analysis of jamestown health benefits

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved.

Analysis of Jamestown Health Benefits

Presented by

Amy Gallagher, MBA The Taxpayers’ Association of JamestownJanuary 4, 2010


NationalRegionalState

Amy Gallagher, MBA 13 Years healthcare insurance industry experience with three major insurance

carriers

5 additional years as Senior Consultant with Cornerstone Group advising large employers in SE New England on group employee benefits and wellness

Noted expertise in cost-containment , consumerism and wellness

Frequent healthcare contributor on NBC-10’s Sunrise Show with Frank Coletta

Guest columnist to Employee Benefit News and Providence Business News

Executive Board member, The Taxpayers’ Association of Jamestown

Jamestown resident since 1996



Our Objectives

Provide insight to town management, town council and taxpayers into actual town and school healthcare benefits and costs by comparing the benefits and costs to those of other employers nationally and in RI

Demonstrate state and national benchmarks



Our Goals

Increase transparency with regards to the second biggest town budget issue outside of salaries

Contain escalating healthcare costs so that taxpayers do not shoulder an unfair portion of these costs



Why We Should Address Jamestown Healthcare Costs Right Now?

Town/School Collective Bargaining Arrangements expire June 30, 2010

Revenue shortfalls to cities and towns will continue

State and national economic crisis continues – Jamestown Taxpayers not able to absorb tax increases

Healthcare costs trending @ 10% annually

Healthcare Reform likely to further increase employer costs - refer to:(http://www.kff.org/pullingittogether/091509_altman.cfm)



2009: Town Family Premium is $14,638, Police Family Premium is $15,595 and School Family premium starts at $14,611 and increases based on product.

Chart Source: Kaiser Family Foundation, September, 2009



Town Demographics - Actual Jamestown employs 52 active employees comprised of:

– Nage68(fiscal, clerical) – 9 employees

– Nage69(DPW, Water, Sewer) – 11 employees

– Police (Local 305) – 14 employees

– Nonunion (Department Heads) – 18 employees

There are 16 individual contracts and 36 family contracts

2009 Estimated healthcare premium costs $609,286

– Town pays $562,982.50 (92%)

– Employees pay $46,303.50 - varies based on Collective Bargaining

Agreements (8%)



School Demographics - Estimated

Jamestown Schools employs 72 active employees , 14 employees who waive coverage (do not take) and 24 retirees

There are an estimated 35 individual contracts and 61 family contracts

2008 Estimated healthcare premium costs $1,057,314

– School pays $959,706

– Employees pay $97,608 -varies based on Collective Bargaining

Agreements (9.2%)

Note: Courtesy of RI Department of Elementary and Secondary Education Final Report Healthcare in RI

School Districts, February 4, 2008 (statistics adjusted for increasing employee share from 10% to 15%



Survey Focus

The United Benefit Advisors Health Plan Survey is the largest national benefits survey with close to 13,000 employer participants

Focuses on small to mid-sized companies

Independent and factual comparison of private industry healthcare costs, contribution and plan design

Provides data to allow analysis of municipal benefits with regard to national and RI employer marketplace norms



Average Annual Premium Cost per Employee

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$8,964

$10,082

$7,925

$11,717Town $11,013

School



Monthly Town Premium vs. State AverageTown/Nage 68

Town /Nage 69

Police State Average

% Differential

Individual $494.86 $494.86 $574.63 $433.00 14 – 32%

Family $1219.84 $1219.84 $1299.61 $1024.00 19 – 27%



Monthly School Premium vs. State AverageTeachersSupport Staff BCBS Classic

TeachersSupport Staff BCBS Healthmate

Administration Retirees Classic

Retirees Healthmate

State Average

% Differential

Individual $583.66 $493.98 $517.59 $590.86 $517.59 $433.00 14 - 36%

Family $1415.46 $1217.64 $1276.63 $1433.09 $1276.63 $1024.00 19 - 40%



Average Monthly Employee Contribution – (% of Premium)



Town - Monthly Employee Contribution %Town/Nage 68

Town /Nage 69

Police State EE Average

Individual 0% (<1993) 0% (<1993) 0%(<1993) 34%

Individual 5%(1993-1996)

5%(1993-1996)

5%(1993-1996)

34%

Individual 20% (>1996) 20% (>1996) 20% (>1996) 34%

Family 0% (<1993) 0% (<1993) 0%(<1993) 45%

Family 5%(1993-1996)

5%(1993-1996)

5%(1993-1996)

45%

Family 20% (>1996) 20% (>1996) 20% (>1996) 45%



School - Monthly Employee Contribution %Teachers Teacher

AssistantsCustodians Administrators State

Average

Individual 5% (<1997) 15% 5% (<10/1/09)

5% (<7/1/09) 34%

Individual 15% (>1997) 15% (>10/1/09)

15% (>7/1/09) 34%

Family 5% (<1997) 15% 5%(<10/1/09)

5% (<7/1/09) 45%

Family 15%(>1997) 15% (>10/1/09)

15% (>7/1/09) 45%



Town - Potential Employer Contribution Strategies

Current Employer Contribution

Total Annual Premium

$ Town Cost % Town Contribution

$Savings Potential

Current 100%/95%/80%/60%

$609,286 $562,983 92%

90%/80%/60% $609,286 $542,976 89% $20,006

80%/80%/60% $609,286 $518,579 85% $44,404

75%/75%/60% $609,286 $488,666 80% $74,317

State Average 66% Individual /55% Family

$609,286 $317,862 52% $245,121



School - Potential Employer Contribution Strategies

Total Annual Premium

$ School Cost % School Contribution

$Savings Potential

Current 95%/85%

$1,057,314 $959,706 91%

85% $1,057,314 $898,717 85% $60,989

80% $1,057,314 $845,851 80% $113,855

75% $1,057,314 $792,986 75% $166,720

State Average 66% Ind /55% Family

$1,057,314 $655,535 62% $304,171



Physician CoPays

$0$2$4$6$8

$10$12$14$16$18$20

Primary Care Physician

$15

$20 $20

$10 Town

$15 School

$0

$5

$10

$15

$20

$25

Specialty Care Physician

$25

$20

$25

$25Town

School



Urgent / Emergency / Hospital CoPays

$0$5

$10$15$20$25$30$35$40$45$50

Urgent Care Center

$25

$30

$40

$50 Town

$50School

$0$10$20$30$40$50$60$70$80$90

$100

Emergency Room

$100

$75

$100

$100 Town

School

$0

$50

$100

$150

$200

$250

Hospital Admission

$0

$250 $250

$0 Town & School



In-Network Deductibles

$0$100$200$300$400$500$600$700$800

Single

$500 $500

$750

$0 Town

School$0

$200$400$600$800

$1,000$1,200$1,400$1,600$1,800$2,000

Family

$1,000$1,000

$2,000

$0 Town

School



Type of Rx Plan Design



Median CoPays for 3-Tier Plans



Median CoPays for 4-Tier Plans



Retiree Coverage Offered



Medical Plan Waiver - Does Not Take Coverage

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Annual Single Waive-Out Bonus

$1,256$1,240

$1,424$1275 Town

$1000 School



Key Benefit Highlight Comparison - TownTown/Nage 68 Town /

Nage 69Police Statewide

Norm% Premium Savings Potential

$ Premium Savings Potential

Primary Care $10 $10 $10 $15 .25% $1,466

Specialist $25 $25 $25 $25 n/a n/a

Urgent Care $50* $50* $50* $25 n/a n/a

Urgent Care Reimbursement

$25 if PCP is closed

n/a There is no limit on reimbursement to these benefits

Emergency Room $100 $100 $100 $100 n/a n/a

Emergency Room Reimbursement

$50 if Urgent Care is closed

n/a There is no limit on reimbursement to these benefits

Coinsurance 100% 100% 100% 100% n/a n/a

Deductible $0 $0 $0 $500 ind$1000 fam

9-11% $58,650

Rx $5/$10* $5/$10* Up to 20% copay at RX, reimbursed less $5/$10

$10/$30/$50/$75Managed Rx

6% $35,189

Total Savings Potential

$95,305

% of Current Premium Saved

15.6%



Key Benefit Highlight Comparison - SchoolTeachers/Support Staff & Retirees Classic

Teachers/Support Staff Healthmate

Administration Healthmate

Statewide Norm % Premium Savings Potential

$ Premium Savings Potential

Primary Care N/A $15 $15 $15 .25% n/a

Specialist N/A $25* $25* $25 n/a n/a

Urgent Care N/A $50* $50* $25 n/a n/a

Urgent Care Reimbursement

N/A $25 * reimbursed through 7/1/09

$25 * reimbursed through 7/1/09

n/a $5000 cap removed 7/1/10

Emergency Room $25 $100* $100* $100 n/a n/a

Emergency Room Reimbursement

$25 reimbursed; ends 7/1/10

$25 reimbursed; ends 7/1/10

n/a $5000 cap removed 7/1/10

Coinsurance 80%/100% coverage varies by service

100% 100% 100% n/a n/a

Convert Classic to Healthmate

$44,261

Deductible $100 Deductible $0 $0 $500 ind$1000 fam

9-11% $78,500

Rx 80%/20 % Preferred Network

$5/$10* $5/$10* $10/$30/$50/$75 Managed Rx

6% $63,438

Total Savings Potential

$196,199

% of Current Premium Saved

19%



Renewal Market Forecast Estimate 2010 Medical cost increases (trend) estimated to be 10%

– Costs could fluctuate based on demographics and claims Town premium could increase from $609,286 to $670,215

Under current employer contribution, Jamestown’s share could increase to $619,281 – a $56,299 increase

School premium could increase from $1,057,314 to $1,163,045

Under current employer contribution, Jamestown School’s share could increase from $959,706 to $1,055,677 – a $95,971 increase

In total there is a potential $152,270 contribution cost increase in 2010

2011, 2012 likely to have similar increases



Recommendations Phase In/Adjust employee contributions each year of 3 year agreements

Consider shorter term collective bargaining agreements

Adjust benefits to marketplace average

– $15/$25 PCP/Specialist

– $25 Urgent Care

– $100 Hospital

– $500/$1,000 Deductible

– $10/$30/$50/$75 Rx

Eliminate reimbursement of vision, rx, emergency room, urgent care and instead offer employees a Flexible Spending Account (FSA) to help pay for these expenses pre-tax



Recommendations, Cont’d Waiver Language and waiver bonus should change to reimburse employee only (not

employee plus family) as the family member has other coverage

Consider timing of healthcare reform and “requirement of coverage” – if employers offer coverage, employees have to take it” – this will likely increase costs to Employer

Insurance is specified– all language in collective bargaining agreements needs to be rewritten in accordance with new state law that prohibits naming health and dental insurance carriers

Implement annual RFP process for healthcare (and dental) after GHGRI contract expires in 2011 and go to market to UnitedHealthcare and Tufts to force competitive bidding - Bid results should be shared with the Town Council

Consider hiring independent consultant to perform language and fiscal analysis of Collective Bargaining Agreements to assure that financial concessions gained are not lost in other areas of contracts



Recommendations, Cont’d

Eliminate reimbursing $5/$10 rx copays for town and police Consider phase-out of waiver bonus as healthcare reform

will eventually mandate coverage if employer provides it Eliminate opt-out for spouse who is married to town

employee (they get coverage through spouse, why are they getting a bonus when they have coverage through town)

Freeze a flat dollar amount to existing retirees; eliminate retiree coverage for all new hires



Recommendations Town/Police Retiree coverage

– Minimally, contributions should be increased

– Paying for retiree and spouse/family needs to be addressed

– Consider giving retirees a “fixed” allowance to purchase retiree coverage

elsewhere

– Retiree language needs to be addressed (i.e. "town agrees to provide coverage

for retired employees until such time as they become eligible for equal or better

coverage….”

– School language “ benefit will remain in effect as long as the retired teacher is

not receiving the same coverage from some other source”…Needs to be

changed



Next Steps

Present to Jamestown School Committee Analyze other avenues of savings in Collective Bargaining

Agreements Invite Independent Consultant to provide rational for fiscal

and language analysis of Collective Bargaining Agreements



Source Documents UBA 2009 Health Plan Survey

Healthcare in Financial School Districts, February 2009

Town of Jamestown GHGRI Contractual Agreement

Current Nage 68, Nage 69, Local 305 and Jamestown Teacher’s Association Collective Bargaining Agreements

Town of Jamestown and Jamestown School BCBS Rate Documents

www.kaiser.org