Proposed 2011 Medical Plan Design May 25, 2010

1. Proposed 2011 Medical Plan Design May 25, 2010

2. Background Challenges Recommended Strategy Summary Presentation Outline

3. Background Challenges Recommended Strategy Summary Presentation Outline

4. Background • BCC • Comptroller • Tax Collector • Supervisor of Elections • Expressway Authority • Housing Finance Authority • OBT Development Board • Metroplan Orlando • Property Appraiser • Lynx • Clerk of Courts • Research and Development • I-Ride Trolley 8,344 Covered Employees Total Plan Members: 18,536

5. Background $42M

6. Background $96M $42M

7. Background 2009: Implemented generic differential for prescriptions and carved out pharmacy with Express Scripts. 2007: County plan goes self-funded saving $6.5 million in the first year. 2008: Implemented the County’s first online open enrollment. 2009: Implemented the healthy pregnancy program to waive delivery co-pays. 2007 2008 2009 2007: By 2007 a total of six fitness centers were available to employees. 2009: HR In the Loop airs its first “webisode” communicating HR information to County employees each pay day. 2008: Began Wellness for Life Credit and Screenings increasing employee engagement in personal health. 2009: Implemented a Diabetes Management Pilot Program to employees as a result of the Wellness for Life Screenings.

8. Background Annual Premium Increases Moved to Self-Insured (Proposed increase 8%)

9. Background • Since becoming self-insured, projected savings of over $26 million to date • Medical claims and pharmacy costs continue to increase at 10.4% • Significant savings have been realized through reduced administrative costs

10. Background 2010: Began assessing a surcharge to tobacco users on the County’s medical plan. 2010: Increased hospital based outpatient surgery from $100 to $200. 2010: Changed inpatient co-pays to $300 on day one, and $100 for days two – four. 2010 2010: Orange County became a Tobacco-Free County, prohibiting tobacco use on County property. 2010: Began a Dependent Audit to remove ineligible dependents from the County’s medical plan. 2010: Implemented prescription step therapy and voluntary select home delivery.

11. Background $229M $96M 9% 9% 9% 9% 9% 9% 9% 9% 9% 9%

12. Background 0% Trend 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

13. Background Since February 23, 2010 BCC Presentation: • Weekly Medical Plan Oversight Committee Meetings • Multiple staff level meetings • Employee Benefits Committee meetings

14. Background Challenges Recommended Strategy Summary Presentation Outline

15. Challenges • Overall cost of claims is trending at 10.4% and is expected to increase without major plan design changes • Unable to sustain funding for large increases year after year • Need to address total cost of plan and increase share of cost paid by employees

16. Challenges Orange County Employees • The County’s premium cost share is more generous than other employers • More evenly share the costs of health insurance premiums • Decrease the overall cost of our health insurance plan 13% 87% Employer Florida Industry Norm Employees 24% 76% Employer

17. Challenges Average Annual Costs • Disproportionate cost share for medical services • True costs hidden from both the health care provider and the plan member

18. Challenges Nationally, between 50 and 85 percent of all diseases are linked to the health choices you make. For every 100 employees, many have lifestyle-related health risk factors:

19. Challenges Keep Current Plan Major Plan Restructure

20. Challenges If current plan is kept… Revenues / Expenditures $107.7M $17.2 Million Deficit Millions $90.5M

21. Premiums will increase by at least 50% Bi-weekly premium increase as much as $100 for family coverage Co-pays will increase substantially Financial challenges will continue to compound Challenges If current plan is kept…

22. Challenges If current plan is kept… • The trend will continue to rise due to the disconnect between cost and awareness • Premiums will continue to increase year after year at very high rates • Coinsurance would be needed for some services • Deductibles would be instituted at some point in the near future

23. Challenges Implementing a Major Plan Restructure will… • Lessen premium increases (held to approx. $15 per pay period) • Address the underlying problem to begin to reverse the trend • Create informed consumers • Focus on Wellness and Preventive care

24. Background Challenges Recommended Strategy Summary Presentation Outline

25. Recommended Strategy • Implement a Consumer Driven Health Plan for 2011

26. Recommended Strategy Consumer Driven Health Plan • Preventive Care at 100% • Preventive Medications outside of deductible • Individual Health Savings Account (HSA) • High-Deductible Health Plan • Remove disconnect between the member and the true cost of services

27. Recommended Strategy Two Major Plan Components • HSA Account • Funding Vehicle/Partially Funded • $750/$1,250 County contribution • High Deductible Health Plan • Deductible : $1,500/$3,000 • 20% Coinsurance • Out of Pocket Max ($3,000/$6,000)

28. An HSA is... An account to help you meet your deductible and out of pocket maximum A great investment and savings vehicle Your Money Your Account You Own It You Manage It A Tax Savings Vehicle Recommended Strategy

29. Recommended Strategy With an HSA, you can... • Receive a County contribution if you complete the wellness screening • Decide how much you will contribute, if any • Earn interest • Opt to invest (once balance is over $2k) • Take it with you when you leave employment • Use it now, or save for later • Relax... because the funds rollover year to year

30. Recommended Strategy Deductible $1,500 Employee Only $3,000 Family Amount paid by covered member before plan begins Member pays full cost of the negotiated rate, until deductible Can be paid from the HSA

31. Recommended Strategy 20% Co-Insurance • Starts after deductible is met • 20% to be paid by member each time a medical service is accessed • 80% remaining is paid by the Medical Plan • Can be paid from the HSA

32. Recommended Strategy Out of Pocket Maximum • $3,000 for Employee only • $6,000 for Family • Designed to protect member in the event of a catastrophic illness (safety net) • Once the out of pocket max is met, all services are covered at 100% by the Plan

33. Background Challenges Recommended Strategy Summary Presentation Outline

34. Summary • 10.4% annual increase in healthcare cost is not sustainable • Fundamental changes to the health plan are needed • Recommend transitioning to a Consumer Driven Health Plan to control costs, change behavior, and begin to reverse the trend

35. Summary • BCC Consent Agenda June 8, 2010 • Communication campaign beginning in June • Open Enrollment for 2011 in October 2010 • Implement health plan changes and fund HSA accounts in January 2011

36. Recommended Strategy Premiums • Portion paid each pay period by employee and county

37. Recommended Strategy

38. Summary If current plan is kept… Revenues / Expenditures $107.7M $17.2 Million Deficit Millions $90.5M

39. Summary $17.2 Million Deficit: • Keep current plan and significantly increase premiums • Find other areas in the budget to fill the $17.2 million shortfall • Implement a major plan restructure

40. Proposed 2011 Medical Plan Design May 25, 2010