Pursuant to Wyoming Senate Enrolled Act No. 61 and the resulting Request for Proposal No M, Buck Consultants, LLC ( Buck ) was retained by the State of Wyoming ( State ) to provide professional assistance to review and analyze the cost comparisons and potential impact of converting the current forty-eight State kindergarten through twelfth grade ( K-12 ) school districts to the State of Wyoming Employees and Officials Group Insurance Plan ( EGI ). Health insurance benefits are the primary focus of this study, however consideration was also given to dental insurance and to a lesser extent, life insurance benefits. The following K-12 school districts are included in this study: Number School District City State 1 Albany County School District #1 Laramie WY 2 Big Horn County School District #1 Cowley WY 3 Big Horn County School District #2 Lovell WY 4 Big Horn County School District #3 Greybull WY 5 Big Horn County School District #4 Basin WY 6 Campbell County School District #1 Gillette WY 7 Carbon County School District #1 Rawlins WY 8 Carbon County School District #2 Saratoga WY 9 Converse County School District #1 Douglas WY 10 Converse County School District #2 Glenrock WY 11 Crook County School District #1 Sundance WY 12 Fremont County School District # 1 Lander WY 13 Fremont County School District # 2 Dubois WY 14 Fremont County School District # 6 Pavillion WY 15 Fremont County School District #14 Ethete WY 16 Fremont County School District #21 Ft. Washakie WY 17 Fremont County School District #24 Shoshoni WY 18 Fremont County School District #25 Riverton WY 19 Fremont County School District #38 Arapahoe WY 20 Goshen County School District #1 Torrington WY 21 Hot Springs County School District #1 Thermopolis WY 22 Johnson County School District #1 Buffalo WY 23 Laramie County School District #1 Cheyenne WY 24 Laramie County School District #2 Pine Bluffs WY 25 Lincoln County School District #1 Diamondville WY 26 Lincoln County School District #2 Afton WY 27 Natrona County School District #1 Casper WY 28 Niobrara County School District #1 Lusk WY 29 Park County School District # 1 Powell WY 30 Park County School District # 6 Cody WY 31 Park County School District #16 Meeteetse WY P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 1

4 SECTION I. INTRODUCTION AND SCOPE OF STUDY Number School District City State 32 Platte County School District #1 Wheatland WY 33 Platte County School District #2 Guernsey WY 34 Sheridan County School District #1 Ranchester WY 35 Sheridan County School District #2 Sheridan WY 36 Sheridan County School District #3 Clearmont WY 37 Sublette County School District #1 Pinedale WY 38 Sublette County School District #9 Big Piney WY 39 Sweetwater County School District #1 Rock Springs WY 40 Sweetwater County School District #2 Green River WY 41 Teton County School District #1* Jackson WY 42 Uinta County School District #1 Evanston WY 43 Uinta County School District #4 Mountain View WY 44 Uinta County School District #6 Lyman WY 45 Washakie County School District #1 Worland WY 46 Washakie County School District #2 Ten Sleep WY 47 Weston County School District #1 Newcastle WY 48 Weston County School District #7 Upton WY *Note, data for Teton County School Districts #1 s is not included in this study. The requested data worksheets were received from Teton County School District on October 26 th, well past the September 1 st due date for schools to submit data. The following entities are included in the State EGI plans: State EGI group City State Casper College Casper WY Central Wyoming College Riverton WY Eastern Wyoming College Torrington WY Executive Branch Statewide WY Laramie County Community College Cheyenne WY Northwest College Powell WY Sheridan College Sheridan WY University of Wyoming Laramie and Statewide WY Western Wyoming Community College Rock Springs WY As we understand, currently each K-12 school district designs and purchases employee benefits, sets employer/employee contributions and monitors plan participation independently. In some instances school districts have chosen to participate as part of a trust and pool these benefit functions, presumably to obtain greater purchasing power. We also understand current funding by the State to each agency is based upon prior year full-time equivalency (FTE) basis, weighted to the proportion of P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 2

5 SECTION I. INTRODUCTION AND SCOPE OF STUDY employee only, split contracts, employee plus spouse or child(ren) and family coverage multiplied by the annualized state contribution rate of the current year (as of January 1, 2005, in this case), on behalf of each employee and official enrolled in the state group health insurance plan, for employee only, split contracts, employee plus spouse or child(ren) and family coverage less the amount contained within the education resource block grant model for the health insurance component. Per Wyoming Senate Enrolled Act No. 61, health insurance funding to school districts is computed by the Department of Education as excerpted from Section 2 (b) as follows: i) Based upon school year data, determine the statewide average health insurance plan participation for professional, certified and classified school district employees, as computed on a full-time equivalency (FTE) basis, weighted as to the proportion of employee only, split contracts, employee plus spouse or children and family coverage; ii) Multiply the statewide average weighted participation per FTE computed under paragraph (i) of this subsection by the annualized state contribution rate as of January 1, 2005, on behalf of each employee and official enrolled in the state group health insurance plan, for employee only, split contracts, employee plus spouse or children and family coverage; iii) Subtract from the amount computed under paragraph (ii) of this subsection the amount contained within the education resource block grant model for the health insurance component; iv) For each school district, multiply the amount determined under paragraph (iii) of this subsection by the number of school year district FTE professional, certified and classified staff. In the 2005 legislative session, additional funding for this purpose was appropriated and distributed to school districts beginning in April. The additional funding for school district employees was above that provided for employees of State agencies, including the University of Wyoming employees, and Wyoming community college employees. Additional data regarding the school district funding is included in Appendix A. The school district block funding grant assumes only two levels of coverage for purposes of benefit plan enrollment. The April 2005 K-12 supplemental block funding grant calculation generally assumes only two levels of coverage for the purposes of benefit plan enrollment; single and family, as opposed to EGI s current model of three-tier coverage (employee only, employee plus spouse/dependents, or family). EGI s model also has a fourth component for split contracts, which provides coverage and contributions for two spouses P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 3

6 SECTION I. INTRODUCTION AND SCOPE OF STUDY employed by and eligible for benefits through the State, University and/or Community Colleges also covering a child or children. In this instance family coverage is mandatory. If both spouses are employed by and eligible for benefits through the State, University and/or Community Colleges, but no children are covered, employee only coverage is mandatory. The legislation also directed the Agency to prepare a report, using the information gathered under the requirements of this legislation, comparing the costs currently being incurred, and costs likely to be incurred if the school district employees were included in EGI. EGI developed information gathering spreadsheets to collect information from each school district regarding plan design, costs, employer subsidies, and enrollment for the plan years , and , as required by the legislation. A sample of the information gathering spreadsheets is included in Appendix B. For purposes of this study, we consider whether or not all Wyoming school districts should join the State EGI plan. Consideration has not been given to whether or not a portion or subset of all school districts should join the State or whether all school districts should ban together and design and fund their own employee benefits program, separate from the State. Allowing school districts to opt in or out of the State plan or any school district formed pool would likely result in adverse selection and would be to the detriment of the plan(s). P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 4

7 SECTION II. PLAN COST ESTIMATES Plan Cost Estimates Buck began receiving data from the district spreadsheets referenced above on August 26, 2005 with the latest information received on October 26, Using the data gathered on these spreadsheets provides the basis for our analysis and report on the costs of the school districts current plan provisions. Each school district s health plan was modeled using Buck s proprietary relative value modeling tool. This tool allows us to determine the relative value placed on the plan design, without considering differences in health plan cost attributed to claims data or the group s demographics. A summary of each school district s key medical plan design features is included in Appendix C. This chart highlights the wide variance in number and type of medical plans offered across all school districts. In addition to reviewing the plan design cost for each district, Buck reviewed and summarized the actual plan costs charged by each district. For districts that pay premiums on a fully insured basis, actual district claims data was not available as part of the requested data. For districts that are self-funded, only total claim costs were available by plan year. Since the amount of claims data available for each district was limited, costs are estimated as a result of plan usage and based upon the data available. In general, we often find school district employees and many employees of higher education institutions tend to have higher claims costs since the overall workforce of the group is generally a more educated population. In our experience, education-related groups tend to specifically have higher instances of mental health claims costs and other related conditions, due to the stressful nature of the job. Dental plan designs are typically more standard compared to health insurance plans. Most dental plans include a deductible for single and family coverage, various levels of reimbursement for certain procedure categories (i.e., preventive and diagnostic, basic, major services and sometimes orthodontia), along with annual plan maximums for the amount of claims that will be paid each plan year. Because there are far fewer coverage categories in dental plans, as opposed to medical, plan features tend to gravitate toward common plan provisions. Buck reviewed and consolidated the school district s dental plans to nine common plan design options among all school districts. Delta of Wyoming, the State s current dental carrier, provided estimated pricing for these nine plan options based upon average enrollment. Please see Appendix D for a table comparing the nine common dental plans and estimated pricing for each option. Life insurance plans are usually even less complex in plan design than medical and dental. Pricing is difficult to determine because many plans are based upon the total volume of pay for each group, which is arrived at by accounting for each individual s covered pay. Because we did not receive individual pay data, we were not able to determine specific costs attributed to employer paid life insurance. Buck has summarized the life insurance plan designs currently offered among the school districts, which is contained in Appendix E. In general, P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 5

8 SECTION II. PLAN COST ESTIMATES any life insurance cost to the school districts would likely be similar to costs available through EGI, or possibly less given the larger population of overall employees. Data received from EGI, included claims data from Great-West Healthcare and census data. This data forms the basis of our analysis and report on the costs of the EGI plan. The following are key statistics and observations comparing all School District plans to the State plan for the school year. Detailed information and summary graphs for the , and school years are found in Appendix F. Also, for purposes of this study, Schools plans and employees are aggregated and compared to State plans and employees. However, no distinction is made between combining all State and Schools employees into a single plan or simply aggregating all Schools employees into their own plan following State plan design and eligibility rules. Both the State and the combined Schools groups are sufficiently large to generate economies of scale and network negotiation clout. Demographic Summary Eligible Employees* Enrolled Employees Average Age Percent Female All School Districts 14,794 10, % State EGI 13,161 11, % * Eligibility defined as one-half or greater FTE status (FTE=full-time equivalent). The relative value of the plan cost for each group is: Relative Value Summary Employee Only Composite Coverage All School Districts State EGI A significantly greater portion of State employees has employer coverage than among Schools employees. This is likely due to different definitions of eligibility under which employees receive subsidies (employer share of premium) to enroll. Under a uniform State definition, there would likely be an influx of new employee enrollment from the School Districts. We cannot determine if this new enrollment will be relatively more or less healthy than current enrollment. We expect that initially any new enrollment will present fewer claims, since they are apparently healthy enough to stay employed without employer-provided insurance. However, there may also be pent up demand for medical services, newly covered unhealthy employees who switch from current coverage, and currently undetected medical conditions that may present after a few years in any new plan. The covered State population is about two years older on average than the covered School District population. Based on average age alone, the State population should have health care costs about 4% to 8% higher than the P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 6

9 SECTION II. PLAN COST ESTIMATES Schools group. The Schools group has a significantly greater proportion of female employees. If Schools female employees are near the same average age as female State employees 46.0 years then the State s larger male population should be relatively more costly. Conversely, if a significant proportion of female Schools employees are of childbearing age, the Schools group will cost relatively more. Data currently available does not afford further analysis in this regard. Finally, we caution that age data for State employees from the plan s administrator shows an older group in than seems reasonable from similar reporting for prior years. We have assumed an average age for State employees in the medical plan (48.8) that generates a lower average age for State employees not in the medical plan (21.7) and still equates to the overall average State employee age of 46.1 years. Data reported by the plan s administrator should be further investigated as the reports indicate the State group is increasing in age at a higher rate than would be expected. Employee only plan design features for all Schools combined offer benefits that are about 13% richer than State employee-only coverage. Schools plans are 52% richer when composite employee and dependent enrollment is compared. However, for most Districts we cannot assess how many spouses, children or families with both a spouse and children are included in Family coverage because of the current two-tier premium/funding structure. On average, Schools contribute more toward dependents who are covered than does the State. So composite relative values including dependents will be higher than the 1.13 shown for employee-only coverage. But we also fully expect that detailed family status information would generate a composite relative value including dependents that is less than the 1.42 factor shown. Regardless, current Schools plan provisions are richer than State plans, especially when dependent coverage is considered. Medical Plan Cost Summary Monthly Premium Employer Share Premium Equivalent* Monthly Admin. Fees** All School $675 $590 $657 $78 Districts State EGI $587 $544 $578 $13 * Retrospectively estimated underlying plan cost. ** All retention, including adjudication, networks, customer service, reinsurance, profit and premium tax as applicable. Composite monthly premiums reflect plan design and dependent coverage, as well as underlying healthcare claims. The 15% excess of average Schools premiums over average State premium falls within the range of relative values described above. All Districts combined fund about 87% of total premium, the State funds about 93%. Generally a greater employer share of premium leads to greater percentage enrollment and lower average risk. We believe this to be a factor P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 7

10 SECTION II. PLAN COST ESTIMATES indicating Schools enrolled members are less healthy on average than are State enrollees, but caution that the wide variety of plan design, size and demographics, employer premium share and eligibility rules across Districts limits the value of this predictor. Despite the number of assumptions made to aggregate and compare Schools data, we calculate a premium equivalent estimated incurred claims plus retention that is within about 3% of stated premium. This compares to the State plan premium equivalent that is within about 1.5% of stated premium. The fact that the average Schools premium equivalent tracks well with premium bolsters observations across all Districts. Unfortunately, the same confidence cannot be placed in data for individual Districts, some with as few as five and twenty-five covered employees. Average Schools administrative costs are six times higher than for the State. This difference is mostly driven by stop loss reinsurance costs, which in one sense can be considered large claim costs instead of overhead. However, for every large claim dollar reimbursed through reinsurance there is typically 20 cents of retention for the stop loss carrier. Also, most stop loss contracts are maintained over time at a loss ratio of 80% or less, resulting in fewer premium dollars paying for care than is the case for the State plan. Pre-Medicare Retiree Medical Plan Costs All School Retirees Enrolled 518 (16 districts) Monthly Premium Employer Share Premium Equivalent* Monthly Admin. Fees** $480 $162 $696 $63 Districts State EGI 601 $548 $0 $903 $13 * Retrospectively estimated underlying plan cost ** All retention, including adjudication, networks, customer service, reinsurance, profit and premium tax as applicable The State covers Medicare retirees as well as pre-medicare retirees, and a few Districts offer Medicare supplement coverage. However, our report is limited to pre-medicare retirees to avoid skewing State costs for comparison purposes. Some Schools contribute toward the cost of pre-medicare coverage, especially for employees who accepted early retirement offers. Though a much smaller group, the dynamic of higher average State contribution for active employees is exactly reversed. For those Districts offering pre- Medicare coverage, premiums paid by retires are lower, underlying plan costs are lower and the spread of risk appears to be better than for the State. Appendix G illustrates global costs for Schools plans as currently constituted, if aggregated into the State plan design and if aggregated into both the State plan design and eligibility definition, as compared to State plan costs. Per employee per month (PEPM) costs for each scenario are summarized below: P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 8

11 SECTION II. PLAN COST ESTIMATES Medical Plan Estimated PEPM Current Schools Plans $ $ $ Schools with State Plan $ $ $ Design Schools with State Plan $464.58* $514.67* $532.93* Design and Eligibility State Plan $ $ $ * Should Schools enrollment change by +/-25% or more will result in different average costs, as described above, but such changes cannot currently be estimated. If the Schools adopt the State s plan provisions, premium sharing and administrative cost, changes in dependent enrollment and benefit levels should decrease total plan costs about 18% per employee covered. State employee costs have grown over the three years shown, both over time and compared to Schools. As described elsewhere, there are many data elements and assumptions to be refined before actionable estimates can be made, but a rough conclusion can be drawn that State employees would have cost 11% less than Schools employees with State plan design and premium sharing in State employees would have cost 2% less than Schools employees with State plan design and premium sharing in and 8% more in Overall, the best that can be concluded is that Schools employees cannot be clearly classified as more or less healthy than State employees. Given this ambiguity, the single biggest driver in overall lower Schools plan costs may be potential leveraging of network discounts and long-term population risk management, disease management and case management programs already in use by the State. As previously noted, in some cases assumptions and caveats had to considered when reviewing the data provided by each school district. Below is a list of the assumptions and caveats used throughout the course of our study: Carbon County #1 is self-funded but provided no paid claims so we valued it as we did insured plans. Carbon County #2 reported employer premium share but not total premium so we assumed the District paid 100% of premiums. Central Wyoming College data is not included as part of the State s EGI plan figures for purposes of this study. Converse #2 did not provide employer premium share for any year so we assumed the District paid 100% of premiums. Fremont #1 did not provide employer premium share for and so we assumed the District paid 100% of premiums. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 9

12 SECTION II. PLAN COST ESTIMATES Fremont #14 provided what appears to be employer premium share for an average month so we assumed the per-employee employer share is what they provided divided by number of employees in plan. Laramie #2 did not provide employer share for categories w/ dependents for Based on what they did provide for & we assumed the District paid $100/month for dependent categories in Lincoln #1 did not provide employer premium share for any year so we assumed the District paid 100% of premiums. Lincoln #2 did not provide employer premium share for any year so we assumed the District paid 100% of premiums. Park #16 did not provide employer premium share for so we assumed the District paid 80% of premiums per prior year reporting. Sheridan College data is not included as part of the State s EGI plan figures for purposes of this study. Sheridan #1 did not provide employer premium share for so we assumed the District paid the same amount as reported for Sheridan #3 employer premium share is greater than total premium for all 10 plans for employee only coverage and is greater than many of the less rich options for dependent categories. Sublette #9 did not provide employer premium share for so we assumed the District paid 100% of premiums. Sweetwater #2 reported District share of insured plans only for all years, we assumed total premium was 8% higher for each year. Teton County School Districts #1 is not included in this study. Uinta #1 did not provide enrollment data for any plan year ( , and ). Washakie #2 did not provide total premium share for and so we assumed employee pays $50 / month for employee only or family coverage as per prior year's reporting. Very few districts reported claims reimbursed through stop loss so self-funded results may be overstated. Changes to the assumptions and/or caveats noted above will change the data and results provided in this report. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 10

13 SECTION III. TRI-STRUCTURE CONSIDERATIONS Tier-Structure Considerations As discussed above, currently the State legislature funds contributions for school districts based upon a two-tier structure. The State s EGI plan currently funds contributions using a three-tier structure. Given the data provided, we currently know the enrollment for each group school districts and EGI. A summary of enrollment statistics and average premium and funding is summarized in the charts below: Category State Plan All Districts Combined Category State Plan All Districts Combined Category State Plan All Districts Combined Active Employee Plan Data Total Total Percent of Total Eligible Covered Employees Premium Employees Employees Covered Employer Premium Percent Paid by Employer 13,161 11, % $525 $ % 14,643 10, % $565 $ % Active Employee Plan Data Total Total Percent of Total Eligible Covered Employees Premium Employees Employees Covered Employer Premium Percent Paid by Employer 13,161 11, % $587 $ % 14,749 10, % $599 $ % Active Employee Plan Data Total Total Percent of Total Eligible Covered Employees Premium Employees Employees Covered Employer Premium Percent Paid by Employer 13,161 11, % $587 $ % 14,749 10, % $675 $ % With the data available, we do not know which tier classification would best suit the enrollment classification given the demographics of the school districts and EGI. For example, within a given school district, we do not know how many employees elect family coverage but only cover a spouse, or those that only cover one or two children. Because the State funding assumes a family contribution, it is likely each district employee may not represent a typical family structure in terms of health insurance (employee + a spouse + one or more P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 11

14 SECTION III. TRI-STRUCTURE CONSIDERATIONS children). If the ratio of dependents to employees is low, the State may be overfunding contributions given the School District s current two-tier structure. Rather, EGI funds based upon three-tiers allowing for an employee covering a spouse to fund less dollars than an employee covering a family (spouse plus one or more children). Utilizing a two-tier structure, such as the schools currently do, creates an implicit subsidy as employees with one dependent are subsidizing employees covering more than one dependent. In our experience, most employers tend to fund coverage based upon either a three or four-tier structure. A four-tier structure typically includes coverage for: employee only, employee + spouse/partner, employee + child(ren) or employee + family. The rationale behind these decisions usually stems from an analysis of the demographics, budgetary issues and the need to address equity issues among the employee population. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 12

15 SECTION IV. PROS AND CONS Pros and Cons There are numerous pros and cons when considering whether or not the school districts of Wyoming should join the State s EGI employee benefits program. This is an issue that is not unique to Wyoming as many other State s contemplate how best to provide employee benefits for State-funded employees. This is a decision that affects many employees throughout the State of Wyoming and should be given careful consideration; including advance planning for any transition and allocating appropriate resources. We have addressed some of the items to consider below: Pros (of all school districts joining EGI): 1. The State achieves parity for all State-funded employees for: a. employee benefit plans - School District medical plan deductibles range from $250 (Washakie #2) to $1,500 (Washakie #1) for single employees for the plan year. b. contributions School District contributions to medical plans vary widely from $57 per month (Big Horn County School District #4) to $1,062 per month (Washakie #2) on a composite basis. c. eligibility to participate. 2. From the data received in this study, in 2005 there are approximately 10,063 employees enrolled in Wyoming school district plans and 11,837 employees enrolled in the State s EGI plan. Combining the two groups together creates a larger purchasing pool. 3. More Statewide employees will likely be covered if all Districts move to the State s plan. Currently, the State s plan eligibility of 50% Full-Time Equivalency status is a lower threshold compared to the eligibility terms of most School districts. 4. Also, based upon a larger group size the State and especially many of the school districts would have less fluctuation in claim costs year over year and therefore better stability in future premium increases since overall plan costs would be spread across a larger covered population. 5. Along the same lines, while increased administration would be a factor that would need to be addressed by the State, long-term administrative costs would likely be lower because costs would be spread across a larger covered population and many duplicative tasks (i.e., general plan administration, competitive periodic bidding for carriers/administrators, etc.) at each District would be eliminated. 6. Some districts may gain more choice of plan options for their employees, in some cases including retiree benefit options that may not currently be available for many of the school districts. 7. The current split contribution structure utilized by EGI, likely will save the State money for additional dual-working couples that work for the State and a school district included in this study. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 13

16 SECTION IV. PROS AND CONS 8. Similarly, a consistent three or four tier premium/funding structure reduces the cost of covering just a spouse or just children at most Districts. 9. The combined group of employees will likely produce greater leverage for developing networks and added value of network discounts, especially in small communities where there are few provider choices. 10. The additional value-added services available under EGI s medical programs will provide benefit and potential long-term cost savings to district plans (i.e., wellness, disease management, etc.) 11. EGI s vendors provide dedicated customer-service lines for all State employees, often producing better, more efficient service. 12. EGI s health insurance vendors are required to have a customer service and claims processing office located in the State of Wyoming, promoting local service and potential job opportunities for Wyoming residents. 13. Dedicated full-time administration of the State s benefit programs would replace part-time administration shared over many different programs. Cons (of the school districts joining EGI): 1. School districts lose local control and flexibility in designing and funding their own employee benefit programs in order to meet the specific needs of their employees. 2. Any time a group changes plans, there are likely differences in the plan design elements covered, but often more important, the network of providers may differ. Employees often build ties with a particular provider and having to change providers due to changes in provider networks is disruptive to employees. This may or may not be an issue in Wyoming depending upon the amount of network overlap among the major carriers in the State. This is an area that would need to be given additional consideration in any future decision-making process. 3. The State will need to increase staff to accommodate increased administration. 4. The State s retiree health care costs will increase depending upon final program design. 5. Some District costs will increase for a combination of factors, depending upon current circumstances: a. Covering more employees due to 50% Full-Time Equivalency eligibility definition. b. Paying more for covered dependents where currently only employee only cost is funded by the employer/district. c. Implicit or potentially explicit retiree coverage costs if a uniform State model is adopted. 6. District employee out-of-pocket costs likely increase at most Districts due to more cost-sharing in State plan design(s). P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 14

17 SECTION IV. PROS AND CONS 7. District employee premium share may go up or down depends upon change in employer funding strategy and overall tiering strategy adopted. 8. Another area of consideration in any type of consolidation process is the impact on people and their jobs. Brokers and consultants who work with school districts, independently or collectively as a trust, may lose work and revenue from a consolidation with the State. The same may be true of any local insurance carrier s providing services specifically for Wyoming-based employers. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 15

18 SECTION V. NEXT STEPS Next Steps As we conclude this study, we incorporate several observations to be considered as next steps in considering whether or not the forty-eight school districts of Wyoming should join the State EGI program. Given the timing of this study, we recommend continued analysis on the data received, as well as gathering additional plan data to update the study up until a decision is made. As pointed out throughout our report, there are limitations with regard to predictability due to the data received. In certain areas, additional specific data will yield more predictable results. If additional data is gathered from the school districts in the future, consideration should be given as to what data elements are most important for decision-making. A complete overhaul of the data information gathering spreadsheets is not necessary, rather a few additional data points should be added for consideration in the future. For example, it would be very helpful in future data collection to obtain enrollment, claims and administration figures separately for each plan(s) offered and also split by active, pre-medicare and Medicare retiree populations. Finally, as pointed out in the pros and cons above, there are many other considerations to be made with this decision, including issues surrounding staffing, funding and network adequacy to name a few. P:\HealthWelfare\Wyoming\RFP Comparison Study\Report lnr.doc 16

19 Appendix A- School District Funding Data

20 District FTE Professional, Certified and Classified Staff District ID District Name Total FTE SF Albany # $ 1,526, Big Horn # $ 356, Big Horn # $ 285, Big Horn # $ 210, Big Horn # $ 170, Campbell #1 1, $ 2,936, Carbon # $ 610, Carbon # $ 414, Converse # $ 657, Converse # $ 311, Crook # $ 509, Fremont # $ 675, Fremont # $ 124, Fremont # $ 192, Fremont # $ 404, Fremont # $ 233, Fremont # $ 146, Fremont # $ 877, Fremont # $ 188, Goshen # $ 789, Hot Springs # $ 290, Johnson # $ 506, Laramie #1 1, $ 4,330, Laramie # $ 432, Lincoln # $ 308, Lincoln # $ 812, Natrona #1 1, $ 4,417, Niobrara # $ 193, Park # $ 618, Park # $ 776, Park # $ 82, Platte # $ 522, Platte # $ 131, Sheridan # $ 403, Sheridan # $ 1,184, Sheridan # $ 80, Sublette # $ 240, Sublette # $ 269, Sweetwater # $ 1,564, Sweetwater # $ 974, Teton # $ 815, Uinta # $ 1,120, Uinta # $ 281, Uinta # $ 295, Washakie # $ 507, Washakie # $ 63, Weston # $ 325, Weston # $ 147, State Total 14, $ 33,321,

21 Salary Data Health Teacher Total Category Base Salary Benefits Insurance Education Compensation Teachers (Base Salary) $25, $4, $4,890 $1,907 $37, Superintendent $80, $15, $4,890 $100, Business Manager $49, $9, $4,890 $64, Assistant Superintendent $77, $14, $4,890 $97, Food Service $34, $6, $4,890 $45, Maintenance and Operations $40, $7, $4,890 $53, Transportation $42, $8, $4,890 $55, Technology $34, $6, $4,890 $45, Clerical $22, $4, $4,890 $31, Principal $62, $11, $4,890 $78, Assistant Principal $56, $10, $4,890 $72, Instructional Aide $14, $2, $4,890 $21, Elementary Salary Data Health Teacher Total Category Base Salary Benefits Insurance Education Compensation Teachers (Base Salary) $25, $4, $4,890 $1,907 $37, Superintendent $80, $15, $4,890 $100, Business Manager $49, $9, $4,890 $64, Assistant Superintendent $77, $14, $4,890 $97, Food Service $34, $6, $4,890 $45, Maintenance and Operations $40, $7, $4,890 $53, Transportation $42, $8, $4,890 $55, Technology $34, $6, $4,890 $45, Clerical $22, $4, $4,890 $31, Principal $62, $11, $4,890 $78, Assistant Principal $56, $10, $4,890 $72, Instructional Aide $14, $2, $4,890 $21, Middle School Salary Data Health Teacher Total Category Base Salary Benefits Insurance Education Compensation Teachers (Base Salary) $25, $4, $4,890 $1,907 $37, Superintendent $80, $15, $4,890 $100, Business Manager $49, $9, $4,890 $64, Assistant Superintendent $77, $14, $4,890 $97, Food Service $34, $6, $4,890 $45, Maintenance and Operations $40, $7, $4,890 $53, Transportation $42, $8, $4,890 $55, Technology $34, $6, $4,890 $45, Clerical $22, $4, $4,890 $31, Principal $62, $11, $4,890 $78, Assistant Principal $56, $10, $4,890 $72, Instructional Aide $14, $2, $4,890 $21, High School 2

22 2005/2006 School District Health Insurance Funding and Participation Analysis FTE (Using 04/05 Calculated Blended ER District Block Grant FTEs numbers) Covered Calculated Blended Premium Premium Total Funding w/ New Grant Calculated ER Contribution Variance from Funded Amount Percent Covered Albany County SD # $461 $436 $ 4,710, $ 3,318, $ 1,392, % Big Horn SD # $780 $587 $ 1,099, $ 1,095, $ 3, % Big Horn SD # $614 $550 $ 880, $ 631, $ 249, % Big Horn SD # $726 $581 $ 648, $ 694, $ (46,021.36) 78.96% Big Horn SD # $934 $140 $ 524, $ 628, $ (104,004.44) 70.10% Campbell County $725 $617 $ 9,060, $ 6,572, $ 2,488, % Carbon County SD # $942 $781 $ 1,883, $ 2,180, $ (296,636.19) 70.38% Carbon County SD # $344 $344 $ 1,279, $ 602, $ 676, % Converse SD # $851 $743 $ 2,027, $ 1,777, $ 249, % Converse SD # $765 $43 $ 960, $ 1,059, $ (99,210.32) 82.44% Crook Count SD # $775 $775 $ 1,571, $ 1,792, $ (220,977.13) 86.09% Fremont County SD # $641 $556 $ 2,085, $ 1,945, $ 140, % Fremont County SD # $897 $812 $ 385, $ 494, $ (108,969.35) 93.71% Fremont County SD # $747 $697 $ 593, $ 639, $ (45,978.33) 84.92% Fremont County SD # $929 $929 $ 1,248, $ 1,739, $ (490,580.46) 92.31% Fremont County SD # $809 $627 $ 720, $ 836, $ (115,608.82) 87.84% Fremont County SD # $741 $597 $ 450, $ 350, $ 100, % Fremont County SD # $726 $598 $ 2,707, $ 3,157, $ (449,965.07) 91.77% Fremont County SD # $766 $701 $ 581, $ 764, $ (183,197.10) 99.01% Goshen County # $673 $511 $ 2,434, $ 3,158, $ (723,310.41) 90.09% Hot Springs SD # $674 $612 $ 897, $ 664, $ 232, % Johnson County SD # $358 $256 $ 1,563, $ 954, $ 609, % Laramie SD # ,548 $754 $694 $ 13,362, $ 14,011, $ (648,558.73) 79.57% Laramie SD # $554 $521 $ 1,335, $ 1,089, $ 245, % Lincoln SD # $710 $710 $ 952, $ 828, $ 124, % Lincoln SD # $644 $644 $ 2,506, $ 2,119, $ 387, % Natrona SD ,028 $531 $487 $ 13,630, $ 6,549, $ 7,081, % Niobrara County SD # $613 $531 $ 597, $ 478, $ 119, % Park County SD # $592 $356 $ 1,907, $ 1,360, $ 547, % Park County SD # $617 $615 $ 2,395, $ 1,600, $ 795, % Park County SD # $894 $805 $ 253, $ 308, $ (55,693.40) 77.80% Platte County SD # $1,000 $1,000 $ 1,610, $ 2,110, $ (499,710.56) 73.26% Platte County SD # $804 $804 $ 405, $ 393, $ 12, % Sheridan County SD # $502 $444 $ 1,246, $ 1,000, $ 245, % Sheridan County SD # $713 $594 $ 3,655, $ 3,518, $ 136, % Sheridan County SD # $539 $575 $ 246, $ 197, $ 49, % Sublette SD # $996 $996 $ 742, $ 1,163, $ (421,594.56) 86.98% Sublette SD # $359 $356 $ 832, $ 468, $ 363, % Sweetwater SD # $620 $505 $ 4,827, $ 3,921, $ 906, % Sweetwater SD # $623 $582 $ 3,006, $ 1,967, $ 1,039, % Teton SD # $541 $541 $ 2,516, $ 2,157, $ 358, % Uinta County SD # $717 $672 $ 3,457, $ 3,670, $ (213,404.58) 90.00% Uinta County SD # $572 $545 $ 869, $ 604, $ 264, % Uinta County SD # $852 $807 $ 911, $ 907, $ 3, % Washakie SD # $706 $706 $ 1,564, $ 1,337, $ 226, % Washakie SD # $1,112 $1,062 $ 196, $ 361, $ (165,183.67) % Weston County SD # $786 $527 $ 1,005, $ 803, $ 202, % Weston County SD # $747 $556 $ 455, $ 286, $ 168, % All Districts Combined 14,843 10,978 $33,978 $29,128 $ 102,807, $ 88,276, $ 14,531, % Note: Data based upon informations supplied by school districts. Assumptions have been made, where necessary. 3

23 Premium Classifications: Employee Only Split Contract Employee +Spouse/Child(ren) Family Total A # of FTE School District Staff Insurance Participants School Year , , , , B (b) (i) Weighted Participation: 39.5% 9.5% 5.3% 45.6% 100.0% C State Employer Contribution - Annualized $4, $4, $8, $9, D (b) (ii) Composite Premium $1, $ $ $4, , E Annual Composite Premium: $7, F Subtraction of Amount Within Prototype: -$4, G (b) (iii) Amount to be funded via SF 47 per FTE $2, H School Year FTE: 14, I Total: $33,321, State Health Insurance Monthly Premium Benefits - January 1, 2005 Employee Only: $ Split Contracts $ Employee +Spouse/Child(ren) $ Family $ Data Sources: School District FTE Participating in Health Insurance: WEA Total School District FTE: WDE State Premium Benefits: A & I Amount within Prototype: LSO 4

24 Appendix B- Information Gathering Spreadsheets

25 DISTRICT DATA COLLECTION INSTRUCTIONS When completing the spreadsheet please enter a NA in any required information field that does not apply to the district. Basic Health Dental Plan Info tab. This sheet is designed to collect the basic information of the programs districts make available to district employees that have actual enrollment. A separate sheet is required for each medical program which has district employees enrolled. For example: the district offers three medical options but only two options have actual enrollment during the year in question. Separate sheets must be completed for the two options that have had enrollment. No sheet is required for the one option that never had any employees enrolled. As you scroll down the spreadsheet you will see that information will be required for the fiscal year (7/03 6/04), fiscal year (7/04 6/05), and fiscal year (7/05 6/06). Information through August 2005 should be provided for fiscal year. If rates or employer contributions are scheduled to change by November 1 st, 2005, include these rate and/or employer contribution changes plus the effective date in the worksheet. District Name Enter district name in shaded cell to the right. District Contact Person, Address and Phone Number Enter the contact information of an individual at the district who can be contacted for questions. Funding Mechanism Indicate whether the medical program is fully insured or self funded. Partially self funded programs with stop loss are to be listed as self funded. Health Insurance Carrier/Administrator Provide the name of the health insurance carrier utilized for the plan if fully insured or the name of the company who provides third party administration for the plan if self funded. Anniversary Date The anniversary date is the date when contracts are negotiated with insurance companies and is usually when rate/benefit changes are made. Enter the anniversary date of the medial plan. Admin Fee Monthly Per Employee If the medical plan is self funded or partially self funded, provide the monthly per employee administration fee. For Example: per employee per month. If the administration fee requires an additional amount for dependents, list both fees. For Example per employee single, per employee family. Case Management/Utilization Review Fee If the medical plan is self funded or partially self funded, provide the base monthly per employee fees for this service. For Example: 2.25 per employee per month. If the base case management/utilization review 1

26 fee requires an additional amount for dependents, list both fees. For Example 2.25 per employee single, 3.00 per employee family. Specific Stop Loss Deductible If the medical plan is self funded or partially self funded, a specific stop loss policy has been purchased. Provide the specific stop loss individual deductible for the plan. For Example: $50,000 per participant. Specific Stop Loss Coverage Period Specific stop loss policies provide specific time periods of eligible coverage. List the coverage period of the specific stop loss policy. For Example: 12/12 (incurred in 12 months, paid in 12 months) 12/15 (incurred in 12 months, paid in 15 months) 24/12 (incurred in 24 months, paid in 12). Specific Stop Loss Premiums - If the medical plan is self funded or partially self funded, provide the monthly per employee premiums for specific stop loss coverage. If the premiums are on a composite basis put the same rate in both the single and family boxes. Aggregate Stop Loss Premiums - If the medical plan is self funded or partially self funded, provide the annual premium for aggregate stop loss coverage. Deductible Single A single calendar year deductible is the amount of covered medical expenses that a individual participant must incur before the medical plan begins to pay benefits. List the individual deductible of the plan. Deductible Family - A family calendar year deductible is the amount of covered medical expenses that all family participants must incur before the medical plan begins to pay benefits. For example: if the individual deductible is $ and three family members must meet the deductible, the family deductible would be $ List the family deductible of the plan. Co-insurance Co-insurance is the percentage ratio paid by the plan and by the participant once the deductible has been met. For example: if the medical plan pays 80% after the deductible is met the co-insurance is listed as 80/20. Annual Co-insurance Out Of Pocket Max Single The annual co-insurance out of pocket maximum for an individual is the maximum amount of co-insurance paid by the individual participant before the medical plan moves to 100% payment for the rest of the calendar year. The co-insurance out of pocket maximum does not include the amount paid for the deductible. For example: if the medical plan pays 80% of the first $5, after a $ deductible, the individual co-insurance maximum would be $1, (20% of $5,000). Annual Co-insurance out of pocket max family The annual co-insurance out of pocket maximum for a family is the maximum co-insurance amount paid by the participant for all family members before the medical plan moves to 100% payment for the rest of the calendar year. The co-insurance out of pocket maximum does not include the amount paid for the deductible. For example: if the medical plan pays 80% of the 2