Lafayette parish school system
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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

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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 benefit design

LPSS Benefit Design


Lpss benefit design1

LPSS Benefit Design


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


Lafayette parish school system

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 Increase10.8 %


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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