Self-Insurance Estimating Conference State Employees' Health Insurance Trust Fund Last conference held: July 26, 2007.

Transcription

1 Self-Insurance Estimating Conference State Employees' Health Insurance Trust Fund Last conference held: July 26, 2007 Executive Summary The outlook for the State Employees Health Insurance Trust Fund has improved somewhat from the February forecast. The projected ending balance of the fund gained from $173.3 million to $175.7 million, and the projected ending balance increased from $2.2 million to $60.7 million. The conference also adopted its first outlooks for and , which show operating deficits of $287.9 million and $471.2 million, respectively. There are significant changes projected in revenues to the trust fund ($19.5 million in and $91.6 million in ). The largest increase is as a result of an increase in premium rates of 5% effective in June of 2008, which results in higher income of $5.3 million in and $64.5 million in Additionally there are adjustments made for increasing employee enrollment projections and category fluctuations, which includes migration out of the TRICARE program, resulting in higher income of $14.8 million in and $21.2 million in Other smaller adjustments in revenues (including a decrease in the Tri-Care surplus) sum to -$.6 million in and $5.9 million in There are also significant increases to the expense forecasts ($17.1 million in and $35.5 million in ). PPO medical claims are projected to be $7.9 million in higher in and $10.3 million higher in , due to an increase in projected enrollment ($2.3 million in and $2.9 million in ) and the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, 2007 ($5.6 million in and $7.4 million in ). HMO premiums are expected to be $11.8 million higher in and $18.3 million higher in due to increased projected enrollment and a higher than anticipated negotiated weighted-average premium increase for Plan Year 2008 (due partially to the repeal of the Florida Motor Vehicle No- Fault law, effective October 1, 2007). The PPO Prescription Drug Program claims are expected to be $2.8 million lower in due to a decrease in the member population size and changes in utilization and generic dispensing, and $ 6.6 million higher in due to an increase in projected utilization and a change in the member population size. The ASO fee is projected to be $.2 million higher in and $.3 million higher in due to an increase in projected enrollment.

2 State Employees' Group Health Self-Insurance Trust Fund Report on the Financial Outlook For the Fiscal Years Ending June 30, 2007 Through 2011 Presented July 26, 2007 Prepared by: Florida Department of Management Services Division of State Group Insurance

3 Exhibit I Financial Outlook By Fiscal Year FY FY FY FY FY Actual Estimate (1) Estimate (1) Estimate (1) Estimate (1) BEGINNING CASH BALANCE $ $ $ $ 60.7 $ 0.0 REVENUES: Insurance Premiums: Employer $ 1,033.8 $ 1,128.0 $ 1,193.0 $ 1,195.6 $ 1,199.0 Employee HSA Contributions (2) COBRA Early Retiree Medicare TRICARE Surplus (3) Investment Interest TPA Refunds PBM Rebates Pretax Trust Fund Transfer Medicare Part D Subsidy TOTAL REVENUES $ 1,412.3 $ 1,523.1 $ 1,601.9 $ 1,606.7 $ 1,615.7 TOTAL CASH AVAILABLE $ 1,588.1 $ 1,723.2 $ 1,777.6 $ 1,667.4 $ 1,615.7 EXPENSES: State PPO Plan: (3) Medical Claims $ $ (4) $ (4) $ (4) $ (4) Prescription Drug Claims ASO Fee HMO Premium Payments (3) (4) (4) (4) 1,048.6 (4) HSA Deposits (2) Operating Costs & Admin Assessment Premium Refunds Other Expenses TOTAL EXPENSES $ 1,388.0 $ 1,547.5 $ 1,716.9 $ 1,894.3 $ 2,086.9 EXCESS OF REVENUES OVER EXPENSES $ 24.3 $ (24.4) $ (115.0) $ (287.6) $ (471.2) ENDING CASH BALANCE $ $ $ 60.7 $ (226.9) $ (471.2) by Plan by Coverage Type TRICARE PPO Standard 103, , ,074 99,805 98,587 PPO HIHP HMO Standard 67,941 71,782 74,273 76,543 78,908 HMO HIHP Total 172, , , , ,633 Active Standard 136, , , , ,836 Active HIHP 1,003 1,088 1,088 1,088 1,088 Cobra 1,091 1,080 1,080 1,080 1,080 Early Retiree 8,486 8,442 8,466 8,466 8,485 Medicare 25,193 25,963 26,686 27,394 28,144 Total 172, , , , ,633 Active Retiree Total (1) Actual results may differ from projected values with increasing likelihood of variance in future periods. (2) Contributions approximate an equal split between employer and employee. (3) Includes the estimated impact resulting from the federal prohibition to offer a TRICARE supplemental plan within an employer-sponsored salary reduction cafeteria plan, effective January 1, (4) Includes the estimated impact resulting from the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, (See Exhibits II & III for estimated impact for FYE 2008 and 2009.) Page 1

4 Exhibit II Financial Outlook Fiscal Year (A) (B) (B) - (A) March '07 July '07 Difference BEGINNING CASH BALANCE $ $ $ 0.0 REVENUES: Insurance Premiums: Employer $ 1,107.9 $ 1,128.0 $ 20.1 Employee HSA Contributions (1) COBRA Early Retiree (1.7) Medicare (0.3) TRICARE Surplus (2) (3.4) Investment Interest TPA Refunds PBM Rebates Pretax Trust Fund Transfer Medicare Part D Subsidy TOTAL REVENUES $ 1,503.6 $ 1,523.1 $ 19.5 TOTAL CASH AVAILABLE $ 1,703.7 $ 1,723.2 $ 19.5 EXPENSES: State PPO Plan: (2) Medical Claims $ $ (3) $ 7.9 Prescription Drug Claims (2.8) ASO Fee HMO Premium Payments (2) (3) 11.8 HSA Deposits (1) Operating Costs & Admin Assessment Premium Refunds Other Expenses TOTAL EXPENSES $ 1,530.4 $ 1,547.5 $ 17.1 EXCESS OF REVENUES OVER EXPENSES $ (26.8) $ (24.4) $ 2.4 ENDING CASH BALANCE $ $ $ 2.4 by Plan by Coverage Type TRICARE PPO Standard 101, , PPO HIHP HMO Standard 70,787 71, HMO HIHP Total 173, ,011 1,331 Active Standard 136, ,438 1,570 Active HIHP 1,013 1, Cobra 1,052 1, Early Retiree 8,664 8,442 (222) Medicare 26,083 25,963 (120) Total 173, ,011 1,331 Active (481) Retiree (12) Total (493) (1) Contributions approximate an equal split between employer and employee. (2) Includes the estimated impact resulting from the federal prohibition to offer a TRICARE supplemental plan within an employer-sponsored salary reduction cafeteria plan, effective January 1, (3) Includes the estimated impact resulting from the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, (State PPO plan $5.6M and State-contracted HMO plans $2.6M) Page 2

5 Exhibit III Financial Outlook Fiscal Year (A) (B) (B) - (A) March '07 July '07 Difference BEGINNING CASH BALANCE $ $ $ 2.4 REVENUES: Insurance Premiums: Employer $ 1,107.3 $ 1,193.0 $ 85.7 Employee HSA Contributions (1) COBRA Early Retiree Medicare TRICARE Surplus (2) (6.0) Investment Interest TPA Refunds PBM Rebates Pretax Trust Fund Transfer Medicare Part D Subsidy TOTAL REVENUES $ 1,510.3 $ 1,601.9 $ 91.6 TOTAL CASH AVAILABLE $ 1,683.6 $ 1,777.6 $ 94.0 EXPENSES: State PPO Plan: (2) Medical Claims $ $ (3) $ 10.3 Prescription Drug Claims ASO Fee HMO Premium Payments (2) (3) 18.3 HSA Deposits (1) Operating Costs & Admin Assessment Premium Refunds Other Expenses TOTAL EXPENSES $ 1,681.4 $ 1,716.9 $ 35.5 EXCESS OF REVENUES OVER EXPENSES $ (171.1) $ (115.0) $ 56.1 ENDING CASH BALANCE $ 2.2 $ 60.7 $ 58.5 by Plan by Coverage Type TRICARE PPO Standard 100, , PPO HIHP HMO Standard 73,003 74,273 1,270 HMO HIHP Total 174, ,485 1,772 Active Standard 136, ,165 2,400 Active HIHP 1,013 1, Cobra 1,052 1, Early Retiree 8,871 8,466 (405) Medicare 27,012 26,686 (326) Total 174, ,485 1,772 Active (965) Retiree 29 0 (29) Total (994) (1) Contributions approximate an equal split between employer and employee. (2) Includes the estimated impact resulting from the federal prohibition to offer a TRICARE supplemental plan within an employer-sponsored salary reduction cafeteria plan, effective January 1, (3) Includes the estimated impact resulting from the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, (State PPO plan $7.4M and State-contracted HMO plans $5.6M) Page 3

6 Exhibit IV Comparison of Financial Outlooks Fiscal Year $ Previous Ending Cash Balance Forecast (1) 19.5 Increase in Revenue Forecast Increase in Employer Insurance Premiums: Increase in projected employee enrollment and category fluctuation, including TRICARE migration (Projected enrollment from 137,881 to 139,526) Increase in premium rates of 5% effective June 2008 (0.2) Net decrease in Insurance Premiums for all other premium revenue categories (3.4) - Decrease in the TRICARE Surplus due to the estimated impact of the federal prohibition to offer a TRICARE supplemental plan within an employer-sponsored salary reduction cafeteria plan effective January 1, 2008 (Projected enrollment from 994 to 501) Increase in the Pretax Trust Fund Transfer due to inadequate budget authority to fully transfer cash surpluses during FY Increase in Expense Forecast Increase in PPO Plan Medical Claims Increase due to an increase in projected enrollment (Projected enrollment from 102,549 to 102,859) Increase due to the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, 2007 (2.8) - Decrease in PPO Plan Prescription Drug Claims due to a decrease in the member population size and changes in utilization and generic dispensing Increase in ASO Fee due to an increase in projected enrollment (Projected enrollment from 102,549 to 102,859) Increase in HMO Premium Payments Increase due to an increase in projected enrollment (Projected enrollment from 71,131 to 72,152) Increase due to the negotiated weighted-average premium increase for Plan Year 2008 (10.8%) being higher than projected (10.5%) (2) $ Current Ending Cash Balance Forecast (1) March 2007 (2) Includes the estimated impact resulting from the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, Page 4

7 Exhibit V Comparison of Financial Outlooks Fiscal Year $ 2.2 Previous Ending Cash Balance Forecast (1) 2.4 Increase in Beginning Cash Balance Forecast 91.6 Increase in Revenue Forecast Increase in Employer Insurance Premiums: Increase in projected employee enrollment and category fluctuation, including TRICARE migration (Projected enrollment from 137,778 to 140,253) Increase in premium rates of 5% effective June Net increase in Insurance Premiums for all other premium revenue categories (6.0) - Decrease in the TRICARE Surplus due to the estimated impact of the federal prohibition to offer a TRICARE supplemental plan within an employer-sponsored salary reduction cafeteria plan effective January 1, 2008 (Projected enrollment from 994 to 0) Increase in Investment Interest due to higher than projected cash balances Increase in PBM Rebates due to an increase in projected utilization 35.5 Increase in Expense Forecast Increase in PPO Plan Medical Claims Increase due to an increase in projected enrollment (Projected enrollment from 101,366 to 101,842) Increase due to the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, Increase in PPO Plan Prescription Drug Claims due to an increase in projected utilization and a change in the member population size Increase in ASO Fee due to an increase in projected enrollment (Projected enrollment from 101,366 to 101,842) Increase in HMO Premium Payments Net increase due to an increase in net projected enrollment (Projected enrollment from 73,347 to 74,643) Increase due to a higher premium base than projected for FY (2) $ 60.7 Current Ending Cash Balance Forecast (1) March 2007 (2) Includes the estimated impact resulting from the repeal of the Florida Motor Vehicle No-Fault law, effective October 1, Page 5

8 Exhibit VI Financial Outlook Fiscal Year (A) (B) (B) - (A) March '07 Actual Difference BEGINNING CASH BALANCE $ $ $ 0.0 REVENUES: Insurance Premiums: Employer $ 1,032.8 $ 1,033.8 $ 1.0 Employee HSA Contributions (1) COBRA (0.1) Early Retiree Medicare (0.1) TRICARE Surplus Investment Interest TPA Refunds (0.1) PBM Rebates Pretax Trust Fund Transfer (2.0) Medicare Part D Subsidy (0.2) TOTAL REVENUES $ 1,412.4 $ 1,412.3 $ (0.1) TOTAL CASH AVAILABLE $ 1,588.2 $ 1,588.1 $ (0.1) EXPENSES: State PPO Plan: Medical Claims $ $ $ 2.6 Prescription Drug Claims (3.2) ASO Fee HMO Premium Payments HSA Deposits (1) Operating Costs & Admin Assessment (1.0) Premium Refunds Other Expenses TOTAL EXPENSES $ 1,388.1 $ 1,388.0 $ (0.1) EXCESS OF REVENUES OVER EXPENSES $ 24.3 $ 24.3 $ 0.0 ENDING CASH BALANCE $ $ $ 0.0 by Plan by Coverage Type TRICARE PPO Standard 103, ,014 (14) PPO HIHP HMO Standard 67,802 67, HMO HIHP Total 171, , Active Standard 136, , Active HIHP 976 1, Cobra 1,106 1,091 (15) Early Retiree 8,514 8,486 (28) Medicare 25,202 25,193 (9) Total 171, , Active Retiree Total (1) Contributions approximate an equal split between employer and employee. Page 6

9 Exhibit VII Premium Rate Table Effective April 2007 ALL ENROLLEES (Excluding TRICARE Supplemental Plan) Coverage PPO/HMO Standard PPO/HMO HIHP Category Type Employer Enrollee Total Employer Enrollee Total Full -Time Employees (1) Single Family Spouse Full -Time Employees (1) (Bi-Weekly) COBRA Participants (2) (Monthly ) Early Retirees Medicare Participants (3) Single Family Spouse Single Family Single Family (I) One Eligible (II) One Under/Over (III) Both Eligible Notes: (1) Premium contribution for Part-Time Employees is to be calculated as follows: Step 1. State Contribution x FTE% = Calculated State Contribution Step 2. Total Contribution - Calculated State Contribution = Employee Contribution (2) Includes an additional 2% for administrative costs as permitted by federal regulations. (3) The actual premium rate for Medicare participants enrolled in an HMO plan may differ from what is presented. (4) The employer monthly HSA contribution of $41.66/single ($500 annually) and $83.33/family ($1,000 annually) is included in the listed employer rates. TRICARE Supplemental Health Insurance Plan Coverage Biweekly Contribution Monthly Contribution Category Type Employer Enrollee Total Employer Enrollee Total Active Full-Time Single Employees (1) Family Spouse (3) COBRA Participants Single (2) N/A N/A N/A Family (2) N/A N/A N/A Early Retirees Single N/A N/A N/A Family N/A N/A N/A Notes: (1) Premium contribution for a Part-Time Employee is to be calculated as follows: Employer Contribution x FTE% = Calculated Employer Contribution (2) Includes an additional 2% for administrative costs as permitted by federal regulations. (3) Premium is shared equally between respective agencies. Page 7

10 Exhibit VIII Premium Rate Table Effective June 2008 Coverage PPO/HMO Standard PPO/HMO HIHP Category Type Employer Enrollee Total Employer Enrollee Total Full -Time Employees (1) Full -Time Employees (1) (Bi-Weekly) COBRA Participants (2) (Monthly ) Early Retirees Medicare Participants (3) Single Family , Spouse 1, , Single Family Spouse Single Family , , Single Family , , (I) One Eligible (II) One Under/Over (III) Both Eligible Notes: (1) Premium contribution for Part-Time Employees is to be calculated as follows: Step 1. State Contribution x FTE% = Calculated State Contribution Step 2. Total Contribution - Calculated State Contribution = Employee Contribution (2) Includes an additional 2% for administrative costs as permitted by federal regulations. (3) The actual premium rate for Medicare participants enrolled in an HMO plan may differ from what is presented. (4) The employer monthly HSA contribution of $41.66/single ($500 annually) and $83.33/family ($1,000 annually) is included in the listed employer rates. Page 8

11 Exhibit IX Abbreviations ASO.. Administrative Services Only COBRA.. Consolidated Omnibus Budget Reconciliation Act DSGI.. Division of State Group Insurance FTE.. Full Time Equivalency FY.. Fiscal Year HIHP.. Health Investor Health Plan (i.e., High Deductible Health Plan) HMO.. Health Maintenance Organization HSA.. Health Savings Account PBM.. Pharmacy Benefits Manager PPO.. Preferred Provider Organization TPA.. Third Party Administrator Page 9