Health Insurance Funding Health Plan Change Recommendations FY - PowerPoint PPT Presentation

Health Insurance Funding Health Plan Change Recommendations FY 2016/17 & FY 2017/18

Highlights  Provides coverage for following groups:  County employees ~650  Constitutional Officers ~650  Retirees ~250  Plus: eligible dependents (spouses, children)  Total members ~3,600

Highlights (continued)  Self-insured fund  “Grandfathered” status under ACA  No plan changes since 2010  PPO  Administered by Florida Blue

Rising Costs  Prescription drug prices up 13.6% for 2015 (Milliman)  Medical trend up 9.0% for 2015, forecast of 9.6% for 2016 (Wells Fargo Ins.)  Healthcare costs = 17.5% of GDP in 2014 (Up 5.3% from 2013)  ACA additional costs - $236,275 fees plus

IRC Healthcare Expenditures 7% trend – 2015 = $20.5 million $20 $18.07 Millions $18 $16 $14 $12 $10 $8 $6 2009 2010 2011 2012 2013 2014 2015 Fiscal Year

Health Ins. Fund Net Revenues/(Expenses) $4 Millions $3 $2 $1 $0 -$1 -$2 -$3 2009 2010 2011 2012 2013 2014 2015 Fiscal Year

Historical Premiums per Month Single Coverage Family Coverage Fiscal Year Employee Employer Employee Employer 2006/07 $0 $505 $202.50 $745 2007/08 $0 $525 $217.50 $765 2008/09 $0 $525 $217.50 $765 2009/10 $0 $495 $217.50 $735 2010/11 $0 $495 $217.50 $735 2011/12 $0 $495 $217.50 $735 2012/13 $0 $475 $217.50 $715 2013/14 $0 $475 $217.50 $715 2014/15 $0 $475 $217.50 $715 2015/16 $0 $505 $217.50 $745

Monthly Premium Comparison – Surrounding Local Governments Total Monthly Premium Family Coverage $2,500 $2,337 Average - $1,608 $2,016 $1,882 $1,944 $2,000 $1,846 $1,828 $1,912 $1,699 $1,688 $1,620 $1,517 $1,500 $1,106 $1,036 $904 $963 $1,000 $792 $500 $0

Monthly Premium Comparison – Surrounding Local Governments Total Monthly Premium ‐ Single Coverage $900 $774 Average - $577 $800 $701 $700 $632 $615 $608 $593 $586 $581 $566 $600 $561 $508 $514 $505 $497 $490 $500 $429 $400 $300 $200 $100 $0

Health Ins. Fund Net Revenues/(Expenses) $4 Millions $3,032,903 $3 $1,761,580 $2 $1,250,302 $993,336 $1 $484,193 $0 -$1 -$1,375,479 -$2 -$2,300,000 -$3 -$2,763,495 -$4 -$3,900,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fiscal Year

FY 2016/17 Recommendations Est. Annual Item Description Amount Est. Annual Loss – FY 2016/17 (Status Quo) $3,900,000 Less: Savings from Recommendations Blue Choice Health Plan ($320,000) Kannact Diabetes Management ($105,000) International Prescription Provider ($110,000) Change Coverage Effective Date ($150,000) Employee Premium Change ($490,000) Employer Premium Change ($1,630,000) Subtotal: Cost Saving Measures ($2,805,000) Estimated Annual Loss – FY 2016/17 ($1,095,000)

Proposed Changes – FY 2016/17 Change from Blue Choice to Blue Options 1. No change in copays, deductibles, out-of-pocket a) More current cost containment measures b) Est. cost savings of 2% or $320,000 c)

Proposed Changes – FY 2016/17 Kannact Diabetes Management Program 2. Plan costs last year ~ $1,050,000 a) Comprehensive system to manage diabetes b) Health coach, real-time monitoring, and support c) Est. cost savings of 10% or $105,000 d) Employees feel better, are healthier, and more e) productive

Proposed Changes – FY 2016/17 International Prescription Provider 3. Stories of people driving to Canada for lower cost meds a) Voluntary program, employees contract with IPP directly b) Import meds from “Tier 1” countries (e.g. Canada, U.K., c) Australia Est. cost savings to County - $110,000 (25% d) participation) $0 Copay for employees – est. savings of $25,000 e)

Proposed Changes – FY 2016/17 Post Employment Health Plan 4. IAFF has expressed an interest a) Tax advantaged vehicle to fund healthcare costs in b) retirement Employee saves FICA & income tax - County saves FICA c) County est. savings ~$44,000 (based on 2015 payouts) d) Participation is mandatory, but can be separate by e) bargaining unit Staff recommends explore through collective bargaining f)

Proposed Changes – FY 2016/17 Employee Premium Adjustment 5. Survey of surrounding local government rates a)

Monthly Premium Comparison – Surrounding Local Governments Employee Monthly Premium Family Coverage $900 $777 $800 $700 Average - $383 $583 $600 $541 $464 $451 $457 $500 $385 $374 $400 $339 $307 $299 $300 $227 $218 $233 $179 $200 $136 $100 $0

Monthly Premium Comparison – Surrounding Local Governments Employee Monthly Premium ‐ Single Coverage $140 $119 $120 $108 $100 $85 Average - $38 $80 $60 $49 $46 $35 $38 $37 $40 $27 $25 $20 $0 $0 $0 $0 $0 $0 $0

Proposed Changes – FY 2016/17 Employee Premium Adjustment 5. No premium increase since 2007/08 a) In light of lack of raises during downturn (09/10 – 12/13) i. Employee raises for last 3 years ii.

Proposed Changes – FY 2016/17 Employee Premium Adjustment 5. Recommend policy to split premium as follows b) Family coverage – 75% County/25% employee i. Single coverage – 90% County/10% employee ii. 2 – Year phase-in to ease burden on employees c) Increase $30/ month each d) Est. savings - $490,000 e)

Proposed Changes – FY 2016/17 Change Effective Date for New Hires 6. Currently 30 days after date of hire a) Same as 30 day open enrollment window b) Difficult & time consuming to administer c) Propose first day of month after 60 days from hire d) Reduce administrative burden e) Est. $150,000 savings based upon 10% turnover f)

Proposed Changes – FY 2016/17 Employer Premium Adjustment 7. $150/ month employer contribution used for budgeting a) purposes This has created great strain on FY 2016/17 budget b) After measures recommended above, increase employer c) contribution by $100/ month Generates additional revenue of $1.6 million d)

Health Insurance Monthly Premiums – FY 2015/16 vs. 2016/17 Coverage Type Premium FY 2015/16 FY 2016/17 Increase Employee $0.00 $30.00 $30.00 Single Employer $505.00 $605.00 $100.00 Employee $217.50 $247.50 $30.00 Family Employer $745.00 $845.00 $100.00

Summary of FY 2016/17 Recommendations – Financial Impact Est. Annual Item Description Amount Est. Annual Loss – FY 2016/17 (Status Quo) $3,900,000 Less: Savings from Recommendations Blue Choice Health Plan ($320,000) Kannact Diabetes Management ($105,000) International Prescription Provider ($110,000) Change Coverage Effective Date ($150,000) Employee Premium Change ($490,000) Employer Premium Change ($1,630,000) Subtotal: Cost Saving Measures ($2,805,000) Estimated Annual Loss – FY 2016/17 ($1,095,000)

8. OPEB Advance Funding • Accounting for Post Employment Benefits Other than Retirement • GASB Statement 45 – implemented in FY 2007/08 • Recognizes cost of benefits when they are earned • Previously accounted on a pay-as-you-go basis • County established OPEB Trust in FY 2007/08 • This allowed for funding of OPEB obligations • County ended explicit subsidy for employees hired after 2/1/06

OPEB – similar to Pensions Employer and Pension employee Payments contributions to retirees during after employment retirement Pension Fund

OPEB – similar to Pensions Employer Payments contributions to cover during retiree employment healthcare costs OPEB OPEB Trust Fund

OPEB – Historic Funding Levels Net Assets 16 Millions 14 12 10 8 6 4 2 - 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year

OPEB – Historic Funded Ratio Funded Ratio 40.0% 37.0% 32.4% 35.0% 30.0% 25.0% 20.5% 20.0% 15.0% 11.4% 10.0% 5.0% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year

Flow of Funds – FY 2014/15 Employer contributions = $1.9 million $2.9 million into Payment to OPEB Trust Healthcare Fund OPEB OPEB Trust Fund

OPEB Trust – Historic Inflows & Outflows $3.5 Millions $2.9 $3.0 $2.6 $2.5 $1.9 $2.0 $1.5 $1.0 $1.0 $0.5 $0.0 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year

OPEB – Breakdown of Annual Required Contribution Breakdown of ARC Normal Cost $2,461,562 Amortization of UAAL $634,849

OPEB – Impact of $9 million advance payment Breakdown of ARC Normal Cost $2,461,562 Amortization of UAAL $634,849 $9 million advance contribution decreases ARC by ~ $900,000

Proposed Changes – FY 2016/17 OPEB Advance Funding 8. $1.9 million from OPEB Trust to pay retiree health costs a) Without OPEB payment, Health Insurance loss would have b) been much larger Additional contribution of $9 million recommended c) Reduces annual contribution by $900,000 d) After $400,000 increase due to rising costs, net decrease e) of $500,000

Summary of FY 2016/17 Recommendations – Financial Impact Est. Annual Item Description Amount Current Budgeted Health Insurance Increase FY $2,400,000 2016/17 Less: Savings from Recommendations ($800,000) Proposed Health Insurance Increase FY 2016/17 $1,600,000 Less: OPEB Annual Contribution Savings ($500,000) Net Impact on FY 2016/17 Budget $1,100,000