S.M.A.R.T. Presentation January 4, 2012 · Fully Insured v. Self Insured Fully Insured • Pay Insurance Company Premium Per Employee ... • Pay Premiums to County • TPA – 4%

S.M.A.R.T. Presentation January 4, 2012

Al Vanderberg, County AdministratorKeith Van Beek, Deputy County Administrator

Mark Knudsen, Director of Planning and Performance Improvement

• Health Insurance• Defined Benefit/Defined

Contribution (DB/DC)• Intergovernmental Collaboration• Transparency

Health Insurance

Health Plan Administration History

• 1970’s – Fully Insured Plans• County Clerk Administered Health Plan

• 1975• County Controller Administered Health Plan

• 1979• Personnel Department Administered Health Plan

• Today• Human Resources Department Administers Health Plan

History Continued……

• County Fully Insured with BC:BS until early 1980’s • Early 1980’s

• County develops self insurance program• First Third Party Administrator (TPA) - Total Group

Compensation (FKA Total Group)• Agent - Wolbrink Insurance

• Late 1980’s• Changed to ASR (Physicians Care Network)• Agent - West Michigan Benefits (later known as Lighthouse)

Health Insurance Expense –Fully Insured v. Self Insured

Fully Insured• Pay Insurance Company

Premium Per Employee• Includes Admin Fee• Includes Profit (15%)

Self Insured• Pay Premiums to County

• TPA – 4% Admin• No Profit Expense

Pro’s and Con’s of Self-Insured

Pros• No profit expense• County control of major claims• TPA Administration expenses

easier to identify

Cons• Budgeting; actuarial for budget

and employee co-pays• Complexity; TPA or provider

getting money in other ways• Health Management; do you

want provider sharing in incentive to keep claims down?

• County control of major claims (i.e. bad claims years)

Managing Self-Insured Health Costs 2003-2010

• Annual meetings with ASR (TPA) and Agent (West Michigan Benefits, FKA Lighthouse Insurance)

• Significant cost reduction highlighted by pharmacy savings• Typically compared County to 11 comparable Counties

with goal of placing near the median• Hard to “budget” savings or evaluate changes…no hard

costs in self vs. fully funded world

In sync with Counties…

Out of sync with community’s…

• City of Holland• Georgetown Township• Gentex• Haworth, Inc• City of Grandville• Ottawa County

*”blended” rate used for budget purposes

Internal Healthcare Review Team

• Alan Vanderberg, County Administrator• Keith Van Beek, Assistant County Administrator• Marie Waalkes, Human Resources Director• Marcie VerBeek, Employee Labor & Relations

Manager• Bob Spaman, Fiscal Services Director

Goals

• Reduce Healthcare Expense• Help employees make healthy decisions• Create Health Management System where

employees become consumers of their own health care choices resulting in lower claims in the longer term

• Employee Choice, move from one to three options

“BHAG”• Reduce future claims• Many of the illnesses that cost health plans major

expense can be indentified and prevented 24-36 months before they manifest.

Gallagher Benefit Services

• Hired to do comprehensive study of self-insurance plan• Not just hired because of low bid….• Gallagher had substantial experience with large government clients

in West Michigan and the West Michigan Health Insurance Pool (WMHIP)

• Gallagher had great references with a proven track record of helping organizations to reduce costs

• Gallagher had city and public school clients and was interested in obtaining county clients

• Timing – large organizations could move faster

Consultant RFP

• Goal to hire company to complete study of County self insurance health program and assess other health

• 15 Proposals• High Bid $120,000• Low Bid $28,000• Some were willing to do the study gratis if they become the

County Agent of Record• Gallagher Benefit Services Inc. hired to do study $28,000

with no Agent of Record commitment


Ottawa County Marketing Analysis August 23, 2010

• Current Content Analysis• Self-Funded Analysis• Fully Insured Analysis• Ancillary Benefit Bid Results

• Vision• Long Term Disability – AD&D• Dental

• Next Steps


• Gallagher Benefit Services was hired to be Agent of Record

• Evaluated claims data and the current plan• Contacted multiple insurance companies and received

quotes for 16 differently composed health plans (including both full and self funded options)

• Presented completed marketing study to County team• Team studied two primary insurance company options• Chose Priority Health to negotiate contract with

Team made decision to pursue the following Priority Health Plans:

• 100-80 Plan, 10% employee co-pay approximated current plan for unionized employees

• 90-70 Plan, 5% employee co-pay• High Deductible Health Plan with H.S.A., 5%

employee co-pay, $1,200 single deductible, $2,400 family deductible, employer fully funds deductible

EnrollmentEnrollment 2011 2012

High Deductible Health Plan

49% 75%

Low Plan-POS 90/70 2% 1%

High Plan-POS 100/80

39% 14%

Opt Out 10% 10%

Gallagher Benefit Services• Negotiated plan specifics and final plan costs• County finalized Gallagher Benefit Services as

Agent of Record

Overview of 3 Plan Options• High Plan – POS 100/80%

• Similar to ASR High Plan design• Same RX copays• Non-Preferred drugs prescribed as DAW will covered at the Non-

Preferred copay• Low Plan – POS 90-70%

• Similar to ASR Low Plan design• $10 Generic/$30 Preferred Brand/$60 Non-Preferred Brand Copays• Non-Preferred drugs prescribed as DAW will be covered at the Non-

Preferred copay• High Deductible H.S.A. Plan – POS 100/80%

• $1,200 Single/$2,400 Family Deductible• Ottawa County will deposit either $1,200 for a single employee or

$2,400 for a family in an H.S.A. bank account to offset the deductible

Annual Ottawa County Health Insurance RatesSingle Double Family

2009

ASR 100/80 $5,681.16 $12,214.44 $17,043.36

2010

ASR 100/80 $6,233.88 $13,402.92 $18,701.64

ASR 90/80 $5,967.48 $12,842.64 $17,920.08

2011

ASR 100/80 $7,276.20 $15,643.80 $21,828.60

ASR 90/80 $6,771.48 $14,558.76 $20,314.44

New 100/80 $5,037.72 $11,334.24 $14,105.28

New 90/70 $4,566.24 $10,274.48 $12,785.88

New HDHP $2979.36 $6703.44 $8342.16

2012

100/80 $5735.40 $12,904.56 $16,059.12

90/70 $5198.64 $11,696.76 $14,556.48

HDHP $3391.92 $7631.88 $9022.76

Annual Ottawa County Health Insurance Co-paysSingle Double Family

2009

ASR 100/80 $511.30 $1,099.30 $1,533.90

2010

ASR 100/80 $623.39 $1,340.29 $1,870.16

ASR 90/80 $596.75 $1,284.26 $1,792.01

2011

ASR 100/80 $727.62 $1,564.38 $2,182.86

ASR 90/80 $677.15 $1,455.88 $2,031.44

New 100/80 (10%) $503.77 $1,133.42 $1,410.53

New 90/70 (5%) $228.31 $513.72 $639.29

New HDHP (5%) $148.97 $335.17 $417.11

2012

100/80 (20%) $1147.08 $2580.91 $3211.82

90/70 (20%) $1039.73 $2339.35 $2911.30

HDHP (5%) $169.60 $381.59 $474.88

Rearranging the Deck Chairs on the Titanic

The Bottom Line

Health Management Plan

• Year 1• Employee Participation and Incentives • Each incentive is worth $50 (total $150) if completed by

employee and spouse if applicable• Health Quotient Information/WebMD Module• See Primary Care Provider for physical exam/participate in

condition management plan program if applicable• Complete 1 of 4 Rewardable Actions (weight management,

smoking cessation, stress management, health tracker)• Health Management Committee consisting of employees

Health Management Plan

• Year 2• Baseline Data of Employees/Bio-Metric Screenings

• BMI, Tobacco Use, Blood Pressure, Glucose, Cholesterol

• Employee Refuses Screenings = Disincentive

• Year 3• Employees with High Risk Bio-Metrics and Do Not

Follow Doctor Advice = Disincentive • Assessment/Data Collection turns into Evaluation

Defined Benefit/Defined Contribution (DB/DC) Transition

DB/DC• Defined Benefit Pension Cost – Not controlled

by County• Defined Contribution Pension – Gives potential

for cost control back to County• Defined Contribution Pension transitions

investment risk from taxpayers to employees

A Study of Retirement Plan Options for Ottawa County (DB/DC Report)• Developed by staff• MERS data - $30,000 to study transition expense

for all 17 pension groups• Fred Todd of PEBS assisted gratis• Study recommends transition from DB to DC for

new hires

DB/DC Report Findings• Savings after 30 years of $38 million• Cost to implement transition $8 million over time• Net savings after 30 years, $30 million• Increased cost until 20?? To cover “break in

pipeline cost”

Challenges…• MERS Obfuscation• Blown Report Deadline• Tricky Math

Implementation• Board Approves Financing Tool and Sets Aside

Monies to Pay Short-Term Costs for Transition.• Seven of eight bargaining groups approved

language in contract effective January 1, 2012 that allows County to implement DB/DC for new hires. POAM is the one group that did not approve this language.

• Board implements for Unclassified & Group T effective January 1, 2012.

The New Defined Contribution Plan• Mandated 3% Employer and Employee

Contribution = 6% Total• Employee Choice of Additional 1%, 2% or 3%

Contribution Matched by Employer = 12% Total• Vesting

• 50% after 3 years• 75% after 4 years• 100% after 5 years

• Current Employees have 6-month window to consider transition into the new plan

Intergovernmental Collaboration

Intergovernmental Collaboration• Context

• Great Recession• Cuts in Revenue Sharing• Continued Unfunded Mandates• Higher Service Demands

• Governor Snyder Focus• Collaboration and Consolidation• Cities, Villages and Township’s (CVT’s) Compete

for Statutory Revenue Sharing; Economic Vitality Incentive Program (EVIP)

• Extend Next to Counties?

Intergovernmental Collaboration• Basic Definitions

• Horizontal• Two or more CVT’s jointly provide

• Vertical• CVT’s rely on or collaborate with county

• Third-Party• Contract with private provider

Intergovernmental Collaboration• History of Collaboration

• Sheriff Contracts• Enhanced Patrols• Community Policing• Paramedic Services• Traffic• School Resource Programs

• Central Dispatch Authority (OCCDA)• Geographic Information System (GIS)• West Michigan Enforcement Team (WEMET)

Intergovernmental Collaboration• Highlighted Efforts

• West Michigan Strategic Alliance (WMSA)• Shared Public Services Initiative• Holland/Zeeland Future Search

• Recognition that a Region Rises or Falls Together

• Inventory to Understand and Document What Exists and What is Possible, Future Importance of EVIP

Intergovernmental Collaboration• West Michigan Strategic Alliance (WMSA)

• Quarterly Meeting of 8 County Administrators• Health Insurance Benchmarks• Reverse Auction with Kent County• Web Services

Intergovernmental Collaboration• Shared Public Services Initiative

• Funding and Administration through the Michigan Municipal League Foundation

• Grant Submittal with North Ottawa Communities• Outside Consultant Evaluates and Recommends• Areas; Assessing, Finance, Human Resources, IT

Intergovernmental Collaboration• Holland/Zeeland Future Search

• Three-day Session with Private, Public, and Non-Profit Sector Leaders

• Emphasis on Quality of Life and Efficiency of the Public Sector

• Formalized the 21st Century Governance Focus at the Macatawa Area Coordination Council (MACC)

• MACC Area Service Delivery Committee; 2 Counties, 2 Cities, and 7 Townships

Transparency

Ottawa County Planning & Performance Improvement Department

Dashboards and Transparency


Michigan Dashboard - Report


Ottawa County/Michigan Dashboard - Report


Ottawa County Dashboard – On the Web


Local Government Dashboard Report


County Dashboard - Departments


miOttawa.org


Ottawa County Dashboard – Home Page

Documents

S.M.A.R.T. Presentation January 4, 2012 · Fully Insured v. Self Insured Fully Insured • Pay Insurance Company Premium Per Employee ... • Pay Premiums to County • TPA – 4%