City of Ashland Employee health Benefits

1. City of Ashland Employee health Benefits HOW WE GOT HERE

2. The City of Ashland was among the first cities to join the EBS Trust which later became City County Insurance Services now known as CIS Benefits • CIS is an Association of Oregon Cities and Counties who benefit through the collective power of pooled resources. CIS supports 98% of cities and over 78% of counties in Oregon with at least one type of coverage • Ashland was one of the original members, and we were with CIS for property, liability and employee benefits for 25 years. CIS BENEFITS

3. CIS is a large self-insured pool and member entities benefit from larger bargaining power and rate smoothing • Membership includes many value-added services to support members and reduce benefit administration costs • During volatile rate years, the CIS Board has used their financial resources to “buydown” the rates for members Benefits of the CIS Trust

4. CIS did not allow individual member entities access to their experience data • The City began to wonder if we were subsidizing other members with poor experience • Limited choice – plan offerings and restrictions made it difficult to make changes • As the City struggled through the economic downturn in 2008, it become more and more challenging to absorb rate increases of 8-15% year after year Why we left CIS

5. The City worked with J.L. Jones and Associates (Benefit Broker) to research our options • In 2011, the City left CIS and went to PacificSource as a fully-insured client with the intent to build our own experience and explore the idea of self-insurance • Once we let CIS know that we were leaving, they provided current experience data to the City which ultimately supported our decision to go out on our own • At that time we had very good experience On our own

6. The original plan was to remain with PacificSource or other insurance provider for at least 3 years so we could track our experience and better market our program • The City had a staffing change; the new Administrator had significant experience with self-insurance and escalated our timeline • The City became self-insured for health benefits July 1, 2013 with PacificSource serving as our Third Party Administrator (TPA) • Stop loss coverage was purchased to protect the City from large claims over $150K • Our first year as a self-insured, we had a $2 million claim - Unfortunately, our experience continued to trend poorly over the next few years The Self-Insurance Saga

7. The Employee Health Benefit Advisory Committee (EHBAC) was formed to review claims data and make decisions regarding the plan • Becoming self-insured put employees in a leadership role and created an awareness about utilization • The first few years the City did save money and due to the timing with the Affordable Care Act, we were able to retain our status as a Grandfathered Plan sheltering the City from some costly requirements of the ACA • The City Administrator was the Plan Administrator and had authority to approve claims that were denied by the TPA • The City had more control on all variables of our plan, eventually we adjusted our stop loss threshold to $125K to save money on reinsurance Not all bad

8. EHBAC was put in the difficult position of making changes to the plan and they left no stone unturned – ultimately reducing benefits and increasing the premium was the best way to try and save the health plan: * Increased premium 16.8% in 2016, 10% 2017 * We looked at increasing the employee cost-share, but changes to the plan design produced savings faster due to bargaining constraints

9. Despite the changes implemented by EHBAC, the City continued to experience high utilization and multiple large claims each year; the trend was not improving • After having to request an interfund loan to keep the Health Benefits Fund positive, it was clear that self-insurance was not working out • July 1, 2018 the City returned to CIS benefits Returning to CIS

10. We went self-insured with the goal of immediate cost savings rather than ensuring long term success by funding the program with adequate reserves • The City only had 722 covered lives which lead to volatility • Employees have a better understanding of why changes were made and have become more realistic about health benefits • We tried to keep costs flat far too long. We should have adjusted our premium equivalent each year regardless of experience to keep up with medical inflation • We should have passed increases along to Retiree & COBRA participants more timely Lessons Learned

11. CIS mirrored the City’s benefits for 1 year with the condition that we move to one of their existing plans January 1, 2020 • Police and Fire have until the end of their labor contracts (Police June 30, 2021, Fire June 30, 2022) before they have to change plans • The City’s health benefit fund has remained positive since the change to CIS What now?

12. Health benefits are a key recruitment tool for the City. Ashland is an expensive place to live, and we cannot always attract candidates with our salary offerings – Health Benefits play a critical role in attracting and retaining employees • Remaining competitive on employee-cost share is often dictated by collective bargaining and comparable jurisdictions • Employee Retention - Transition is difficult for existing employees – especially those in the middle of a serious health issue. Few people budget for cancer, but we are all vulnerable • The City offers an employee-funded flexible spending account (FSA), and an employer funded Health Reimbursement Account (HRA). Both can be used for qualifying out-of-pocket medical costs and will continue to be a valuable tool in addressing increasing medical costs Other Considerations

13. Medical research and advances lead to longer lifespan • Prescription drug marketing • The internet and self-diagnosis • Medicare reimbursements fall short of actual costs • Legislative Mandates for care • Malpractice claims and insurance costs have lead to fewer providers • Medical inflation continues to trend 7-10%/year on average Healthcare Cost Factors outside our Control

14. Discuss Collective Bargaining Agreements