07-24-07 Chapter 172 Employee Retiree Insurance and Benefits Board Meeting

Browse Search

This is the goal of any self-funded plan. If you terminated your plan tomorrow you would have enough money in your plan to pay your run-outs between the cost for claims being incurred and when they were ultimately paid. On the left you see the things that are included in the revenue numbers and included in the cost numbers. Question Clark Askins: Where it says, 2007 what does that mean? Answer Neal: That is just for January 2007 thru June 30, 2007. Unlike a School District where there might be a real anomaly season by season on claims utilization, which is not your situation. Probably more important and more revealing is a comparison of cost over a two and a half year period. When you self-fund you act as the insurance company and there only seems to be peaks and valleys. There never is a straight line in anything. Our plan for the period of February thru October 2005 and 2006 and even February thru June of 2007 look pretty plotable and somewhat predictable and then you get to October 2006 and we go right off the chart. You must keep in mind we are talking about raw claims data. These are catastrophic claims for the most part. We know what happened in October, November and December of 2006 as it relates to large claims. We know who those folks are, we know what happened to them and so forth. It is very difficult to forecast what our claims and related cost might be like at any given time. You would like to think you have a handle on forecasting expense cost. Weare real good at predicting the revenue but not very good at predicting the cost. Question Karen Beerman: I am trying to understand this. Looking at the 2007 average covered employee it is less than other years. Does that mean we have less employees or does it mean just the employees that utilize the plan? Answer Neal Welch: There is a group of people that is not included for some reason. The cost per member per month is probably right but there are thirty or fifty people that are not accounted for. Question Steve Valerius: I don't want to get into the details here, but could that account for some of the increase in cost per employee?