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HomeMy WebLinkAbout1994-08-10 adj000087 August 10, 1994 (Afternoon Adjourned Meeting) (Page 1) An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on August 10, 1994, at 6:00 P.M., Rooms 5/6, County office Building, McIntire Road, Charlottesville, Virginia. The meeting was adjourned from August 3, 1994. PRESENT: Mr. David P. Bowerman, Mrs. Charlotte Y. Humphris, Messrs. Forrest R. Marshall, Jr., Charles S. Martin, Walter F. Perkins and Mrs. Sally H. Thomas. ABSENT: None. OFFICERS PRESENT: County Executive, Robert W. Tucker, Jr., and County Attorney, Larry W. Davis. Agenda Item No. 1. The meeting was called to order at 6:00 P.M., by the Chairman, Mr. Perkins. Agenda Item No. 2. Joint Meeting with School Board. SCHOOL BOARD M~MBERS PRESENT: Mr. Russell Madison Cummings, Jr., Mr. Michael J. Marshall, Mrs. Karen L. Powell and Mr. William W. Finley ABSENT: Mr. George C. Landrith, III, Mrs. Patricia L. Moore and Mrs. Sharon Wood. OFFICERS PRESENT: Acting Superintendent, Dr. Carole A. Hastings, and Director of Human Resources, Mr. Robert B. Brandenburger. Mr. William W. Finley called the School Board to order. Agenda Item No. 2a. Discussion: Employee Health Insurance. Mr. Brandenburger presented a slide presentation outlining the financial implications of the County's employee health plan. He provided information on the premiums charged by Blue Cross/Blue Shield, the employee's portion of the premiums and the Board's contribution. He also summarized the current three tier plan offered by the County (Key Care I, Key Care II and Comp 500) and the implications of providing three plans. Mr. Brandenburger said the County recently acquired the services of a health care consultant, who is working with the Health Care Advisory Committee and staff, to aid it its efforts to provide cost effective health insurance programs. The consultant, Mr. George Weikely is recommending that the County: 1) increase Blue Cross/Blue Shield's most recent rates by four percent to cover claims; 2) establish a reserve of up to 20 percent of the County's projected claims ($800,000); 3) continue to rate retirees separately; 4) switch from a three tier plan to a one tier plan; and 5) eliminate transfer credits. Staff is reviewing the recommendations. The committee feels strongly that mandatory health screenings should be a part of the County's health care plan. Mr. Brandenburger said last December, during the budget process, Blue Cross/Blue Shield projected a 20 percent increase in rates for the FY 1994-95 plan year. Due to several factors the projected increase is now a proposed increase in premiums of only 3.6 percent. Mr. Brandenburger then summarized the health care rates reflected in the two options presented to the Boards for consideration. Option 2A is the budgeted premium schedule for the FY 1994-95 plan year for the medical program using an 85 percent contribution level. Option 2B is a premium schedule using a 95 percent contribution level. In summary, the Health Care Advisory Committee and the Executive Management Committee propose to continue offering three plans with no change in benefit design and the addition of an annual health screening at the proposed rates in Option 2A. The committee recommends retiree premiums continue to be rated separately so as not to adversely affect the rates of current employees. Mr. Perkins asked what did the committee recommend on establishing a reserve fund. Mr. Brandenburger Said Option 2A provides for a reserve of approximately $183,000. The reason the consultant is recommending a 20 percent reserve is because the County is a self funded insurance plan which means that it basically pays the claims that it experiences. In an insured plan the premiums have built-in funds to make sure that the reserve is covered. The County needs to have the ability to cover claims that are incurred if it decides at a later date that it wants to change health care carriers. Mr. Tucker said a reserve of $183,000 is built into both options. Mrs. Thomas said one of the incentives for getting people to keep health expenditures down is to give them a reward if the group claims are low. She asked if the good experience is due to employees keeping their claims down or if it is due to less inflation in the health care industry this year. If this is something that the employees have done, then they should see a direct benefit, and this will influence her decision as to which plan to choose. However, if the good experience is not related to the employees' activities, and it is a matter of chance, then this will mean something else to her. Mr. Brandenburger said he thinks this year's experience is due more to chance although that has not been determined. There has been nothing to 000038 August 10, 1994 (Afternoon Adjourned Meeting) (Page 2) indicate that the rate structure or contribution level had a direct impact on the consumption of health care. He th~ks it is more of a reflection this year of not having high individual claims as well as the inflation rate experienced by the health industry. Mr. Tucker said health industry personnel indicate that if employers can provide a screening program, there should be a reflection of improvement in the claims, etc. That is one of the reasons the committee recommended mandatory screening. Mr. Bowerman asked if the consultant had mentioned the health savings plan concept. He said a few companies now have an incentive to try to reduce medical expenses and the benefits go to the employees and the employers. He does not know the mechanics of the plan but it is a type plan that is fast becoming an alternative because the experience is less costly and it directly addresses incentives for health care. He recalled an example whereby $2,000 was put into a health savings plan and the employee could use that money to pay the deductible and the rest was picked up by the plan. He added that the effect of having such a plan in place was to reduce the overall plan costs. Mr. Brandenburger said staff worked with the consultant only for a short time and due to time constraints was unable to discuss different plans. Mr. Bowerman said that is an area that should be considered for the future. Mr. Finley asked if the employee would be required to get counseling or training if the results of the screening was unsatisfactory. Mr. Brandenb- urger said the purpose of mandatory screening is to identify health concerns and introduce preventive methods. Dr. Hastings said the proposal is for mandatory health screenings to take place this current year and the training programs would be considered for the future. Mr. Brandenburger said the screening would not be mandatory for the plan which goes into effect on October 1, 1994. Mrs. Humphris said with the 85 percent contribution level, the school division would have $247,882 for reallocation and the report references the school division's debt situation in regard to the Virginia Retirement System. She asked where the money would come from for the early retirement payback if this money was not available. She also wondered about the size of the debt. Dr. Hastings said the first payment on the 20 year cycle is built into the FY 1994/95 budget. She said last March when the School Board was faced with balancing the budget, Board members indicated that they did not like the 20 year payment cycle because a ten year payment plan was less per year. She said that VRS does allow extra payments on the mortgage without penalty to reduce the size of the overall debt. She thinks the School Board members' intentions were that any extra funding that is received would be put toward those extra payments. She said everything is already in place for FY 1994/95 but this would be an additional payment. Mr. Finley asked what is Blue Cross/Blue Shield's percentage of the premiums and how is the insurance carrier paid. He said the percentage used to be 25 percent. He also asked if the percentage relates to total claims. Dr. Hastings said although the fee varies, historically the administrative fee has been between five and six percent. Mr. Finley asked if the fee is five to six percent of the total claims. Dr. Hastings said the percentage relates to total anticipated income that Blue Cross/Blue Shield would receive from the County's claims each year. Blue Cross/Blue Shield anticipates a certain number of claims per year so the administrative fee is built on the projected amount of income. Mr. Brandenburger said the renewal rate has been negotiated and the proposed fee for next year is $13.00 per subscriber per month. He said this current year the amount was $14.30. Mr. Brandenburger added that in the past when there were rate increases, administrative charges were high even though the administration of the plan might not have been proportionately larger. He went on to say that this was one of the issues that the consultant considered in his talks with Blue Cross/Blue Shield representatives. There are other percentages involved, such as taxes and reserves which are 1.3 percent of claims; there is a premium tax of .75 percent, as well as 6.4 percent for insurance rates for high insurance claims. All of these percent- ages are built into the actual rate structure that Blue Cross/Blue Shield quoted which is a 3.6 percent increase over the current year. Mr. F. Marshall asked if Blue Cross/Blue Shield was the only company involved in insurance negotiations for this past year. He asked if other companies, such as Aetna, were asked for quotes. Mr. Brandenburger replied, "no." One of the reasons that other insurance companies were not involved was because of the timing. He said the consultant will immediately start looking at a lot of issues, such as a single plan versus a three tier plan. He believes the consultant will be aggressive in working with the staff to try to develop a plan that is in the black so that when bidders are sought the County will be in a much better posture to get positive responses. Mrs. Thomas said she came to this meeting not certain if she wanted to raise the 85 percent contribution level to something higher because there has not been a program in place which has allowed the employees to be directly responsible for lowering the claims. She does not feel enthusiastic about raising the percentage. She also does not feel enthusiastic about some of the suggestions that the consultant is making. The consultant appears to be looking out for the best interests of management and she is not sure about the impact his suggestions will have on employee morale. She is also uncertain about the impact on employee morale. She asked if the School Board feels that 000039 August 10, 1994 (Afternoon Adjourned Meeting) (Page 3) . it is important to provide a higher contribution level. Dr. Hastings said the Board of Supervisors and the School Board raised the contribution level five percent for FY 1994/95. Mr. F. Marshall said he has some knowledge of what is happening at Martha Jefferson Hospital and the University of Virginia Hospital, and to his knowledge there are going to be other plans available from which to choose. He would like to see the retirees' premiums included in the plan for next year. He thinks the people who have worked for the County for a long time feel as though they are being slighted, and rightly so. The young people who are paying the premiums today will someday need a plan such as the retirees need now. At this time Mrs. Thomas offered a motion, seconded by Mrs. Humphris, to accept the recommendations of the Health Care Advisory Committee to continue offering the current three tiered health insurance plan for the FY 1994-95 plan year and to add mandatory annual health screening for all employees eligible for benefits, as outlined in the FY 1994-95 rate structure (Option %2A) to begin October 1, 1994. Mr. Martin said during the coming year he thinks consideration should be given to providing some type of financial benefit to employees. He also thinks the County should consider purchasing exercise equipment and providing shower facilities so that the employees can work out during the day. The exercise equipment could be considered as part of the Capital Improvements Program. Roll was then called and the motion carried by the following recorded vote: AYES: Mrs. Humphris, Messrs. Marshall, Martin, Perkins, Mrs. Thomas and Mr. Bowerman. NAYS: None. Mrs. Powell then offered motion, seconded by Mr. Cummings, to approve the proposed recommendations and rates in concurrence with the Board of Supervi- sors' motion. All School Board members voted in favor of the motion. Item No. 2b. Other Matters not Listed on the Agenda. There were no other matters. Agenda Item No. 3. Adjourn. At 6:43 p.m., with no further business to come before the boards, the meeting was adjourned. 'Chairman