Travis County Commissioners Court
February 14, 2006
Item 11
Next is 11. 11. Discuss and take appropriate action on fy '05 year end health plan report and 1st quarter fy '06 health plan report. Joe has two or three items that there are other folk here, we will try to get to those next. Number 11.
>> good morning, judge, Commissioners. It's a good day to think about healthy heart lifestyle and we are here to talk with you about our Travis County employees health fund. Full refer to page 1 of the backup that we provided to you. The key findings, we will move through this as quickly as we can. We would liked to present the end of the year health fund report to you for plan year 2005, then into the first quarter of plan year 2006. Then we have a short review of the last four years that we have been self funded. So on page 1, at the bottom, key findings, we have a total of 66 at the end of the plan year September 30th, we had a total of 6675 participants that represented 3838 employees. And 2837 dependents. That ratio is 1.35 dependents for each employee. And that's somewhat below the national average for a group our size. The national average is .7 dependents for each employee. We are a little below where that normally should be. The total health plan cost for 2005 was $26,553,153. The total contributions were 13,479 -- [indiscernible] so -- we have a surplus from last year and we will get into that in just a moment with the financials. We had a total of I think your backup shows 19 claims that exceeded the 125,000 stop loss. Actually that's 20 claims that exceeded that. This year when we get to that report you will see that it's -- it was a change in stop loss from 125,000 to 150,000 for the current plan year. So we will review that in just a moment. Norman is going to talk about the financials, if you will turn to page seven of your backup,.
>> net assets, I guess the main thing to look at here is our beginning net asset balance prior to fy '05 with $794,752. The change in net assets during fy was a total of 7 million-570. At the end of [indiscernible] as our net asset balance in the health insurance funds. So as you can see, it's -- that's a healthy reserve. You can see our pair son of actual contributions and expenses to the budget. As you can see there, premiums we came in 101% as far as the contribution, so we came right in on target there. And if you look down under operating expenses, health claims, we were at 76%. You see that difference between the health claim number and the -- the revenue number where we are getting some of that reserve. Those were the highlights of the -- of the financials, you can look at page 10, which shows you the detailed contributions and claims, that actually gives you the breakdown of -- of epo, cepo, ppo, different plans, how much we collected and the claims. Might want to point out there as far as the retirees, you can see if you look at the bottom of that page, the middle, middle column there, you can see the total retirees were in a $984,000 deficit. Even though we had a healthy balance during the career, the retirees still had more expenses than contributions for their particular premiums.
>> what was the staff for retirees before we self-insured?
>> I don't know that we.
>> five years ago before retirees, before we went self funded they were blended with the actives, there were no statistics that blue cross made available to us at that time. We really don't know what it was before -- we don't have an accurate picture of what it was before we split and before it was self funded.
>> so this negative 900,000 could be better, could be worse.
>> I suspect that it's better because the last few years we have tried to adjust retiree rates to reflect more the experience retirees are having as opposed to active. We have done that for a year so I think that will get better over time.
>> not only have we split out, we refined that to those that are over 61, those that are under 65, there's a different contribution level for those two classes.
>> was the number of retirees better in '05 than it was in '03?
>> it is probably about 100,000 or 200,000 better because we require more now.
>> okay.
>> I want to point something else out, on page 10, if we were an insurance company we would be looking at the loss ratio. The epo plan has a loss ratio of about 74 cents per dollar. We spend 74 cents of every dollar. The co-insured epo and the ppo have a 64 cents expense ratio. So while epo is covering costs not covering [indiscernible] as to as great of a degree as the other two plans. So we will be looking at that real close through the employees benefit committee, bringing that to you. As a recommendation what to do with that map because we are not seeing the revenue -- with that plan because we are not seeing the -- we are not seeing the loss ratio drop as much as we should see it.
>> we heard remay have to phase out owe.
>> he phase out or make substantial changes to it.
>> we still think that will be the case?
>> I think so, yes.
>> okay. Reading page 10, first column, if you go back to page 1, is that the 6 million 561, that the difference between the 26 million and the 33 million? That's --
>> that's parts of it.
>> that's part of it. So in other words when you say that the -- that the -- that the plan costs, 26 million, that -- that doesn't include retiree? Just active?
>> [indiscernible]
>> is that -- what -- would you read that? The total health plan cost for the county of 26 million ... That -- does that the knot include retirees.
>> includes retirees, as well as actives and dependents. That's total cost, everyone is in the plan.
>> that's what I am looking for. Is it actually total? Because when you look at the 26 versus the 33 --
>> on that column, the 26 -- the -- the 28 million there, is the total of all contributions, coming in. And then you see all of the claims, 19 million per actives, you see that across go over to 23 million as the total, then there's some other costs admin costs and things that get into that 26 million, that's the way to look at that.
>> all right.
>> [indiscernible] we have some grafts that are attached, the grafts represent percentage in dollar amounts where those claim costs went to, whether inpatient, outpatient, so forth. If you will go to the new quarterly report for the new plan year, it's three months ending December 31st. Page 1 again key findings in the current plan year, 6814 participants. That's an increase I believe of about 92 over the plan -- in the plan year in October. So it's -- we have increased our number of participants. We've had one stop loss claim that's exceeded $150,000. And the plan that cost for the year through December that is is 6,000,005 -- of of 6 million ... The contributions 8,639,000 $100. We have added some additional amounts to the ending fund balance for the first quarter.
>> do you want to go over that. This just shows the enrollment. I think a better picture, if you turn to page 19, shows a comparison of our -- of our employees in the different plans between open enrollment of fy '06 versus our participation in fy '05. You see if you look at that percentage change up at the top, we have epo, we lost 16% in epo this past year because of an adjustment of the rates to reflect more the costs of the epo. We have been trying to get the premiums more in line with the claims. As you can see that is -- you have seep people move into -- mostly the ppo, also into the co-insured. You can see those percentages there. Page 4 is kind of a reflection of December 31st versus October first, doesn't really give you the pictures as well as page 19. I think that's a good picture of the change in our enrollment. You will also see it reflects that same thing.
>> if we are looking 14 million in reserves, the beginning, what correlation, if somebody were watching this, say okay you build up your reserves through your increased -- the differential between your expenses and what you bring in, now somebody probably starts asking okay well how many -- how much reserves do you continue to build up before -- before what you really want to do is -- I would think that most people would want you to cut the cost that each person has to pay for -- is it that simple, somebody saying hey as opposed to charging me this, at some point in time you are going to have enough reserves that maybe -- maybe --
>> basically our premiums on what the actuary brings back every year. That's pretty much what it's based on, there are factors, obviously if we have a good year, claims aren't as high based upon what the accident water or trend might be, we are going to get more in reserve than we might have anticipated when is a -- which is a good thing, things coming up on the horizon. I think dan adjusted the stop loss, more of a risk in addition to the stop loss program the county has to self insurance rather than be insured. We have to reserve for catastrophic losses if I think danny had an example of --
>> for example, avian flu struck, we would have a reserve that would cover those instances where it was below stop loss, but still within catastrophic range of expense, so you have to have a reserve built in for that.
>> then we have this gasb thing of course looming over us as well where we are going to have to recognize a reserve for future retirement benefits for active employees today and in the future. That's something that will be coming to the court later, but it's significant liability for the county.
>> we built up 14 million in reserves over what four years?
>> it's probably been over the last two -- two years, we had a deficit the second year.
>> okay. Again, it's a lot of money, it's a healthy reserve, but not without liability attached to it. So it's important to remember that, even though there's several million there. There's still some looming exposures out there that we need to reserve for. I’m sure that it makes the bond market happy to see a reserve for health fund that -- in that range.
>> yeah, I don't think anybody has any question about that you need substantial reserves to -- to, you know, get, you know, all of the bond folks and, you know, everybody happy. But, you know, I do think that employees expect, you know, our risk management people to -- to make sure that we are not -- some reserves are way over the top. Now, obviously, you know, we are -- we are probably not there. But -- but I can see where you can build a reserve, you know, especially if you are act -- if your accumulation of year after year. I just want to make sure that we try to keep that in line. What would be nice to know is what the -- the comparisons are with -- with other self-insured folk and, you know, because there is some number there that -- that -- that I don't know whether it's the -- it's the actuaries or whoever it is that says, you know, kind of like new york tells us hey we are real comfortable with that kind of reserve when you come up here to talk to us. So there probably is a number somewhere in this health insurance that we ought to be satisfied with as well.
>> well we'll watch for that, sure.
>> okay.
>> I think we need to get some more information about this whole gasb thing. It sound like a good number. But some of the gasb numbers are frightening. It would be disingenuine to say here's a little bitty help, there are employees or actually employees today because of their future needs that we have to book for, it could be really stiff things in the future, either through the health insurance or impacting the general fund and impacting everything else that we need to do. It's -- it's a big number and needs to be built up.
>> yeah. Actually true. It's tens of millions of dollars.
>> okay. We did not include the wellness clinic in this report, right.
>> no, we will bring that back to you hopefully next week. I want to point out, this is really a tribute I think to the court for addressing the wellness needs to -- two and a half years ago. Because what we are seeing in the reserves built up is the effect of having wellness programs and employees and employees deserve a lot of the credit as well because they have embraced the wellness programs, the idea of living a healthy lifestyle. Being good health care consumers. This is the result of what we are seeing of those efforts, we appreciate the court's direction on that.
>> okay. There's a lot of information here. Let's read it at our leisure after today. Thanks for bringing it to us, though.
>> if we could take an additional moment, we would like to give you a quick overview of the last four years to show where we started from and where we are at. Cindy can do that. In a quick new york minute.
>> could use the screen judge.
>> okay.
>> this one is just a chart.
>> I’m going to take the -- take the microphone. There you go, thank you. Cindy, go to the next chart. This just shows, this chart here shows total members in all our health plans. As you can see, this is 2006 here. 2002 we grew into 2004, but back in 2005 remember cscd employees dropped off. So that reflects this year. Of course we tend -- our trend is always to go up a little bit as far as total members as people add dependents as well as we get new employees. There's a chart back to your left. That one. Okay. This chart shows our different plans. It shows the number of members in each. Again this is 2006. So as you can see our epo plan started out with the vast majority of members. As we made changes in rates to -- to get those to reflect the actual cost, you can see membership went down and now you can see that the client here is ppo, we have more in the ppo than epo. The come insured is also gaining new members. It just reflect the increase in rates as we try to get those closer to the actual costs of each of the three plans. I’m going to let cindy then go over the rest of the charts.
>> okay, instead of going over the quarterly and the annual charts that you see awful the time, we thought that -- you see all of the time, we thought that we would compare and kind of give you an overview. The first ones that I have are the stop loss claims, the claims over 50,000. The blue line will be our stop loss amounts so these were claims that were over $150,000. And you will notice in -- in fy 2003 to '04 we had a huge leap. We had -- we went from I believe it was seven stop loss claims up to 19 I believe. So which was unexplainable as far as why there was such a large increase but when we did the data overview with uhc, we found that we had a lot of significantly chronically ill people with very serious disease state. If you will notice the pink line, the pink line is the over 50,000, but under 125. That number is on an upward twin -- I can't talk. An upward trend. On this next chart, these are the paid claims by plan years. All of the plans. The -- the total number is this solid orange are orange line at the top. You can see again fy '02 to '03 and to '04 we had pretty much of an upward trend, leveled over from 2004 tough to '05 which is I think significant. It may be we've kind of hit the -- the happy medium. You will also notice on the pink line at the bottom, that's our pharmacy costs. See how stable they have been after about '03 they are almost a straight line. That's good news for us. That means that our pharmacy programs are working, our increase in co-pay is stabilized, the pharmacy costs somewhat. So I thought that those were -- were interesting to look at as well.
>> cindy, is there any way that can you depict the increase in mail order pharmacy? Is that also include understand that depiction?
>> that's in your regular -- we show you what -- what a pie chart that shows how much of the pharmacy cost is attributable to mail order. I didn't chart out mail order, but I probably could.
>> okay.
>> it would be something that the court would be interested in seeing.
>> okay. I think we can always do a little bit better job on mail order as more people get educated and learn to use it. It's just a win-win situation for the employees to do that.
>> to answer your question, 21% of our prescription drugs are by mail order.
>> 21%.
>> yes, up from about 17 I think two years ago.
>> thank you, thank you, dan.
>> this next chart is also a comparison of stop loss claimants and the -- the number of -- this is the number of claims. We went from starting out in '02 with five stop loss claimants up to 20 this last year. 20 is significantly more than an actuary thinks that a group our size would have. Again it goes back to the serious disease state of some of our employees. The interesting line here is also this pink line, these are the claimants over $50,000 in claims. That -- that line continues to rise. We had over 40 in fy '05 that had over $50,000 worth of claims but under the stop loss amount. So -- so to me that's significant. And we don't know the causes. It would probably take some real and investigative staff that knew how to investigate these things to find out the causes. The next one that I would like to look at is --
>> cindy, I mean, would any of that be attributable to just the cost of care or is this just strictly the number of people that have a claim.
>> I’m sure the cost of care factors into it. But for us to have a significant number of claimants with the serious claims, when united health care comes down and -- and does their annual I call it the slice and dice report, they go over all of our data, look at it, they said last year we were over 40% more significantly chronically ill people than another entity our size, a comparable entity. Which I thought was significant, but I don't know the underlying causes. But we are seeing the effects.
>> I think the cost drivers have been fairly consistent. I think the last study was musculo skeletal was the leading cost driver followed I believe by cancer, heart disease and renal failure. We see a lot of costs associated with renal failure, dial losses and those costs -- dialysis, costs have come down some, we are looking at ways to control those costs but those are the top four cost drivers.
>> do we have the ability to figure out whether those are our own employees triggering those claims or whether it is one of their dependents or kids and whether there's a little bit of adverse selection going on here that as other plans out there become more or less favorable --
>> I do track that Commissioner. The majority of them are our employees. We do have some spouses and a couple of children, very few children, but we do have a couple of seriously ill children and a couple of seriously ill spouses. It's either our retirees or employees or the bulk of them.
>> do we need this back on next week for more discussion?
>> I don't believe so.
>> no.
>> why don't we cover retiree information when we come back.
>> we can if you want to.
>> we will bring this back when we bring the entire -- I think that's more appropriate to talk about the costs when we get into the retiree issues if that's all right with the court.
>> okay.
>> I have also got a hard copy of these charts that I can leave with the court so you can peruse them. Okay. Thanks, I appreciate it.
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Last Modified:
Wednesday, February 15, 2006 11:17 AM