BOARD OF COMMISSIONERS'
March 29, 2005
Commissioners' Conference Room
Commissioner Anna Morrison, presided with Commissioners Bill Dwyer, Bobby Green, Sr., Peter Sorenson and Faye Stewart present.† County Administrator Bill Van Vactor, County Counsel Teresa Wilson and Recording Secretary Melissa Zimmer.
1. COMMISSIONERS' BUSINESS
a. DISCUSSION/Employee Benefits.
Karen Artiaco, Management Services, reported the County is facing double digit health increases.† She noted increases have more than doubled in the past five years.† She said in 2004 about 50 percent of employee pay was paid in benefits, including PERS, health insurance, social security, retiree medical and unemployment.† She said this past year they were at 50 percent of average salary because some benefits are a percentage of salary and others are a fixed dollar amount, and as salaries go up that becomes a smaller percentage.† She noted that this year about 55 cents on the dollar is additional for benefits.† She said the projection for 2006 (based on the preliminary budget) has the County going to about 67 percent of salary paid in benefits.† She said the most recent projection from Pacific Source is that they will not have a 17.5 percent increase.† They are hoping it will be 14 percent or 15 percent because utilization was better this year.† She added the County is facing an additional 4.5 percent increase in PERS.
Artiaco noted that 86 percent of every thing they spend in health care premiums goes directly to health care providers.† She added if a claim is larger than $100,000, they no longer pay for that claim.† She said that costs about 4 percent of premium.† She noted the total administration risk cost for Pacific Source is 8.8 percent.†
Artiaco explained that more dollars go to prescription drugs than any other single line item, followed by in-patient hospital costs, out-patient hospital costs and out-patient visits.† She said they had a lot of very serious conditions among people covered by Lane County health insurance.
Artiaco indicated that Lane County has a unique premium structure with Pacific Source. She explained that at the beginning of the year their actuaries look at Lane County health care utilization and health care increases within the industry and calculate a number to cover the premium.† She reported that every month they pay 85 percent of that premium.† At the end of the year they see what was used. They have a contractual arrangement as to how much per person they will pay per month for administration and pooling charges.† She added that if at the end of the year that number is less than 85 percent of what they paid, they get the money back.† She said if it is more than 85 percent, they pay the additional amount, but only up to the 100 percent of the original bid premium.
Artiaco noted that in 2000 the Lane County Police Officerís Association agreed to a cost sharing calculation for their health insurance premium.† The calculation is that anything over 10 percent will be split between the employee and the County.† She said that currently they are contributing $50 per month toward the cost of health care, but it is not cumulative.† She noted that other bargaining units had different plans.† She indicated they are using plans from 2003.
Artiaco noted a way to cut costs is cost sharing with the employee.† She said the advantage to that is the plan is easy to explain and implement.† She stated if they were to add an opt out coverage, if they would add an incentive to employees who have other coverage, that they would reward them to opt out.
Dwyer thought if employees went through the FQHC for prescriptions, they would save money.
Artiaco explained that any employee could use the FQHC.† She was told that within the drug program it would not work, as it had to be restricted to lower income patients.
Morrison wanted information on if they could legally use the FQHC for prescriptions and if so, what the savings would be.
Dwyer wanted to see a list of drugs the FQHC could purchase, and their cost; and a list of drugs the hospital could purchase and their cost.† He thought it would be cheaper.
Artiaco noted many companies were going to the consumer-driven health plan over the next year.† She explained it is the type of plan that the City of Springfield went with and a variation that LTD implemented.† She noted the employee could contribute to the plan in the employee health savings account as well as the employer.† The drawback is there are restrictions on use of the money after retirement and it is not user-friendly.† She added the HRA is a health reimbursement account.† She stated that only an employer could contribute to an HRA.† She added there is a voluntary employee benefits association.† She indicated there are rules and limits, and as a stand alone product, is has not been attractive.† She noted they could use that with an HRA.† She said these plans deal with high deductibles. She indicated the City of Springfield has a $1,500 deductible for individuals and a $3,000 deductible for families.† She said the city puts between $900 and $1,200 into an HRA and an employee could start drawing on it so they wouldnít use any deductible until they used up the contribution.† She noted if the employee chose to pay for their own health care expenses or if they did not equal the $900 or $1,200, that amount rolls over.
Dwyer asked how they could come up with plans to recognize the differences in uses of health care.
Artiaco noted that the City of Springfield continues to offer both plans but on the existing plan, if they stayed with traditional, they would have to self-pay any costs increases over what the HRA.† She said the difference this year was $400 per month.
Morrison asked how many employees in Springfield remained on the traditional plan.
Artiaco responded that 10 percent stayed with the traditional.
Artiaco explained that if Lane County went to a $1,200, $2,400 reimbursement plan, they could save 13 percent of the health cost.† She added if they went to a $1,000 to $2,000, they could save 17 percent.
Dwyer asked what type of plan could be designed that would give a monetary incentive to the employee for not utilizing the service.† He said it would have to be a pre-tax account.† He didnít know how that could offset the cost of insurance to the company to negotiate with.
Artiaco commented that a health reimbursement account rewards people who are conscious of their health care.
Artiaco noted in Lane County there are no health management organizations.† She indicated that Lane County offered a managed care plan, but it is not an HMO.† She stated that Pacific Source said if they combine the plan, they would give a one percent savings for them not having to juggle the two plans.
With regard to a self-insured plan, they asked Pacific Source for a quote asking what it would look like with the 15 percent on the plan.† She said their current fees are $119 per employee per month and under a self-managed plan, it would be about $103.† She noted the City of Eugene has one-half of their employees covered under a self-funded plan.† She added they have to have an actuarial evaluation every year that costs $6,000 per year plus additional legal fees and HIPPA costs they donít have to deal with now because they are not the ultimate insurer. She added with the self-insured plan, †at the end of last year they would have had to write a check for an additional $1 million they did not have.†
Artiaco commented that regarding private industry, she hadnít seen anything close to Lane Countyís insurance package.† She noted that more employers are passing on costs in the private industry.
With regard to the regional plan that was suggested by the service stabilization task force, Artiaco commented she didnít see any evidence to indicate that they could do anything less expensive.† She noted an idea was to develop the Countyís own health clinic.† She indicated that 4J School District and SAIF in Salem have employee clinics and they are run by a nurse practitioner.† She noted they only have 20 percent of the employees use the facilities.† She added that with 4J, employees pay $20 per month just to have the clinic.† She noted the clinic is at no cost to the employee.† She noted that Pacific Source was paying the same amount and there wasnít a savings on a per-appointment basis.
Artiaco discussed the River Stone Clinic.† She said about 22 percent of the total cost in a given year is for primary care appointments.† She noted the other 80 percent are for specialists.† She thought they could save 10 percent or 15 percent with River Stone, excluding† pharmacy.† She said this was an estimate if everyone went to River Stone Clinic as a primary care provider.
Artiaco explained that a menu plan could be a benefit about rewarding people who do not use health care.† She indicated with a menu plan there is an adverse selection.†† She said the rate would be different.† She added that every year they would be changing the health care design.† She noted that some entities have an employee opt out provision.† She said by IRS law, if an employee could show they have coverage elsewhere, they could be given an incentive to use that insurance and not Lane Countyís.† She noted that Pacific Source shows 137 employees who have co-insurance with another employer.
Artiaco indicated that Lane County is participating in a pilot program on disease management.† She said there are companies that will look at a workforce and show which workers have the biggest exposure.
Dwyer asked what would be a reasonable goal that would help with the fiscal year budget cycle.†
Van Vactor indicated they were about to enter the process with collective bargaining.† He commented that what they want to do is develop strategies that have long term impacts on what drives the costs as opposed to a one-time quick fix.
Dwyer thought there needed to be a national answer, and when there is enough outrage and fundamental change, it will happen.† He thought they would have to play it by ear.
Green concurred with looking for a long-term approach
Sorenson said the decision should not be a unilateral decision of the Board, it should be a collaborative negotiated decision.
Stewart also wanted to look into the long-term effects of† insurance.
Morrison indicated that she would work with Van Vactor to discuss bringing this item back and the next step.† She added they were going to have an Executive Session tomorrow that will take them to another step about collective bargaining.
There being no further business, Commissioner Morrison adjourned the meeting at 10:45 a.m.