HomeMy WebLinkAboutMINUTES - 01272015 - D.5RECOMMENDATION(S):
ACCEPT report on Medical Benefit Trends in the Bay Area prepared by Cheiron.
FISCAL IMPACT:
This report is for informational purposes and has no specific fiscal impact.
BACKGROUND:
Attached is Cheiron's report entitled "Medical Benefit Trends in the Bay Area".
CONSEQUENCE OF NEGATIVE ACTION:
None.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 01/27/2015 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Theresa Speiker, Chief Assistant County
Administrator (925) 335-1096
I hereby certify that this is a true and correct copy of an action taken and entered on
the minutes of the Board of Supervisors on the date shown.
ATTESTED: January 27, 2015
David J. Twa, County Administrator and Clerk of the Board of
Supervisors
By: June McHuen, Deputy
cc: Robert Campbell, Auditor-Controller, Christine Penkala, County Benefits Manager
5.
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 27, 2015
Contra
Costa
County
Subject:Medical Benefit Trends in the Bay Area
CLERK'S ADDENDUM
Speaker: Wendy Lack, resident of Pleasant Hill.
ATTACHMENTS
Presentation on Medical Benefit Trends, by Cheiron
Medical Benefit Trends
in the Bay Area
Michael Schionning, FSA, Cheiron
Contra Costa County
January 27, 2015
Agenda
• Overview
• Employee Benefits
• Retiree Benefits
• Questions
• Appendix
– Benefit Comparisons
– Contribution Methodology
1
Overview
• Provide a comparison of benefit offerings
by other counties in the Bay area of
California
• Discuss the key components of medical
benefits for both employees and retirees
• Review the current premium cost to both
the County and employees
• Provide general commentary on future
trends in benefit coverage
2
Overview
• The counties studied were:
– Alameda San Mateo
– Marin Santa Clara
– Napa Santa Cruz
– Sacramento Solano
– San Francisco Sonoma
– San Joaquin Stanislaus
3
Employee Benefits
• The focus was on the key components of
the medical benefits offered
– Number and type of plans offered
– Total premium cost of coverage
– Contributions toward coverage
– Other key features
• Waiver of coverage incentives
• Rating tiers used
• Extension of coverage to Part-time employees
4
Employee Benefits
• Benefit plan offerings
– Contra Costa County sponsors 8 health benefit
plans for non-safety employees
• 2 are Preferred Provider Option (PPO) plans
• 6 are Health Maintenance Organization (HMO) plans
• Additionally, certain safety employees participate in
CalPERS Sponsored or Public Employees’ Medical
and Hospital Care Act (PEMHCA) health plans.
• 3 counties participate solely in the PEMHCA
(Napa, Santa Cruz and Solano)
– Excluding these 3 counties, the range is 3 to 6
plans, with an average of 4
– 4 of 12 peers offer one or more High Deductible
Health Plan (HDHP) options
• Marin, Sacramento, San Mateo, and Stanislaus
5
Employee Benefits
• The appendix (see pages 22, 23 & 24) compares key
benefit coverage features for the Kaiser HMO, which is
offered by all but 1 county and the most commonly
offered PPO plan
• The table below shows the current enrollment in PPO
and HMO type benefit plans for the County
• Note that most of the County’s employees and retirees
are in HMO type benefit plans
6
HMO Plans PPO Plans Total HMO Plans PPO Plans Total
County Sponsored Plans 5,679 14 5,693 4,070 298 4,368
PEMHCA Plans 849 112 961 793 334 1,127
Total Contra Costa County 6,528 126 6,654 4,863 632 5,495
Active Employees Retired Employees
Employee Benefits
• For the Kaiser HMO Plan
– In the comparison counties, the most common
physician copay is $15 compared to $10 for the
County
– The most common emergency room copay is $50
compared to $10 for the County
– 3 counties also have a per admission copay for
inpatient hospital visits
• Overall, the County’s most common Kaiser HMO
plan provides a higher level of coverage (lower
co-pays/user fees) than the other counties
studied
7
Employee Benefits
• For the most common PPO Plan
– The annual deductible is at the lower end of the range
offered by the other counties; $500 is the most common
deductible
– The out-of-pocket maximum for the County is somewhat
lower at $1,500 compared to the most common amount of
$2,000 for the comparison counties studied
– The in-network coinsurance of 10% is consistent with most
other plans and the out-of-network is better at 30%
compared to the most common amount of 40%
– The prescription drug copayment of $5 for all drugs is the
lowest of the counties studied
• Overall, the County’s most common PPO plan
provides a higher level of coverage than the other
counties studied
8
Employee Benefits
• The charts below compare the annual premiums for
single coverage for Kaiser HMO and the highest cost
PPO plan offered in each county
• The County has the highest cost Kaiser HMO plan and
the second highest cost PPO plan
• Stanislaus County does not offer a Kaiser HMO plan
9
$9,736
$7,645 $7,684
$8,573
$7,517
$6,648
$7,694 $7,392
$8,233 $8,573 $8,573
$7,764
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Kaiser Single
$18,241
$28,093
$12,561
$9,301 $7,797
$12,149
$11,467
$14,077
$11,423
$9,301 $9,301
$12,035
$8,688
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
PPO Single
Employee Benefits
•The charts below compare the annual premiums for full family coverage
for Kaiser HMO and the highest cost PPO plan offered in each county
•The County has the second highest cost Kaiser HMO plan and the
second highest cost PPO plan
•Note that most of the other Counties offer 3-tier rating structures so that
premiums are lower for 1 dependent
10
$22,697
$21,635 $20,439
$22,291
$19,222 $18,769
$21,775 $20,875
$23,875
$22,291
$22,291
$21,972
$0 $0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Kaiser Family
$43,332
$76,969
$32,239
$24,183 $19,961
$33,598
$32,108
$42,546
$24,185 $24,183 $24,183
$33,061
$23,457
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
PPO Family
Employee Benefits
•The charts below compare the annual premiums for employee with one
dependent coverage for Kaiser HMO and the highest cost PPO plan
offered in each county
•The County has the highest cost Kaiser HMO plan and the second
highest cost PPO plan
•For the PPO plan, the total premiums in other counties are much lower
because Contra Costa County’s one dependent rate is the same as the
full family rate
11
$22,697
$15,289 $15,368
$17,147
$19,222
$13,271
$15,389
$14,760
$17,289
$17,147
$17,147
$15,528
$0 $0
$5,000
$10,000
$15,000
$20,000
$25,000
Kaiser 1 Dep
$43,332
$54,498
$25,442
$18,602
$19,961
$23,848
$22,935
$29,238
$24,185
$18,602 $18,602
$23,658
$17,376
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
PPO 1 Dep
Employee Benefits
12
•The charts below compare the annual County subsidy for single coverage
for Kaiser HMO and the highest cost PPO plan offered in each county
•The County has the lowest subsidy for the Kaiser HMO plan and is in the
middle of the range for PPO coverage
•Five of the Counties subsidize 100% of the single premium for the Kaiser
HMO plan
•Pages 29 and 30 of the appendix show representative annual employee
contributions for single and full family coverage
$5,747
$6,880
$7,684
$8,573
$6,043 $6,648 $6,155 $6,283
$8,233 $8,274 $8,573
$5,979
$0 $0
$2,000
$4,000
$6,000
$8,000
$10,000
Kaiser Single
$7,255 $6,880
$11,639
$8,573
$6,246
$12,149
$8,463
$10,558
$11,423
$8,271
$9,301
$5,979
$6,950
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
PPO Single
Employee Benefits
13
•The charts below compare the annual County subsidy for employee
with full family coverage for Kaiser HMO and the highest cost PPO plan
offered in each county
•The County subsidy on a dollar basis is in the middle of the range for
the other counties
•On a percentage basis, only 2 counties contribute a lower percent of
premium for Kaiser HMO and the PPO plan
$13,390
$19,471
$14,139
$19,504
$15,453
$15,578 $17,420
$17,744
$23,875
$20,375
$12,687
$5,979
$0 $0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Kaiser Family
$17,235
$19,471
$14,139
$19,504
$16,044 $18,210
$23,696
$31,909
$22,811
$20,369
$12,687
$5,979
$18,766
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
PPO Family
Employee Benefits
14
•The charts below compare the annual County subsidy for employee
with one dependent coverage for Kaiser HMO and the highest cost
PPO plan offered in each county
•The County subsidy is higher for this category because it only offers a
full family rate
•On a percentage basis, only 2 of the comparison counties subsidize a
lower percent of premium for Kaiser HMO and the PPO plan
$13,390
$13,760
$12,389
$15,003 $15,453
$12,740
$12,311
$12,546
$17,289
$15,673
$12,687
$5,979
$0 $0
$5,000
$10,000
$15,000
$20,000
Kaiser 1 Dep
$17,235
$13,760 $12,389
$15,003
$16,044
$14,892
$16,927
$21,929
$22,811
$15,671
$12,687
$5,979
$13,900
$0
$5,000
$10,000
$15,000
$20,000
$25,000
PPO 1 Dep
Employee Benefits
• Waiver of coverage
– Contra Costa County does not provide incentives
– 7 of 12 peer counties offer an incentive for employees
who waive coverage
– Incentives range from $50 to $385 per month
• Rating tiers
– Contra Costa County uses a two tier structure (Single
and Family)
– 10 of the 12 other counties use a three tier structure
(Single, Two Party, and Family)
– Sacramento uses a two tier structure
– Santa Clara uses a four tier structure (Single,
Employee and Spouse, Employee and Children, and
Employee and Family)
15
Employee Benefits
• Part time employee coverage
– Contra Costa County provides the same subsidy
to employees who work 20 or more hours per
week
– Threshold for providing full county subsidy:
• 3 counties require 20 hours per week
• 9 counties require 40 hours per week
– Of the 9 counties that provide a partial subsidy to
some part-time employees:
• 8 counties prorate the subsidy based on scheduled
part-time hours and threshold for full subsidy
• 1 county offers part-time employees a special medical
plan
16
Retiree Benefits
• All of the counties studied provide some
level of retiree coverage
– Three counties only provide access to
coverage at the same premium as active
employees
• The County is one of the leaders in
addressing this liability through:
– Pre-funding the benefit
– Changing the program to reduce the liability
17
Retiree Benefits
• The chart on the next page compares some key
measures of the retiree medical costs:
– The total actuarial liability
– The amount of any assets to support the liability
– The funded ratio of the plan
– The actuarial liability as a percentage of payroll
• All but four of the comparison counties are
providing some level of pre-funding for the benefit
• As a percentage of payroll, the County is the
fourth highest plan
• The County is in the top six in pre-funding the
liability
18
Retiree Benefits
19
CAFR Liability as
County Date Liability Assets % Funded % of Payroll
Contra Costa FYE 14 $923.8 $129.4 14.0%150.5%
Alameda FYE 14 $724.6 $617.6 85.2%79.0%
Marin FYE 13 $361.7 $26.4 7.3%238.0%
Napa FYE 13 $51.7 $16.6 32.1%58.0%
Sacramento FYE 13 $100.4 $0.0 0.0%12.8%
San Francisco FYE 14 $4,000.0 $17.9 0.4%162.6%
San Joaquin FYE 13 $97.8 $0.0 0.0%26.7%
San Mateo FYE 14 $319.4 $192.8 60.4%70.5%
Santa Clara FYE 14 $2,430.2 $560.3 23.1%166.1%
Santa Cruz FYE 13 $127.8 $0.0 0.0%82.6%
Solano FYE 14 $34.4 $14.2 41.4%20.4%
Sonoma FYE 14 $335.4 $23.7 7.1%102.4%
Stanislaus FYE 13 $36.1 $0.0 0.0%16.7%
Discussion
Questions
20
Required Disclosures
•The purpose of this presentation is to present general information regarding the
medical benefit offerings for County employers in the San Francisco Bay Area.
•This presentation was prepared exclusively for Contra Costa County and its Board of
Supervisors for the purpose described herein. This presentation is not intended to
benefit any third party and Cheiron assumes no duty or liability to any such party.
•In preparing our report, we relied on information (some oral and some written)
supplied by the County as well as publically available data for other Counties in the
Bay Area. This information includes, but is not limited to, the plan provisions,
employee data, and financial information. We performed an informal examination of
the obvious characteristics of the data for reasonableness and consistency in
accordance with Actuarial Standard of Practice No. 23.
•To the best of my knowledge, this presentation has been prepared in accordance with
generally recognized and accepted actuarial principles and practices which are
consistent with the Code of Professional Conduct and applicable Actuarial Standards
of Practice set out by the Actuarial Standards Board. Furthermore, as a credentialed
actuary, I meet the Qualification Standards of the American Academy of Actuaries to
render the opinion contained in this presentation. This presentation does not address
any contractual or legal issues. I am not an attorney and our firm does not provide
any legal services or advice.
Michael W. Schionning, FSA
Principal Consulting Actuary
21
Appendix
Benefit Comparisons
Kaiser HMO Plan and
Highest Benefit PPO Plan
22
Appendix
23
Contra Costa Alameda Marin Napa Sacramento
Kaiser HMO
Out-of-Pocket Maximum $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 $1,500/$3,000
Office Visit Copay $10 $15 $5 $15 $15
Inpatient Hospital Copay $0 $0 $0 $0 $0
Emergency Room Copay $10 $50 $50 $50 $35
Retail Pharmacy
Generic $10 $15 $5 $5 10
Brand Formulary $20 $15 $5 $20 $20
Brand Non-Formulary Not Covered Not Covered Not Covered Not Covered Not Covered
PPO Plan
Deductible $250/$750 $2,000/$4,000 in-
network;
$4,000/$8,000 out-of-
network
$500/$1,000 $500/$1,000 $1,500/$3,000 in-
network only
Out-of-Pocket Maximum $1,500/$3,000 In-
network; $5,000 per
person out-of-network
$4,000/$8,000 in-
network;
$8,000/$16,000 out-of-
network
$3,000/$6,000 in-
network,
$15,000/$45,000 out-
of-network
$2,000/$4,000 In-
network; none out-of-
network
$1,500/$3,000 in-
network only
Coinsurance 10% in-network;
30% out-of-network
20% in-network; 40%
out-of-network
20% in-network; 40%
out-of-network
10% in-network; 40%
out-of-network
0%
Office Visit Copay $10 in-network $25 in-network $20 in-network Coinsurance 100% after ded.
Inpatient Hospital Copay None $500 per admit plus
deductible
None $250 per admission 100% after ded.
Emergency Room Copay $50 copay plus
coinsurance
$250 copay $50 copay plus
coinsurance
$50 copay plus
coinsurance
100% after ded.
Retail Pharmacy
Generic $5 $10 $5 $5 100% after ded.
Brand Formulary $5 $30 $15 $20 100% after ded.
Brand Non-Formulary $5 $50 $30 $50 100% after ded.
Appendix
24
Contra Costa San Francisco San Joaquin San Mateo Santa Clara
Kaiser HMO
Out-of-Pocket Maximum $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 $1,500/$3,000
Office Visit Copay $10 $20 $10 $15 $10
Inpatient Hospital Copay $0 $200 per Admit $0 $100 per Admit $100 per admit
Emergency Room Copay $10 $100 $100 $100 $35
Retail Pharmacy
Generic $10 $5 $10 $10 $5
Brand Formulary $20 $15 $20 $20 $10
Brand Non-Formulary Not Covered Not Covered Not Covered Not Covered Not Covered
PPO Plan
Deductible $250/$750 $250/$500/$750 $125/$250 in-network
only
$0 Tier I, $200/$600
Tier II, $500/$1,000
Tier III
$0 Tier I and Tier II,
$200/$600 Tier III
Out-of-Pocket Maximum $1,500/$3,000 In-
network; $5,000 per
person out-of-network
$3,750 in-network;
$7,500 out-of-network;
both per person
$1,000/$2,500 in-
network only
$0 Tier I,
$2,000/$4,000 Tier II,
$4,000/$8,000 Tier III
$0 Tier I,
$2,000/$4,000 Tier II,
$4,000/$8,000 Tier III
Coinsurance 10% in-network;
30% out-of-network
15% in-network;
50% out-of-network
0%0% Tier I, 20% Tier II,
40% Tier III
0% Tier I, 10% Tier II,
30% Tier III
Office Visit Copay $10 in-network Coinsurance $5 $15 Tier I,
Coinsurance all other
Tiers
$15 Tier I, $20 Tier II,
Coinsurance Tier III
Inpatient Hospital Copay None Coinsurance $100 per admit $100 per admit Tier I,
coinsurance all other
Tiers
Coinsurance
Emergency Room Copay $50 copay plus
coinsurance
Coinsurance $100 copay $100 copay $50 copay
Retail Pharmacy
Generic $5 $5 $5 $15 $5
Brand Formulary $5 $20 $10 $30 $15
Brand Non-Formulary $5 $45 $30 Not Covered $30
Appendix
25
Contra Costa Santa Cruz Solano Sonoma Stanislaus
Kaiser HMO
Out-of-Pocket Maximum $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 $1,500/$3,000 Not Offered
Office Visit Copay $10 $15 $15 $10 Not Offered
Inpatient Hospital Copay $0 $0 $0 $0 Not Offered
Emergency Room Copay $10 $50 $50 $50 Not Offered
Retail Pharmacy
Generic $10 $5 $5 $5 Not Offered
Brand Formulary $20 $20 $20 $10 Not Offered
Brand Non-Formulary Not Covered Not Covered Not Covered Not Covered Not Offered
PPO Plan
Deductible $250/$750 $500/$1,000 $500/$1,000 $300/$900 $1,250/$2,500
Out-of-Pocket Maximum $1,500/$3,000 In-
network; $5,000 per
person out-of-network
$2,000/$4,000 In-
network; none out-of-
network
$2,000/$4,000 In-
network; none out-of-
network
$2,000/$4,000 $3,000/$6,000
Coinsurance 10% in-network;
30% out-of-network
10% in-network; 40%
out-of-network
10% in-network; 40%
out-of-network
10% in-network; 40%
out-of-network
0%
Office Visit Copay $10 in-network Coinsurance Coinsurance $20 in-network $20 after deductible
Inpatient Hospital Copay None $250 per admission $250 per admission $125 per admit, then
coinsurance
$150 per admit after
deductible
Emergency Room Copay $50 copay plus
coinsurance
$50 copay plus
coinsurance
$50 copay plus
coinsurance
$100 + Coinsurance $75 per admit after
deductible
Retail Pharmacy
Generic $5 $5 $5 $5 $10 after deductible
Brand Formulary $5 $20 $20 $15 $25 after deductible
Brand Non-Formulary $5 $50 $50 $30 $25 after deductible
Appendix
Contribution Methodology
26
• The Bay Area counties have a variety of
contribution strategies that are employed to
develop county subsidies and the resulting
employee contributions
– 9 subsidize a percentage of the premium of the plan
or rating tier selected
• This ranges from 75% to 100% for single coverage
• It ranges from 50% to 100% for family coverage
• 2 set the subsidy amounts based on a specific plan and the
employee pays the difference between the premiums and the
county subsidy
27
Contribution Methodology
• 1 has a cafeteria plan
– The county sets a fixed base subsidy amount
– The amount varies based on bargaining unit
– The amount also varies based on rating tier
– The amount that can apply towards dependent
coverage is based on the salary of the employee
– Most single coverage is free to the employee;
dependent coverage can cost as much as 56% of the
premium
• 2 pay a fixed subsidy:
– One does not vary based on rating tier
– One varies the subsidy so that the percentage paid
by the county is similar for single and family
28
Contribution Methodology
29
Contribution Methodology
Kaiser Alternative High Cost Low Cost
County HMO HMO PPO PPO
Contra Costa $3,989 $6,683 $10,986 $9,166
Alameda $764 $1,167 $21,212 n/a
Marin $0 n/a $922 n/a
Napa*$0 $2,573 $728 $0
Sacramento $1,503 $1,561 $1,784 $0
San Francisco $0 $0 $0 n/a
San Joaquin $1,539 n/a $3,004 $2,116
San Mateo $1,109 $1,584 $3,519 $850
Santa Clara $0 $0 $0 n/a
Santa Cruz*$300 $2,882 $1,030 $28
Solano*$0 $0 $0 $0
Sonoma $1,785 n/a $6,056 $3,915
Stanislaus n/a n/a $1,738 $363
* PEMHCA Counties
Annual Employee Premium
for Single Coverage
2015 Plan Year
30
Contribution Methodology
Kaiser Alternative High Cost Low Cost
County HMO HMO PPO PPO
Contra Costa $9,307 $16,394 $26,097 $21,774
Alameda $2,163 $3,302 $57,498 n/a
Marin $8,496 n/a $18,101 n/a
Napa*$2,786 $9,476 $4,678 $2,037
Sacramento $3,844 3996.24 $1,561 $0
San Francisco $3,191 $3,730 $15,387 n/a
San Joaquin $4,355 n/a $8,412 $5,925
San Mateo $3,131 $4,483 $10,636 $2,397
Santa Clara $478 $0 $1,374 n/a
Santa Cruz*$1,916 $8,628 $3,814 $1,164
Solano*$9,604 $16,294 $11,495 $8,854
Sonoma $15,993 n/a $27,081 $20,981
Stanislaus n/a n/a $4,692 $981
* PEMHCA Counties
Annual Employee Premium
for Family Coverage
2015 Plan Year