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

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Question Steve Valerius: Do you loose some of your steerage here? Answer Neal Welch: Yes, you sure do. Comment Steve Valerius: You want to steer them towards generic drugs because that has the same effect. Neal Welch: The last page is a look at our premiums categories. We have four plans with deductibles of $1500, $1000, $500 and $300. The interesting thing is the participation is spread pretty evenly. As long as the premium contribution on the part of the employees or retiree is actuarially sound for the difference in benefits between those programs we should allow folks to have this many selections. Of course they cannot have ten, but four is quite a few for a group our size. If you look down at the bottom the total employer annualized premium versus the employee represents about an 80/20 split between employer/employee. At this point I would like to go back to Tab 1 to look at the comparison of our fees, because I think tonight unless Robert tells us differently we might want to make a recommendation to Staff. When Donnie put these spreadsheets together he looked at the lowest overall cost alternative for the top three. The reason he came up with a choice of Aetna as number one is because of the Discount Differential. Aetna generates the lowest overall discount for hospital and physician components. Therefore, when we add in the Administrative Fee we get the total differential and that number starts with zero. That way the calculation works is if we had selected United Healthcare thru TML there would have been a $211,000.00 increase in cost, and Humana $628,000.00 increase in cost. That is just how 1, 2 and 3 were ranked. Keep in mind the difference between $20,000 and $30,000 in Administration cost might seem like a lot. However, when compared to $2.8 million in claims cost you spend a lot more time talking about Pharmacy, medical, hospital and physician claims because that is where 85% of the cost of the plan happens. The next page is just a re-cap of the top three to look at their services versus their fees. All of them are relatively close. Below are the various programs guarantees which is why Aetna is a little bit higher. One such item is Run-Off Claims, which means if you terminated this program Aetna would pay the Run- Offs at no additional fee. Question Robert Swanagan: Is there a ceiling on the Run-Offs?