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Lafayette Parish School System

Lafayette Parish School System. Joint Meeting of the Board Insurance Committee & Employee Insurance Advisory Committee. May 2006. Healthcare Finance. Overall Benefit Plan Cost Trends-Nationally Medical Component 8 – 10% annual growth expected for 2006 – 2007 Prescription Drug Component

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Lafayette Parish School System

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  1. Lafayette Parish School System Joint Meeting of the Board Insurance Committee & Employee Insurance Advisory Committee May 2006

  2. Healthcare Finance • Overall Benefit Plan Cost Trends-Nationally • Medical Component • 8 – 10% annual growth expected for 2006 – 2007 • Prescription Drug Component • 12 – 14% annual growth expected for 2006 – 2007 • Risk or Reinsurance Component • 15 + % annual growth expected 2006-2007 • Administrative Component • Expected cost based on plan type • Current plan type 5%–8% per year

  3. What’s Driving the Costs? • For all plans • Improved medical and pharmaceutical technology • Trend expected to continue • Deciding what to cover • People living longer, when most costs are incurred • Rapid growth in prescription drug component • For LPSS plans • Same as above • Amplified due to LPSS demographics • Growing work force and retiree population

  4. LPSS Benefit Design

  5. LPSS Benefit Design

  6. LPSS CurrentSituation • Partially Self-Funded • LPSS claims (over $30 million per year) paid from Board and participant contributions • Primarily a “Fee for Services” plan with PPO Network discounts • LPSS determines plan design • Blue Cross provides claims payment, doctor and hospital contracting and re-insurance • Relatively low administrative costs • Pharmacare provides PBM administration • Administers prescription program for LPSS • Retail and mail order prescriptions

  7. LPSS Financial Situation • Fiscal Year July 1, 2006 – June 30, 2007 • Accrual Rate Projections • Current Premium $ 30,559,929 • Required Premium $ 33,860,277 • Proposed Increase $ 3,300,348 • Percent Increase 10.8 %

  8. 2006-2007 Benefit Alternatives • Benefit Plan Options • Plan Options 1-5 • Different Deductible & Copay Options • Board options on funding • Insurance Committee Recommendation • Plan Option 4 • Increase Deductible from $500 to $750 (01/01/07) • Eliminate PCP Copay (01/01/07) • Increase Premium 7.3%

  9. 2006-07 Benefit Alternatives & Premiums • Option 1 • No change to current benefit • 10.8 % increase in premium: July 1, 2006

  10. 2006-07 Benefit Alternatives & Premiums Option 1 • $500 Individual Deductible • 80/60 Coinsurance • $3,000 OOP Max/Individual • $30 PCP visits • $100 Rx Deductible • $10/$25/$50 Rx Drug Co-pay *Current Board Contribution Level

  11. 2006-07 Benefit Alternatives & Premiums • Option 2 • Increase deductible from $500 to $750 • Effective January 1, 2007 • Half-year effect: 4.5% x 50% = 2.25% • Increase premium 8.55% • Effective July 1, 2006

  12. 2006-07 Benefit Alternatives & Premiums Option 2 • $750 Individual Deductible • 80/60 Coinsurance • $3,000 OOP Max/Individual • $30 PCP visits • $100 Rx Deductible • $10/$25/$50 Rx Drug Co-pay *Current Board Contribution Level

  13. 2006-07 Benefit Alternatives & Premiums • Option 3 • Eliminate PCP co-pay • Effective January 1, 2007 • Half-year effect: 4.5% x 50% = 2.25% • Increase in premium: 8.55% • Effective July 1, 2006

  14. 2006-07 Benefit Alternatives & Premiums Option 3 • Eliminate PCP Co-pay • $100 Rx Deductible • $10/$25/$50 Rx Drug Co-pay • $500 Individual Deductible • 80/60 Coinsurance • $3,000 OOP Max/Individual *Current Board Contribution Level

  15. 2006-07 Benefit Alternatives & Premiums • Option 4 • Increase deductible from $500 to $750 • Eliminate PCP co-pay • Effective January 1, 2007 • Half-year effect: 7% x 50% = 3.5% • Increase premium 7.3% • Effective July 1, 2006

  16. 2006-07 Benefit Alternatives & Premiums Option 4 • Eliminate PCP Co-pay • $100 Rx Deductible • $10/$25/$50 Rx Drug Co-pay • $750 Individual Deductible • 80/60 Coinsurance • $3,000 OOP Max/Individual *Current Board Contribution Level

  17. 2006-07 Benefit Alternatives & Premiums • Option 5 • Increase deductible from $500 to $1,000 • Eliminate PCP co-pay • Effective January 1, 2007 • Half-year effect: 7% + 4.5% x 50% =5.75% • Increase premium 5.05% • Effective July 1, 2006

  18. 2006-07 Benefit Alternatives & Premiums Option 5 • Eliminate PCP Co-pay • $100 Rx Deductible • $10/$25/$50 Rx Drug Co-pay • $1,000Individual Deductible • 80/60 Coinsurance • $3,000 OOP Max/Individual *Current Board Contribution Level

  19. 2006-07 Premium Alternatives Option 1 (No. of Contracts: ) Option 2 Option 3 *Current Board contribution level

  20. 2006-07 Premium Alternatives Option 4 Option 5 *Current Board contribution level

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