Employee health premiums, discounts and providers largely unchanged as Pima County transitions to self-insuranceby Pima County News on Mar. 05, 2013, under Board of Supervisors, Health, Pima County, Southern Arizona, Tucson
In an effort to rein in the rising cost of health care, the Pima County Board of Supervisors on Tuesday approved moving to a self-insurance model for employee medical coverage.
By a unanimous vote, Supervisors selected Aetna Life Insurance Company to serve as the third-party administrator that will pay claims, manage the provider network and provide wellness and disease management programs.
Traditionally, the County has contracted with an insurance carrier to provide employee health benefits, allowing that carrier to assume all of the risks or rewards. If caring for Pima County employees cost less than the premiums, the insurance provider made a profit. Now that employee health claims have begun to drop below premium levels, it provides a strong opportunity to transition to self-insurance, while also allowing for savings on administrative overhead costs.
In the current fiscal year, which ends June 30, the total cost of the traditional, fully insured plan with UnitedHealthcare is $46 million. Projections under the self-insurance model for 2013-14 call for an increase of 1.8 percent, or $800,000 – far lower than the 18 percent increase the County sustained in 2012-2013 under the fully insured model.
Employees will experience little change from their current plans. Consider:
- Rates will remain unchanged for the 66 percent of employees who are enrolled in a high-deductible model with an established health savings account. Although there is a slight increase in the monthly rates under the Preferred Provider Organization (PPO) plan, the increase is typically about $5.
- The County will continue its four health lifestyle premium discounts, which allow for a maximum discount of $20 per pay period, and will continue funding the Health Savings Account contributions at current levels.
- Nearly 98 percent of existing providers also participate in the new plan, so most employees will see little disruption in their choice of doctors.Aetnawas selected in part because it had the closest match to the current network.Aetnahas already begun efforts to contract with the few that are not currently contracted. In addition, some providers that were previously out-of-network will now be in-network withAetna.
Supervisors also approved issuing a “stop loss” contract to Symetra Inc., which is a prudent action designed to stop the County’s costs in the unlikely event that total claims for the entire year exceed by 20 percent of the forecasted claims annually. Over time, as the County builds up a reserve, it will eliminate the need to purchase “stop loss” insurance.
Since state law requires funding for self-insurance programs be deposited in a trust,
Supervisors also established a Board of Trustees that will be responsible for oversight of the trust. Four inaugural members with expertise in employee benefits, insurance and financial management were selected:
- Henry Boice, a vice president and loan officer for the Tucson Office of Northern Trust Bank;
- Janet Marcotte, the former Executive Director for the YWCA Tucson;
- Patricia Taylor, a retired top-level executive of the Hughes/Raytheon Missile Systems leadership team;
- Neil West, a successful physician with more than 40 years of experience in medical care who serves as chair of the Tucson Unified School District Employee Benefits Trust Board, which manages $25 million in annual benefits.
Also approved is an enhancement to the County’s self-insured dental plan. Lifetime limits for periodontal and orthodontia have been removed and the annual limit of $1,000 has been increased to $2,000.
Pima County Human Resources plans informational meetings for employees throughout April, and plans to provide written communication as well.