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Lafayette Parish School System. Joint Meeting of the Board Insurance Committee & Employee Insurance Advisory Committee. May 2006. Healthcare Finance. Overall Benefit Plan Cost Trends-Nationally Medical Component 8 – 10% annual growth expected for 2006 – 2007 Prescription Drug Component

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lafayette parish school system

Lafayette Parish School System

Joint Meeting of the

Board Insurance Committee &

Employee Insurance Advisory Committee

May 2006

healthcare finance
Healthcare Finance
  • Overall Benefit Plan Cost Trends-Nationally
    • Medical Component
      • 8 – 10% annual growth expected for 2006 – 2007
    • Prescription Drug Component
      • 12 – 14% annual growth expected for 2006 – 2007
    • Risk or Reinsurance Component
      • 15 + % annual growth expected 2006-2007
    • Administrative Component
      • Expected cost based on plan type
        • Current plan type 5%–8% per year
what s driving the costs
What’s Driving the Costs?
  • For all plans
    • Improved medical and pharmaceutical technology
      • Trend expected to continue
      • Deciding what to cover
    • People living longer, when most costs are incurred
    • Rapid growth in prescription drug component
  • For LPSS plans
    • Same as above
    • Amplified due to LPSS demographics
      • Growing work force and retiree population
lpss current situation
LPSS CurrentSituation
  • Partially Self-Funded
    • LPSS claims (over $30 million per year) paid from Board and participant contributions
    • Primarily a “Fee for Services” plan with PPO Network discounts
    • LPSS determines plan design
    • Blue Cross provides claims payment, doctor and hospital contracting and re-insurance
      • Relatively low administrative costs
    • Pharmacare provides PBM administration
      • Administers prescription program for LPSS
      • Retail and mail order prescriptions
slide7

LPSS Financial Situation

  • Fiscal Year July 1, 2006 – June 30, 2007
    • Accrual Rate Projections
      • Current Premium $ 30,559,929
      • Required Premium $ 33,860,277
      • Proposed Increase $ 3,300,348
      • Percent Increase 10.8 %
2006 2007 benefit alternatives
2006-2007 Benefit Alternatives
  • Benefit Plan Options
    • Plan Options 1-5
      • Different Deductible & Copay Options
      • Board options on funding
  • Insurance Committee Recommendation
    • Plan Option 4
      • Increase Deductible from $500 to $750 (01/01/07)
      • Eliminate PCP Copay (01/01/07)
      • Increase Premium 7.3%
2006 07 benefit alternatives premiums
2006-07 Benefit Alternatives & Premiums
  • Option 1
  • No change to current benefit
  • 10.8 % increase in premium: July 1, 2006
2006 07 benefit alternatives premiums1
2006-07 Benefit Alternatives & Premiums

Option 1

  • $500 Individual Deductible
  • 80/60 Coinsurance
  • $3,000 OOP Max/Individual
  • $30 PCP visits
  • $100 Rx Deductible
  • $10/$25/$50 Rx Drug Co-pay

*Current Board Contribution Level

2006 07 benefit alternatives premiums2
2006-07 Benefit Alternatives & Premiums
  • Option 2
  • Increase deductible from $500 to $750
    • Effective January 1, 2007
  • Half-year effect: 4.5% x 50% = 2.25%
  • Increase premium 8.55%
    • Effective July 1, 2006
2006 07 benefit alternatives premiums3
2006-07 Benefit Alternatives & Premiums

Option 2

  • $750 Individual Deductible
  • 80/60 Coinsurance
  • $3,000 OOP Max/Individual
  • $30 PCP visits
  • $100 Rx Deductible
  • $10/$25/$50 Rx Drug Co-pay

*Current Board Contribution Level

2006 07 benefit alternatives premiums4
2006-07 Benefit Alternatives & Premiums
  • Option 3
  • Eliminate PCP co-pay
    • Effective January 1, 2007
  • Half-year effect: 4.5% x 50% = 2.25%
  • Increase in premium: 8.55%
    • Effective July 1, 2006
2006 07 benefit alternatives premiums5
2006-07 Benefit Alternatives & Premiums

Option 3

  • Eliminate PCP Co-pay
  • $100 Rx Deductible
  • $10/$25/$50 Rx Drug Co-pay
  • $500 Individual Deductible
  • 80/60 Coinsurance
  • $3,000 OOP Max/Individual

*Current Board Contribution Level

2006 07 benefit alternatives premiums6
2006-07 Benefit Alternatives & Premiums
  • Option 4
  • Increase deductible from $500 to $750
  • Eliminate PCP co-pay
    • Effective January 1, 2007
  • Half-year effect: 7% x 50% = 3.5%
  • Increase premium 7.3%
    • Effective July 1, 2006
2006 07 benefit alternatives premiums7
2006-07 Benefit Alternatives & Premiums

Option 4

  • Eliminate PCP Co-pay
  • $100 Rx Deductible
  • $10/$25/$50 Rx Drug Co-pay
  • $750 Individual Deductible
  • 80/60 Coinsurance
  • $3,000 OOP Max/Individual

*Current Board Contribution Level

2006 07 benefit alternatives premiums8
2006-07 Benefit Alternatives & Premiums
  • Option 5
  • Increase deductible from $500 to $1,000
  • Eliminate PCP co-pay
    • Effective January 1, 2007
  • Half-year effect: 7% + 4.5% x 50% =5.75%
  • Increase premium 5.05%
    • Effective July 1, 2006
2006 07 benefit alternatives premiums9
2006-07 Benefit Alternatives & Premiums

Option 5

  • Eliminate PCP Co-pay
  • $100 Rx Deductible
  • $10/$25/$50 Rx Drug Co-pay
  • $1,000Individual Deductible
  • 80/60 Coinsurance
  • $3,000 OOP Max/Individual

*Current Board Contribution Level

2006 07 premium alternatives
2006-07 Premium Alternatives

Option 1

(No. of Contracts: )

Option 2

Option 3

*Current Board contribution level

2006 07 premium alternatives1
2006-07 Premium Alternatives

Option 4

Option 5

*Current Board contribution level

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