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