1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 KERR COUNTY COMMISSIONERS COURT Workshop Monday, August 29, 2005 2:45 p.m. Commissioners' Courtroom Kerr County Courthouse Kerrville, Texas EMPLOYEE HEALTH BENEFITS PROGRAM PRESENT: PAT TINLEY, Kerr County Judge H A."BUSTER" BALDWIN, Commissioner Pct. 1 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 DAVE NICHOLSON, Commissioner Pct. 4 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 On Monday, August 29, 2005, at approximately 2:45 p.m., a workshop of the Kerr County Commissioners Court was held in the Commissioners' Courtroom, Kerr County Courthouse, Kerrville, Texas, and the following proceedings were had in open court: P R O C E E D I N G S JUDGE TINLEY: Okay, let's come to order, if we might, for the 2 o'clock Commissioners Court workshop on Employee Health Benefits Program originally scheduled for 2 o'clock this date, Monday, August 29th, 2005, at 1:30 -- that was the meeting date. The workshop was scheduled for 2:00; it's somewhat past that now. So, Mr. Looney, we'll give it to you. MR. LOONEY: Thank you, Judge, Commissioners. Glad to be here. Every time I come in and sit in a Commissioners Court, I get just a great deal more respect for what you all go through on a regular basis, and learning about purple boxes and wires in the air and communications and broadbands and all that kind of stuff. I think maybe there's a life in Jeopardy after y'all are finished here, you know, or Trivial Pursuit, anyway. There's got to be. COMMISSIONER WILLIAMS: Kind of scary, isn't it? MR. LOONEY: That's a little scary. And particularly since the language I speak is absolutely 8-29-05 wk 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 totally different from anything that y'all listen to on a regular basis. The meeting we have is scheduled where I -- I originally scheduled it for about two hours. We're not going to take that long. It's not going to take that long. I'm going to try to bring you up to date on where the plan is, tell you where we are and do some estimated funding for you. But I do not have final numbers from Mutual of Omaha on stop loss insurance for renewal. We don't get that until 90 days out from the anniversary date. The reason for that 90 days out is because we've still got two full months of experience to blend into the experience for this year. So, what I'm going to do, though, is I'm going to make some predictions and recommendations. So, don't hold me totally to the numbers, but I've got a pretty good feeling for where I think we're headed on it, and I'm going to show you how we got there. One of the things I'm going to do -- several things. I'm going to give you kind of a general terminology again. We're going to go back through the -- again, kind of go through the glossary so that if I say some things that you need definition for, hopefully I'll cover those. I'll talk about the current claim information. Got a lot of claim information under these tabs, which we'll go through, and I'm going to show you what we use from an underwriting standpoint to determine where we're headed in the future for 8-29-05 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 4 budget purposes, hopefully, going forward, and then make a couple recommendations for next year. But thank you -- thank you for your patience in advance, because I know that some of this, again, is a new language. So, we're going to go through the glossary of terms real quick, and I'm just going to fly through these, so if I'm going through something you need better or more explanation on, you know, stop me. Administrative service only contract is the kind of contract that we have with Mutual of Omaha. That means they provide the administrative service functions under a contract that is separate from other insurance contracts that we have for the underlying coverages that I'll describe here in a minute, which are the specific and aggregate. We actually have three separate contracts. We have two stop loss contracts, one of them for an aggregate insurance, one for specific insurance, and then we've got an administrative contract with Mutual of Omaha that provides us with administrative services only. The administrator -- under the legal terms of our contract, the actual administrator is the County. You are considered by law to be the administrator. As the administrator, you hire Mutual of Omaha to provide claims administration for you. 25 ~ Aggregate insurance. The aggregate insurance 8-29-05 wk 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 program that you have is the insurance program that protects you against high frequency losses. It's the insurance that covers you for those expenses that do not exceed the deductible that you have on an individual, but it's the accumulation of all those expenses underneath that deductible. So, we aggregate those expenses, and that gives us our maximum liability during the year when we look at the aggregate. Under the aggregate attachment point, that's simply a factor that we multiply times number of employees each month, which equals to our maximum liability during the year. The coordination of benefits, that's when we have an individual that has benefits with two different companies. They may have a spouse that has them covered under another program, and it's the coordination of those two plans that we look at in many cases to determine whether or not we're totally liable for a claim, or else we're secondary. COMMISSIONER NICHOLSON: May I ask a question? MR. LOONEY: Sure. COMMISSIONER NICHOLSON: If any of our county employees were covered under Medicare -- I'm not sure whether we are or not -- who would be the primary? MR. LOONEY: If they're an actual full-time employee, then the County's plan is primary. COMMISSIONER NICHOLSON: Thank you. 8-29-05 wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 MR. LOONEY: There are some retirees that is the one that's a little more confusing. Creditable underwriting information. One of the things that I look at when I have got the information in front of me, I look to go back at least three years, if I can, and try to base projections on three years of information that we have. Creditable means that the longer period of time I have to look at history, the more accurate I can be in the future presentations. Right now, we have information that is about seven months old under the Mutual of Omaha contract, and we're still missing bits and pieces from the old E.B.A. contract to be able to be as secure as I'd like to be in projections going forward. I am going to send a request -- a formal request through the Treasurer's office to E.B.A. for additional information. Now, E.B.A. doesn't exist any more. As I understand it, they sold their company to an organization out of Houston, so I'm not sure whether I'll be able to get the numbers that I need, but what we're going to look at today, this has been adjusted based on what we have for credibility as far as information that we've gotten. One of the things we do look at is this 8-29-05 wk 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 look at when we look at coding for where the expenses are actually being incurred in the plan itself. DRG's, I'll show you the reason I put that in there, is because we do have a report on diagnostic-related groups. That's the manner in which you look at a claim based on the total diagnosis, an appendectomy as opposed to a byline surgery. The entire cost of the appendectomy is the diagnostic-related group, so they group it all together. The reason we look at it is because under the claim process, some claim processors will bundle things into a DRG and pay in accordance to that, while others, we ask them to unbundle that so that we're not paying for the claims within that DRG that we shouldn't be paying for. So, that's part of that. Experience rate. That's just basically what I was talking about for creditable coverage. The fixed costs are the charges that Mutual of Omaha charges for the administration of the plan, the stop loss insurance, things of that sort. Flexible spendable accounts are managed outside by a third party. That is not your HRA account. Flexible spendable account is an amount that the individual elects to set aside to reimburse him for expenses that are not covered under your medical plan. Now, this -- we do a little bit of a juggling act here when we have an HRA, an FSA, and a fully paid plan as far as benefits, as to where the dollars come out first. 8-29-05 wk 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: Is that the AFLAC MR. LOONEY: I think AFLAC is your administrator currently. COMMISSIONER LETZ spending we're talking about? MR. LOONEY: Yeah They handle the flexible The reason people have covered under the FSA account, such as prescription medications that are over-the-counter type of medications. They may not be covered otherwise. COMMISSIONER LETZ: Okay. MR. LOONEY: Eyeglasses, dental work, a lot of different things that they can do. An incurred claim, when we look at claims -- we look at incurred claims, we look at paid claims. An incurred claim -- a claim is considered to be incurred on the date the service was rendered, so that starts the clock ticking. Lag claims, we look at lag claims from the standpoint of the time frame from the date that it's actually incurred until the date that the check is actually written and funded -- not just written, but funded. That's the time frame -- that incurred-lag time frame is that area in which we examine to determine what our reserves should be in relationship to 8-29-05 wk 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 incurred dates and paid dates. Incurred dates and paid The policy coverage period. This is probably one of the areas that's very confusing. The date that it's incurred and the date that it's paid determines what the liability of the insurance company is in relationship to their contract. Our current contract for a specific coverage is a 15/12 contract. That means anything that was incurred three months prior to January of last year, paid during this calendar year, is considered to be an expense that the insurance company is liable for, for both specific and aggregate calculations. So, anything that was incurred actually during that last 90 days of the year last year carried forward into this year from an expense standpoint. And what we're looking at for renewal purposes going forward is what we call a paid contract, or at least a 24/12 contract. That means we go back to January of last year, and claims then that are submitted are eligible for reimbursement if, in fact, they qualify for reimbursement. Doesn't mean that it's automatic. You still have to qualify for reimbursement under the plan definitions. You have to file on a timely basis. You have to provide the proper information for the filing, as far as that's concerned. But the contract itself will go back to January of this year. COMMISSIONER LETZ: Question on that. Say I 8-29-05 wk 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 go to the doctor; I have other insurance, and they go do all that and they say, "You don't owe us anything." You know, send it to insurance, and then it comes back and -- and it says -- so then it goes back and forth a bunch of times, and finally -- I ignore the first three or four bills I get from the doctor; I never can figure it out. Then you finally get one -- you get the second late letter; you send them a check. What if there's a disagreement -- I mean, how does -- at what point should the employees start questioning if something's being covered or not covered in relation to these dates? MR. LOONEY: As far as the benefit plan is concerned? Or -- COMMISSIONER LETZ: Well, if there's something that -- you know, say I went and had a physical, and if it was coded as a physical, it gets paid under one rate. But if it was because -- you know, I went because I was sick, it was a different amount paid, and they coded it wrong, okay? But I think that the insurance company should pay 100 percent of that claim. MR. LOONEY: At what point do you -- did you raise your hand and say, "Wait, time out"? COMMISSIONER LETZ: And if I'm late, -- MR. LOONEY: Okay. COMMISSIONER LETZ: -- what is that -- the 8-29-05 wk 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 incurred date versus the -- MR. LOONEY: Okay. COMMISSIONER LETZ: -- lag? MR. LOONEY: You'll see, when we look at some of the numbers in here, that the majority of the claims that are being incurred today are going through the preferred provider organization, the P.P.O. network. The P.P.O. physician actually is charged with filing properly with the insurance company to be reimbursed, because you're making the copayment, typically. So, then at that point, he is supposed to file his claim with the insurance company for reimbursement. Now, it doesn't mean that you still don't have the responsibility for filing a claim if, in fact, it doesn't flow through the system properly, but normally you would not see that filing occur. Normally, you wouldn't see it unless there's a coding problem and it comes back. Now, there's a standard set of rules for denial and going through the process of reviewing that claim for the purposes of being reimbursed. The insurance company is required to -- if they do not immediately pay the claim, if they don't pay it within the 21-day period, they're required to deny the claim. At that point, when they do the denial, then you can go through the process of having it reviewed for reimbursement purposes. COMMISSIONER LETZ: I guess I find -- and I 8-29-05 wk 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 don't use insurance very much. MR. LOONEY: Thank you. COMMISSIONER LETZ: I find the statements incredibly confusing. And if I find them confusing, I would imagine that most of the employees find them confusing. MR. LOONEY: Is it the Explanation of COMMISSIONER LETZ: I never can tell if I'm -- if it's coming out of the deductible, if it's coming out of some other -- you know, I mean, I don't know where the money's coming from. I think if there's a way that we can develop a -- and I presume this is coming through Mutual of Omaha. That's their -- MR. LOONEY: Their Explanation of Benefits. COMMISSIONER LETZ: But if we can get something that is clear, and just a running total as to, "Here's your deductible and here's now how much..." I just never can see any rhyme or reason to what the numbers are on the statements I get. MR. LOONEY: Have you had a chance to go online under your own claim and -- I believe that -- Don, isn't it available online to go through the -- an individual to go through and get a review of their claim? MR. WALLACE: Yeah. MR. LOONEY: I thought that had been set up 8-29-05 wk 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: It just seems that it's a -- I don't know that I'm unique in that area. MR. LOONEY: Explanation of Benefits. MR. WALLACE: You`re not. COMMISSIONER NICHOLSON: And this policy's not -- our administrator is not unique. All of the insurance companies we deal with -- I have the same problem, and I do just what you do. Keep getting bills till I decide I must -- I'll pay it. MR. LOONEY: You have about five -- you have about five different columns there, you know. One of them has -- is this CPT code, five digits, this is what we did. And then you've got a bill charge, which really doesn't have anything to do with -- it's a number that comes from the -- from the doctor. Then, all of a sudden, you have the P.P.O. eligible expense. Then you have your percentage of coinsurance that you're liable for, and then a number that is the balance due at that point, but under -- your copayment covers a lot of expenses. So, you know, you're right, it is confusing. COMMISSIONER LETZ: It just seems if that's something that we could make simpler, it would be good, or at least explain better. But we don't need to waste a lot of time on that. Just an observation. 8-29-05 wk 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER NICHOLSON: Can't be done. COMMISSIONER WILLIAMS: You have to deal with Mutual of Omaha to make it simpler. MR. LOONEY: Yeah, we can -- you know, the -- actually, they've got one of the more user -- I hate to tell you this, Commissioner, but they've got one that's got more information on it than the majority of the people that we see. JUDGE TINLEY: Is theirs more user-friendly than most? MR. LOONEY: More user-friendly than most. And, actually, we looked at it in this process last year; we went through and looked at them. COMMISSIONER LETZ: Okay. MR. LOONEY: But you do have access to the 800 number, that they will go through that and explain it to you and work with you on that. Actually, we need to get more feedback from you all on calling that 800 number for that claim explanation, if you need that explanation. COMMISSIONER LETZ: We can do it online, though? MR. LOONEY: Pretty much. It's pretty much an online process also. The reinsurance that I discussed, we had the specific and aggregate reinsurance. But, again, it's those paid dates and incurred dates that we really look 8-29-05 wk 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at very closely. We do not, at this point in time, as far as I can tell -- I'm not sure if there's anything in the budget established for any type of reserve, unless you all tell me that there's something in the budget that I'm not aware of that was a budget established for any type of reserve element going forward for payment of medical claims. I -- I have not seen anything at this point. Everything has been funded at -- had been funded at required funding for the previous year; nothing has been carried forward that I could see. And -- unless you all got something hidden back there that I haven't been able to find. We're self-funded. The specific insurance coverage is the deductible that we have from an individual -- for each individual and each dependent, we have a $40,000 specific deductible at this point. Anything under $40,000, we're liable for. Anything under $40,000 goes against that accumulation for aggregate coverage. Anything in excess of $40,000 is reimbursed by the reinsurance company. What we look at when we're looking at renewal information, we look at trend. "Trend" meaning that inflationary number that's built into the cost of health care. If it cost us $100 last year, it's going to cost us $100-plus for it this year. And we pull those trends out of two or three different resources; insurance industry, actuarial reports that we have access to, and then again, 8-29-05 wk 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 creditable history, if we've got creditable history. Utilization is just how frequently people are using the Now, under your -- your tabs there, if you'll look at -- I'm going to -- I'm going to go through the tabs with you, because we've got the first tab. If you'll look at the first tab on your thing, we have in there what I was talking about a minute ago, was the diagnostic related groups. These are -- these DRG codes out here, those are the codes that the industry uses to identify these particular programs, like 075 is a major chest procedure. That's not increase or decrease in size; that's a cutting in the chests or actually doing some sort of cardiac -- cardiovascular repair. But you can see that we've had the claim amounts; we've had 22 during the first seven months of admissions, and these groups typically are admitted to the hospital. We'd really -- the numbers here are not totally creditable yet, because we don't have enough history, but what it shows you is the -- the standard length of stay that you have for these particular incidents, and it shows you where we are as far as the length of stay. You'll notice that there's a lot of negatives in this column. That means that we're spending less time in the hospital than -- than a lot of other people are spending in relationship to these particular services. But we have 8-29-05 wk 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 one or two in here, such as pneumonia, and then is greater than 17 years old. We had pneumonia, one stay, that that person was in the hospital for 13 days. That's a long time to be in the hospital for pneumonia. That must have been a pretty critical circumstance. But that's what the DRG report shows us, and what we watch and what we try to see is a high frequency of these particular issues to determine whether or not there's anything that we might be able to do from a medical management standpoint for employees for informational purposes. We don't have quite enough information yet to be able to do any managed care function in that area. COMMISSIONER WILLIAMS: Gary, if I'm reading this correctly, with the exception of just those couple up there in the 12 and the 13, we are essentially under the normal average stay? MR. LOONEY: Very much so. COMMISSIONER WILLIAMS: Which should be a good factor. MR. LOONEY: Very good, sir, yes. This is -- negative is good in this -- in this one -- in this report. And we make up for that on the next report. COMMISSIONER WILLIAMS: Oh. Don't get too carried away here, huh? MR. LOONEY: Yeah. Next thing we look at is 8-29-05 wk 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the prescription drug program, and you'll notice down at the bottom of this -- at least you should see down at the bottom of this page, it should say Page 4 of 4. COMMISSIONER WILLIAMS: Should say what? MR. LOONEY: "4 of 4" at the very bottom. COMMISSIONER WILLIAMS: Yes. MR. LOONEY: Okay. The other three pages that are included are divided up by the area of coverage in the three different plans that we're reporting on. We report on the -- on the base plan that we have, then the buy plan, and then we also report on retirees, so this is a summary of all of -- everyone. This includes all participants. And through seven months, we had $140,000 in paid claims on prescription drugs. The good news in this piece of this is that about 80 percent of it -- little over 80 percent of it fell within the formulary, where we do receive some discounts on those medications. We did have, then, about 19 percent of it that fell outside that formulary, which means that we had a little higher expense. That also means the employee had a higher contribution toward medication. We had -- about 27 percent of the total cost of the prescription drug program was borne by the employee, so about 73 percent was covered under the medical plan itself. And that's really a pretty good average, that 70-30 ratio. Based on benefit programs, that's not a bad 8-29-05 wk 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 average. The concern is more the frequency and the volume. $140,000 of claims over that seven-month period. Actually, about six months, because we had that first month lag in there. That's a pretty high ratio of prescription drugs. MR. LOONEY: Sure. COMMISSIONER LETZ: -- the last column says scrips. That's telling me that there were 2,661 prescriptions written? MR. LOONEY: Right. COMMISSIONER LETZ: Is there any data here that says the number of employees that accounted for that? I mean, did all employees? I mean, I guess I'm wondering -- MR. LOONEY: The average employee scrips that are written during the year, we typically use an average of about 2.8 scrips per year per employee. And I'd have to go back -- and, you know, we've got 270 employees on a monthly average basis. I don't have a calculator. 270 times 12 divided by five times -- divided into that number. COMMISSIONER LETZ: Okay. MR. LOONEY: You know, the -- the retail -- let's see, which one was it that I was looking at? The mail-order actually is being used, you know, pretty well, which is good. But the brand retail formulary, 44 percent 8-29-05 wk 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 generic is -- is not bad, unfortunately. You know, 44 to 50 percent is -- 44 or 45 percent is pretty good on a generic. But I can check the frequency. COMMISSIONER LETZ: Okay. MR. LOONEY: Claim experience by class is the next one. Again, it should be Page 2 of 2, which is accumulation. These are medical claims only. It does not include the actual prescription drug information. COMMISSIONER WILLIAMS: Two of what? COMMISSIONER LETZ: The next tab. MR. LOONEY: 2 of 2 down at the bottom. Again, it's -- the last page is the summary page. The other page is -- COMMISSIONER WILLIAMS: Okay. MR. LOONEY: The classes that you see there, A, C, and R, A is the primary benefit plan. C is the buy -- or the buy-down plan, and R is that retiree code group. The amount of claims that were submitted, the amount that was reduced -- and I'm going to have a little more descriptive piece of this in a second, but this shows that the coinsurance and the coordination of benefits period, the coordination of benefits is pretty high for you all. That means that we do have a lot of secondary coverages within your organization. We have people that do have secondary coverages. The coinsurance amount -- 8-29-05 wk 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: Back on that, because that group is out of the retirees, that's probably all MR. LOONEY: Coordination of benefits amount? COMMISSIONER LETZ: Yes. 'Cause, I mean, the 37 -- the number there is all under -- or almost all under the R category or R class, so that's retiree. MR. LOONEY: A lot of Medicare. COMMISSIONER LETZ: Almost certainly, it's all -- it's not that our employees have additional insurance; it's that Medicare, probably. MR. LOONEY: Some of your Medicare recipients. And then copayment amount, that's the amount that the individuals actually pay out of pocket for the -- that's not -- that's deducted from the claims payments also. So, copayments are pretty high, but that's the way the plan's designed, and that's why the HRA is there to help reimburse on some of those expenses. But coinsurance amount overall is -- is a little below average than where I like to see it, so we may have to look at tweaking the plan a little bit in that area. The next one is the -- is a little more descriptive of the medical disposition of total charges. This was in the -- working out in our network. As you can see, we're highly utilizing the network, the majority of the claims. Only a small portion of the claims are not in 8-29-05 wk 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 network. And this is -- I think this was Tab 6? COMMISSIONER LETZ: Four. MR. LOONEY: Tab 4, I'm sorry. Tab 4. Tab 4, 4 of 4, so total charges submitted for reimbursement were actually right at a million, one. Then these are the things that were subtracted from those charges to get down to what was available for reimbursement. There's certain penalty -- there were no penalties involved. Penalties are not precertified, a stay or something. Noncovered services. Those are typically things that are not eligible to be paid under the benefit plan. Product limit. That would be something that we had a limitation on as far as the number of visits or number of services. Quite often, that comes in -- I'm not sure; I think the plan may come in under chiropractic services or may come in under physical therapy, may come in under something that was just -- mental or nervous disorder that was asked, but not paid. The big number is then on the pricing, as you can see, the $227,000 number. That pricing number has to do with your reductions that we get for the P.P.O. network. That's part of that. You also see under the out-of-network, you see a number there. That's for negotiated fees in case they were out of network; those were fees that were negotiated that were lower, too. Then you have the individual deductibles, copays and coinsurance. That's the 8-29-05 wk 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 employee portion that they're paying out-of-pocket for these medical expenses. Also, with all the reductions taken in place, we've got $581,000 to pay claims that were paid based on the total submitted charges. That's roughly a 50-50 share of the total charges submitted that was actually paid. The plan design that we have with the high deductible, utilizing the HRA plan, we've -- that's about what we'd expect to see. We expect to see that 50-50. If it were much higher than that, then our benefit plan would -- would be defeated by the HRA account. We want that -- that number to be low. We want it to be 50 percent, possibly even under that. And then the HRA blends in over that to offset some of the expenses that the employees have above. That way they get a better implication of what the actual costs are, because they're having their coinsurance numbers reimbursed by -- out of their account, so they're seeing that number being -- reducing that number. Then we add back in the prescription drugs, and you see that we've got a total paid claims through seven months of $721,000. Under the next tab, which is paid claims, it shows that the distribution of the claims, that the majority of our claims are paid on employees. The dependents only had -- or children only had about $25,000 in claims, and the spouses -- spouse had 172, and the balance was for the 8-29-05 wk 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subscribers. So, the balance was in the employee group, so we're paying a lot of claims on those employees. Now, the next page should be those claims that were paid, and up at the top, I think it's something that was -- the next tab, I guess is -- COMMISSIONER WILLIAMS: Tab 6. MR. LOONEY: Tab 6? It should show claim threshold, 20,000, is what I'm -- COMMISSIONER LETZ: Yes. MR. LOONEY: Claim threshold, 20,000. We use the $20,000 level because that's halfway to the specific deductible. And we report -- I have them report anything that reaches 50 percent of the specific deductible; I have them report that to me. Right now, we've had two claims that -- actually three now that exceed the $40,000 limit. We had one for 76, one for 77, and one for 118. Total reimbursement on those three claims to date is $115,000, which is shown on the next tab. So, our stop loss insurance has reimbursed us, in excess of $40,000, $115,000 at this point in time. Now, let's see, we should be under Tab 7. COMMISSIONER LETZ: Mm-hmm. MR. LOONEY: Under Tab 7, you'll see what the -- again, on the health insurance piece of it, you see the total fixed costs that we've been paying for administrative services. Yes, sir? 8-29-05 wk 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: Could we go back to the COMMISSIONER LETZ: Is that -- that doesn't look bad to me. That -- I mean, the five employees have gone over $20,000, or four -- or dependents or one of the spouses. But, I mean, is that -- MR. LOONEY: One of the things -- we've been tracking that one at 118,000, and I think we've pretty much gone through his -- through that individual's -- got to be careful with these HIPAA regulations. I think that we've pretty well gone through that individual's total incurred claims at this point, because two months ago we were at a hundred and -- 114 or 115,000, and now we've just kind of finished off some of the claims that we've had to be at 118. The one that bothers me is the third one on the list, which is new. We did have another claim that was running that we felt like was going to run out at about 70. That was the second one on the list, and that was run up, pretty much run out. Also, the next one's a new one that we just got in. That concerns me a little bit, because that hit all in a 30-day period, so that was a pretty expensive -- COMMISSIONER LETZ: So that one's probably going to go up? MR. LOONEY: That one, expect to go up. The 8-29-05 wk 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 other two we expect to level off and -- and I was going to say "die off," but that's not -- that's not a good word to use, I'm sorry. That one's going to level off, 'cause they are healthy -- or healthier. COMMISSIONER LETZ: But to have five claims over the 50 percent threshold for our number of employees -- MR. LOONEY: It's not bad. COMMISSIONER LETZ: -- is not bad? MR. LOONEY: No, it's not bad. The bad thing is the next report that you look at. COMMISSIONER LETZ: Okay. COMMISSIONER WILLIAMS: Number 7? MR. LOONEY: The bad thing is the next report that shows the premium we pay for that coverage. The premium we paid for that coverage to date is $81,000. And we've received $115,000 in reimbursements at this point, so our loss ratio from that standpoint is up. But, still, that's not a terrible number. Now, if we can get back to -- by year end, if we can get back close to zero, we'll be -- should be in pretty good shape from that standpoint. That's not a terribly unusual number, because it only takes one or two claims, as you can see, that are exceptionally high to be reimbursed for very large amounts. This is -- this is getting back to pure insurance. This is -- this is more of the pure insurance standpoint. We don't get as much 8-29-05 wk 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 experience reading out of these types of plans that we -- that we get from other insurance programs, which means that having a bad claim experience in this situation may not impact our rate going forward nearly as much as it would if we were in some other form of insurance, in fully insured or whatever. This type of insurance, we can -- we can do a lot of -- a lot with. We can market it. We can -- you know, there's a lot of things we can do in this area to help protect this piece of it. There have been no life claims. There's been no life -- been no deaths in the county. COMMISSIONER LETZ: So, where -- probably a stupid question, but we want the premium number lower than the claim number? MR. LOONEY: No, we want to -- yeah, the County does. The County does. JUDGE TINLEY: Stop loss carrier doesn't like it that way, though. MR. LOONEY: We have paid 80 and we've gotten back 115 at this point. COMMISSIONER WILLIAMS: I've seen 91. Where do you see 80? MR. LOONEY: I'm sorry, I don't have my glasses on. 91, I'm sorry. I'm sorry, didn't have my glasses on. COMMISSIONER WILLIAMS: I thought you were 8-29-05 wk 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2? 29 2_` looking at a better sheet than I'm looking at. MR. LOONEY: It looks like an 8 from here, but nope, it's a 9. So, you know, we're not too far off in that. So -- COMMISSIONER LETZ: What you're saying is because that number -- if it continues to stay higher, that means that the premiums are going up to adjust for that? JUDGE TINLEY: Yeah. MR. LOONEY: It looks like it's potentially going to go up. COMMISSIONER WILLIAMS: Gary, just one quick question under Tab 6. I don't want to belabor anything, but in -- in three of those situations, stop loss carrier picks up, and in two of them, we're not there yet; is that correct? MR. LOONEY: Correct. That's correct. Now, the ASO paid basis, these are the administrative fees. That page before was the premium we were paying on behalf of the specific insurance. Now these are the administrative fees, and relationship to the claims also. There's a timing differential in this report versus the other report that I had. So, the -- the $748,000 number needs to be adjusted for corrected claims that have come in since the report, so it needs to be the previous number, and I don't remember what it -- 740, 741, or what that number is. Okay. Now we 8-29-05 wk 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1~ 2C 21 2~ 2: 2~ 2` get down to the nuts and bolts. Where do we go from here? Where are we? That's kind of the history. The next one is the -- you should have a chart that says Kerr County Estimated Medical Plan Costs for 2006. When I went back to my original -- my original note, you'll see that on that -- my original memo, it says, okay, here's what we used to be able to calculate where we are, where we're going. We take current medical incurred claims -- actually, we take -- project that out to 12 months. We take our prescription drug charges. We check that out in a different manner, because we have a different impact as far as trend is concerned on prescription versus medical. We come up with a total paid claim number that we expect going forward for the plan year next year. We adjust that for any reimbursements that we've received to-date, assuming that we're going to get some credit going forward, and then we apply a trend factor to that, inflationary trend factor, which, again, I get out of the actuarial reports from other insurance companies, from general regional information. If we change the plan design, then we adjust those claims going forward either up or down based on either improving benefits or decreasing benefits. That gives us an estimation of the total plan liability going forward. We i add back in our fixed costs and our exposure that we feel we 8-29-05 wk 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have under the HRA account. That gives us what we expect year, based on the current number of employees, is $2,086,988. Last year it was a million, eight, based on 261 employees, so you've added 11 employees, approximately. The factor per individual employee, total number for funding purposes last year was 577. That included employee contributions and county contributions. That was total -- total factor that we budgeted for. The current plan year, we're looking at 627, which is approximately an 8.8 percent increase over the previous year. That includes funding at the full liability of the HRA account, and currently our liability -- our reimbursements under the HRA account are very minimal. So, under our HR account, we should have -- moving forward, going forward, we should have -- at this point in time, we're looking at anywhere from $140,000 to $150,000 projected to still be unused in those accounts. You know, where it happens to fit in your budget, I'm not really sure, but I think we funded for -- we funded for a million, eight, so there should be sufficient if those numbers -- if that's not used, it should remain in the budget. It should stay in the budget, and hopefully we'll be able to carry that forward till the next year. But we still need to fund toward that again for one more year. We still need to fund toward that. The reason is that we've 8-29-05 wk 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 got a maximum liability under the health care plan for an individual claimant. We've got a maximum liability that they can claim. So, even at the highest reserve, which is somebody carrying forward 600 from this year, 600 next year, even if they're carrying forward $1,200, we still have a maximum liability under the health care plan that we apply that to. So, we've got this next year, and then possibly one more year as far as funding at that level until we're pretty much done funding with that piece of it, and until then, we can carry forward on that part of it. The claims that you see that -- up here, these are projected claims. This million, 581 is a projected claim factor based on seven months, but we had to rate that, because we had approximately a month and a half to two months where incurred claims were not actually being submitted for payment at that time. So, rather than be a straight line projection on claims, dividing by 7, times 12, we can't do it that way. We have to -- we have to rate it; we have to put our trend into it -- not our trend, excuse me. I lost my train of thought. We had to put our timing and credibility into it, because of the fact that it's not a pure number at this point. Once we get into, again, 18 months, 24 months of experience that we can track, that number will be a lot more accurate, but right now, this is -- this is the projection. 8-29-05 wk 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The 7 percent actually is a pretty -- it's a pretty solid number from your-all's region. That's down from where we were two years ago, which was 11 to, you know, 12, 13 percent. The 7 percent number is a good number. The way this has projected also, I have projected the fact that Mutual of Omaha quoted a two-year rate guarantee on their fixed admin costs. We did not get a firm quote on the specific and aggregate insurance. That may change. This particular projection has a 25 percent increase in it for the specific and aggregate insurance. Now, we may very well have to put that out to bid, but we won't know until we get the renewal information from Mutual of Omaha, which would be, again, at the end of this month -- at the end of next month, excuse me. End of September, 90 days out. To skip ahead to my -- to my recommendations, my recommendation at this point is that we have a fixed number from Mutual of Omaha. If we apply that fixed number to the admin fees directly, it's less than a 1 percent increase in their costs -- in the total overall costs going forward for next year. It's -- I can't remember the exact total number, but it's about a 1 percent change as far as admin costs are concerned. Now, the specific and aggregate insurance is another question. It's something that we have the ability under Mutual of Omaha, being an administrative service only contract, to go to the market and bid for those 8-29-05 wk 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 insurance products, for those particular products. I think it's not a wise thing to change administrators every year. For one thing, you have to go through the immediate change for employees. We've really gone through -- we went through about three or four months of the change in turmoil, went through three or four months of that process, the lost time for employees. Making a change to another third-party administrator is something that's very seldom blended back into your costs, but we've got a two-year rate guarantee. That number is good. I think we should bid the stop loss going forward, if, in fact, Mutual of Omaha comes back with anything that's not tenable at this point. So, you know, that's -- that's where we are today. The numbers are not terrible. I hope that our claims -- you know, I'll have -- again, I'll have another claim run that'll be available to me in about 10 days, and then I will be able to get another run prior to the beginning of October, which will bring all of these numbers back up to date. And -- but this is where I feel that we are today. COMMISSIONER LETZ: So, the last page, the -- your best estimate right now is the total cost is 2,089,793? MR. LOONEY: Now, what that -- what that sheet shows, too, is an increase for the County of 11 percent. But the 11 percent is assuming that you assume 8-29-05 wk 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 all of the increase for the employees going forward for the next year. It's an 11 percent increase in calendar funding. The 8.8 percent is an overall increase, assuming the combination of both employee and employer contribution. COMMISSIONER WILLIAMS: So, for budgeting MR. LOONEY: For budgeting purposes, depending on whether or not you want to assume all the costs going forward, yes, that would be 11 or 8.8. COMMISSIONER NICHOLSON: Gary, I want to talk again about the employee-only insurance. Those who enroll and only cover themselves, not their family. MR. LOONEY: Right. COMMISSIONER NICHOLSON: Going back to Tab 5, Class A, I see that -- that the claims paid for the employees were about two-thirds of the total. MR. LOONEY: Correct. COMMISSIONER NICHOLSON: 420 versus 613. And then, turning to the last page in your notebook, again, we see that if you -- MR. LOONEY: Percentage contribution by the employee in relationship to total claim premium. COMMISSIONER NICHOLSON: And if there's no charge to it at all to enroll for employee only, then you do 25 ~ that. Now, quite a number of our employees have spouses who 8-29-05 wk 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have coverage, so if they -- if they chose not to enroll in our plan, they would be covered by their spouse's insurance. But because there's no cost to enroll in our plan, they do that, and then we become primary on the coordination of benefits. So, when Commissioner Baldwin enrolls, there's no cost for him to enroll for himself only. I don't know what he does; let's pick somebody else. Employee A enrolls. Employee A's got a spouse that's got an insurance program, so Employee A enrolls at no cost, and he becomes primary, and we pay his medical costs first, and his spouse's plan might pick up some of them. And the vast majority of our enrollments are employee only, 200 of the 266. 208 -- 209 of the 266. And what I'm saying is, if we charge some amount -- I don't know what it is -- $50 a month, it would drive some of those out of the employee-only category. I've got Aetna coverage, and because it costs nothing to enroll in the county insurance program, I enroll. So, when I go -- when I incur medical expenses, Kerr County pays first. But if you charge me something -- I don't know what; $50 a month, maybe -- perhaps I would deem the benefits of that to be not worth $50 a month, and you wouldn't be paying the first dollars on my insurance. I would support charging something. You know, I just think it's a -- I won't speak for the expert, but I just think it's good insurance 8-29-05 wk 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 principle that you participate to some extent in the cost of the program. COMMISSIONER BALDWIN: That's an interesting MR. LOONEY: Yes. It's -- COMMISSIONER LETZ: Most counties probably do. MR. LOONEY: It's getting to be -- it used to be the -- the rule of thumb, you pay for the employee, they pay for their dependents. That was kind of the rule of thumb. We're seeing a lot of -- of individual organizations, corporations and county governments, school districts, everybody else, moving to an employee contribution of some sort. The reason is just exactly what you said; it puts them in a position where they have the ability to waive out of the plan. Well, currently, unless we have some very specific information about where they are elsewise, we don't even allow them to go. COMMISSIONER LETZ: By doing that, don't you waive out probably the lower risk? MR. LOONEY: You know, it's -- that's the question. You know, that's what happens. 261 employees, if you start charging $10, $20, you know, depending on the volume that you charge, then you might possibly get some of those people to move to other areas. They might go to other 8-29-05 wk 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 areas. On the other hand, if you have no contribution level for an employee, you're inviting those individuals that have problems into your organization, because they're not having to pay for their health insurance, so you get kind of a, you know, double-edged sword. You want to -- you want to be good and competitive in the employee market, but you don't want to be that shining star out there with the $600 reimbursement account on your HRA account, with the -- with everything that attracts people in, too. That would potentially overutilize the prime. We ran into that very problem in San Antonio at the Methodist Hospital system. They were the last hospital system to have their employees covered at 100 percent, and we went through a couple years where they didn't have any problem with nurses -- they didn't have any problems with hiring nurses. But we got a lot of sick ones that came in, a lot of pregnant ones. So, it's that double-edged -- that double-edged sword, you know as to whether or not we lose. So, I don't know currently whether or not the -- the three major employers in town -- I don't know whether they're charging employee contributions or not. That's something that we can find out. I suspect that the City, the school district, and the hospital -- I'm not sure exactly what they're doing with their employees. COMMISSIONER LETZ: I believe the school 8-29-05 wk 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 charges. COMMISSIONER BALDWIN: I don't know. JUDGE TINLEY: They've got a cap on theirs of the amount, I think, under the current law, if I'm not mistaken. The Legislature has toyed with it. COMMISSIONER LETZ: But I think the -- I mean, the employees pay a portion out of their paycheck for their insurance. MR. LOONEY: The last time I looked at the school district, what they did was they set a budget, said we're going to pay -- at that time, it was $150; this was about five or six years ago. They were going to pay $150. Anything over and above that, the employee was responsible for. COMMISSIONER LETZ: City, I have no idea. MR. LOONEY: But it potentially can impact the cash flow and the overall cost of the plan. COMMISSIONER LETZ: If the amoun t is nominal -- you mentioned $10, $20, $50. $50's not too nominal. $10 or $20 is. JUDGE TINLEY: $50 is. COMMISSIONER LETZ: Is -- is it really -- someone like Dave really going to think, well, I'm going to save $10 a month, so I'm not going to join in? I mean, I wonder i f -- if that's enough of a cost to make any 8-29-05 wk 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 difference. MR. LOONEY: Well, I remember -- I remember a young lady that was sitting in one of these chairs last year at one of our sessions that I believe was with the Sheriff's Department, and she was talking about the increase in the cost for dependent coverage and the fact that it was -- you know, $10 or $20 was an incredible burden on her at that point in time. So, I just -- I remember that discussion. COMMISSIONER LETZ: Right. MR. LOONEY: At that point in time, I think part of that had to do, too, with double -- you know, double-dipping on the withholding. So, the -- you know, there are other optional benefit -- there are other optional things that I've seen in plans, and I'm concerned about whether or not they're legal or not, and that is changing your plan so that your plan is secondary regardless if there is other coverage in force, where you just make it -- it's automatic that your plan is secondary, regardless of what -- I see that at the Northside Independent School District in San Antonio. They wrote into their plan that if, in fact, there was other coverage -- it didn't make any difference; if you had other coverage, the school district was secondary, period. And they got that -- that's been in force about two years now. COMMISSIONER NICHOLSON: Any down side to 8-29-05 wk 40 1 I that? 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LOONEY: Other than administratively being something that's unusual, and third-party administration functions -- the majority of insurance companies use the birthday rule to determine whether something on the coordination of benefits is -- is primary or secondary, but almost all companies use the fact that if you're a full-time employee of an organization, you're considered primary, so it would be an administrative change that would have to be taken. COMMISSIONER WILLIAMS: Did you question the legality of that, did I hear? MR. LOONEY: I did. And there was -- there was two things that occurred. I got opinions both from Fulbright and Jaworski and Cox and Smith that said they could do it. The other thing that came up was a required contribution by an employee, where we have a company that required that their employees make a contribution as a -- for employment purposes. If you wanted to be employed with the county, you had to pay "X" number of dollars for your health insurance, and that was another one that I -- that I took to attorneys, and they said that that was legal also; that you could require as -- as a requirement for employment, that you could require an employee to make a contribution to the health care plan. 8-29-05 wk 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER NICHOLSON: Our costs are -- our medical insurance costs are a big chunk of our budget. I heard a couple months ago Ford Motor Company described as a health care company that also makes automobiles. MR. LOONEY: That's very, very close. COMMISSIONER NICHOLSON: I can tell you that industry, for 20 years, has been projecting that health care was going to kill them, whether it's retail or oil business or whoever. And I think the standard in there used to be -- I'm 10 years out-of-date -- was a 20/80 split on premiums. Employees had to pay 20 percent. And that was still cutting it up. MR. LOONEY: I saw a report recently where the health care costs -- that they were going to need to up pricing of their automobiles, I think, by $140 an automobile to keep up with what they were facing for the increase in the health care costs. COMMISSIONER NICHOLSON: One year for that contract period, yeah. MR. LOONEY: Right, for one year. JUDGE TINLEY: Just for the increase. MR. LOONEY: For the increase. COMMISSIONER LETZ: This past year, we, you know, started the HRA and we raised the deductible. MR. LOONEY: Correct. 8-29-05 wk 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: And the HRA's are not being used a whole lot. Would it be much of a savings to the County to raise the deductible again and leave the HRA limit where it is? The two years for most people that roll up to $1,200, their HRA, and raise it -- our deductible is $1,000 right now? MR. LOONEY: $1,000 right now. COMMISSIONER LETZ: Raise -- raise the deductible to $1,200, $1,500, something like that. Would that give us a noticeable reduction? MR. LOONEY: It's always, you know, experience -- it'll impact experience. And best I can tell you is that I can go back -- excuse me. I can go back and determine how many people fell within that range, and try to give you a fiscal impact on what it would be. Normally, moving from a $1,000 deductible to a $1,500 deductible is a -- anywhere from about a 2 and a half to 4 percent change overall in what you expect to see in total claims payments, so it's not a huge number. But it's 2 to 4 percent of total paid claims. So -- COMMISSIONER LETZ: Our total paid claims was -- MR. LOONEY: Well, you're estimating total paid claims for next year to be at about the million, seven. COMMISSIONER LETZ: So, that's a pretty big 8-29-05 wk 43 1 I number. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER NICHOLSON: It's a big number. COMMISSIONER LETZ: 4 percent of that, or 3 percent. And one of the reasons I asked that is that the -- when I was at the post-legislative conference, I mentioned to you that the overall view was that Kerr County's on the cutting edge of where county government is going, in Texas anyway, and that they were kind of amazed that little backward Kerr County was doing this. Or whereas most -- like, Fort Worth and, I don't know, some of the places -- I know Fort Worth is not yet, but they're getting ready to go down this road. They, incidentally, do require their employees to pay $50 a month. But they also -- during that seminar, it -- it became apparent they were surprised our deductible is as low as it is with an HRA established, and they thought that it was -- I said we were transitioning the first year. MR. LOONEY: I was going to say, remember, the first year, what we tried to do was to transition it so that there wasn't a huge impact upon the employees moving forward. COMMISSIONER LETZ: If we raise -- if -- do you have -- I mean, if -- assuming most of the employees didn't use their HRA and don't use it, they're going to have $1,200. Then, if we raised the deductible to $1,500, they 8-29-05 wk 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would basically have a $300 out-of-pocket expense. MR. LOONEY: We probably should take it higher than that, because two years ago our deductible was 400. So if you have 1,200 -- you know, potentially $1,200 of credit in that account and we only raise it to $1,500, our benefit plan is actually richer at that point than it was the previous year. So, we could actually raise it to more in the -- to get the impact of the deductible savings, we're looking at more in the $1,750 to $2,000 range, as far as deductible is concerned. COMMISSIONER LETZ: I would rather go that direction than -- and try not to charge, personally. COMMISSIONER BALDWIN: If it helps. COMMISSIONER LETZ: Well, I mean -- COMMISSIONER WILLIAMS: I'd like to see the numbers, if you can run some numbers on it. MR. LOONEY: I need to get you numbers. COMMISSIONER WILLIAMS: Tell us what the impact is. COMMISSIONER LETZ: A $1,500, a $2,000 deductible, and see where it puts us. MR. LOONEY: I can do that. COMMISSIONER LETZ: And also, do we have -- is there a breakdown here as to HRA usage? MR. LOONEY: No, because when I got the 8-29-05 wk 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 report -- initially, they told me they were going to get it to me on a quarterly basis. The next quarter is tomorrow, so -- you know, plus it had names on it, the first one I got, so I couldn't -- I couldn't present that to you. But I will -- I will have that, what -- by the end of this week, actually. Today's the 26th? COMMISSIONER BALDWIN: 29th. MR. LOONEY: It'll be the beginning of next week, probably. COMMISSIONER LETZ: I mean, going back to your -- if we went to $1,500 -- say we go to $2,000. It's -- that could get us to 5 percent off? MR. LOONEY: I just have to get the report first and see where we fell as far as claims were concerned. COMMISSIONER WILLIAMS: I doubt it will go that high. MR. LOONEY: I wouldn't think that it would go quite that high. We'd have -- and we're looking at two different claim factors. You know, we're looking at the HRA claim factor and looking at the underlying health care factor too, so we have to weigh those two against each other as far as total cost is concerned. COMMISSIONER LETZ: Even at 4 percent, you're looking at a $65,000 savings. COMMISSIONER NICHOLSON: Lot of money. 8-29-05 wk 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER LETZ: Could buy an ambulance. JUDGE TINLEY: Northside's mandate of other coverage being primary coverage, have you got any idea of -- ballpark, what that -- how that might impact us? MR. LOONEY: Not knowing how many -- you know, as far as total dependents are covered, we don't have a huge volume of dependents covered at this point in relationship to the total overall population, so I'm not sure exactly. I'd have to -- JUDGE TINLEY: You can only do that with MR. LOONEY: No, it would be -- I don't know how many would be covering their dependents. JUDGE TINLEY: Okay. MR. LOONEY: I don't know how many are actually out there. JUDGE TINLEY: Would have the other coverage? MR. LOONEY: Yeah. I don't have any way of knowing what that is, statistically. We'll just have to make an estimation. Just make an actuarial estimation. COMMISSIONER LETZ: I would doubt that's a very big number. COMMISSIONER BALDWIN: It couldn't be. COMMISSIONER LETZ: I mean, there may be a few that -- you know, and the people that are going to have 8-29-05 wk 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it are people that have retired and went back to work, MR. LOONEY: What we look at is the ratio of female population to male population; we look at the number of singles -- single individuals, classify them as single versus married first, if we can get that information, and then would classify them male-female, and then we'd estimate what it is. We've got a higher population of females that would be covered by spouses' coverage as opposed to lower. So -- COMMISSIONER NICHOLSON: And I wouldn't be so much interested in the premiums that it brought in as the claims that it would avoid. For example, I'd be willing to raise pay rates to allow people to cover for that extra $50. It's just the idea of driving them out of our plan that might save tens of thousands of dollars, for one claim. JUDGE TINLEY: Well, with that rationale, you could give them a $100-a-month pay raise and require them to contribute $100. COMMISSIONER NICHOLSON: Yes. JUDGE TINLEY: That might -- put it to them a little bit stronger than election. COMMISSIONER NICHOLSON: Probably be a net benefit to the County for doing that. MR. LOONEY: If they contribute $100 to their 8-29-05 wk 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 plan, they do it under your cafeteria plan, then it's net of taxes at that point, so whatever a $100 contribution would be would be net of whatever income tax they'd be subject to, because you're doing it under your premium reduction program. Your flexible -- well, your premium reduction program, cafeteria premium. JUDGE TINLEY: But it would reduce the premium that would be required to be paid by the County. MR. LOONEY: It would reduce -- if the individual had a contribution. If the individual had a $50 contribution and they were in a minimum tax bracket, their net contribution would still be $43 for the -- because of the way the tax implications are, the salary reduction program. COMMISSIONER LETZ: Okay. MR. LOONEY: So, what I need to do is get back to you, then, pretty quickly with these numbers based on the higher deductible contribution, and -- COMMISSIONER LETZ: The HRA usage. MR. LOONEY: -- HRA contribution, utilization on that. 2,000? COMMISSIONER BALDWIN: Did we go to 1,750 or MR. LOONEY: I'll get you a number on both of 8-29-05 wk 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BALDWIN: Both? MR. LOONEY: I can get you that projection on both of them. COMMISSIONER LETZ: I'd like to look at the idea of a $100 contribution, if we can figure out pretty easily a $100 pay raise to all employees. MR. LOONEY: Okay. Let's see if that's -- looks like it may help, but I don't know. You don't know for sure until you do it. 277 employees at $100 a month, that's $27,000 a month in premium, so that's, what, 400,000 -- $400,000 in premiums. COMMISSIONER LETZ: But the County -- not necessarily. We're adding salary that much anyway, so it's -- MR. LOONEY: I'll bring -- what it will show you is, I'll show you -- on that chart that you've got right there, I'll show you what the impact is on that chart. I appreciate your time, gentlemen. JUDGE TINLEY: Thank you, sir. COMMISSIONER NICHOLSON: Good presentation. JUDGE TINLEY: I think you're slowly drumming this into our heads. I know I'm absorbing a little bit more each time. MR. LOONEY: I try to take -- go back a little bit and then come forward a little bit too. 8-29-05 wk 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGE TINLEY: Anything else for Mr. Looney? Anything else in connection with the health benefits workshop? I will adjourn the workshop. MR. LOONEY: Thank you, gentlemen. Appreciate it. (Workshop adjourned at 3:55 p.m.) STATE OF TEXAS I COUNTY OF KERR The above and foregoing is a true and complete transcription of my stenotype notes taken in my capacity as County Clerk of the Commissioners Court of Kerr County, Texas, at the time and place heretofore set forth. DATED at Kerrville, Texas, this 20th day of January, 2006. JANNETT PIEPER, Kerr County Clerk BY: ___ ~~Z----- - Kath~nik, Deputy County Clerk Certified Shorthand Reporter 8-29-05 wk