1. FY 07-08 Budget Worksession July 17, 2007 ORANGE COUNTY MEDICAL & DENTAL PLAN RENEWALS

2. PRESENTATION OUTLINE Self-Funded Medical Plan Retiree Medical Employee Wellness Wellness Screenings & Incentives Dental Plan Renewal Recommendations

3. SELF-FUNDED MEDICAL PLAN

4. BACKGROUND County moved to self-funded medical in 2007, with an ASO contract with United Healthcare (UHC) Move was seamless to employees – no change in plan design Risk transferred from UHC to the County Premiums increased 5% in 2007 versus 8% UHC proposed for fully insured

5. BACKGROUND County now collects premiums from all participating agencies and reimburses UHC for plan costs Position established in Human Resources to work with UHC, Comptroller’s office and participating agencies to monitor premium payments and plan enrollment Process working well

6. BACKGROUND Medical Plan Oversight Committee established for self- funded medical plan Committee works with UHC and Benefits Consultant to monitor plan experience, costs and County’s medical plan budget

7. 2008 MEDICAL PLAN Plan experience (trend) remains stable - around 8% Minimum reserves must be established & maintained for self-funded medical plans Move to self-insured projected to increase reserves by $4 million Savings allows County to absorb much of 8% trend increase in 2008

8. 2008 MEDICAL PLAN UHC met with oversight committee in June to review 2006 experience & trends Key Findings Inpatient costs increased 13% Emergency Room costs up 14% Diabetics account for 21% of total medical spend – 17% increase over previous year Pharmacy increased 7%

9. 2008 MEDICAL PLAN Based on annual experience, oversight committee recommends the following co-pay changes Inpatient $250  $300 Emergency Room 75  125 Major X-Ray 0  25 Outpatient Surgery 0  25 Pharmacy Co-Pays Tier 1 $10  $10 Tier 2 25  30 Tier 3 40  50

10. 2008 MEDICAL PLAN Co-pays for recommended screening procedures, and key disease management and maintenance drugs will not increase – Colonoscopies – Cholesterol & Blood pressure maintenance drugs – Diabetic drugs and supplies Committee & Benefits Consultant to work with UHC to identify exclusions Oversight committee recommends 1.35% premium increase with co-pay changes

11. RETIREE MEDICAL

12. 127 Medicare eligible retirees and spouses enrolled in medical plan County does not currently require Medicare eligible retirees to enroll in Medicare Part B, so County plan remains primary This practice increases plan costs Medicare eligible retirees have Humana Choice plan option Oversight committee recommends requiring Medicare Part B enrollment in 2008

13. EMPLOYEE WELLNESS

14. County medical premiums have increased from 5 – 11% each year over past 5 years Increases primarily driven by plan experience Initial focus on controlling costs Learned that cost containment alone is not enough Must focus on employee wellness

15. EMPLOYEE WELLNESS County has focused on wellness over the past 4+ years Goal has been to increase employee wellness – control medical plan experience Conducted annual health screenings, health risk assessments, county-wide challenges, wellness fairs, etc.

16. WELLNESS FOR LIFE Annual wellness challenge participation levels have not changed (800 – 900 each year) Created “Wellness For Life” logo and program in 05/06 –Added wellness RN –Created $5 wellness Beneflex credit Program objective – increase annual challenge participation to 2,000

17. BACKGROUND 2006 Wellness for Life participation: –1,250 screenings –899 also completed Health Risk Assessments (HRAs) and earned $5 Beneflex credit –463 also attended wellness class and submitted proof of physical –Participation level disappointing

18. BACKGROUND Learned – Program design challenging to administer – Employees uncomfortable with HIPAA release and health info shared with County – Need for integration of screenings & HRAs – Need for greater management support and participation

19. WHERE DO WE GO FROM HERE Move to self-funded medical increases the need to engage employees and control medical costs Need to integrate employee wellness into overall Benefits plans Propose redesign of Wellness for Life program

20. WELLNESS FOR LIFE 2007 Wellness for Life – Continue wellness focus throughout the year Connect Benefits & Wellness – One program that promotes “physical, emotional & financial well being” Revise annual screenings and incentives

21. WELLNESS SCREENINGS & INCENTIVES

22. Must engage more employees in wellness screenings to impact medical plan costs Previous incentives have not been effective Current budget challenge mandates new approach

23. WELLNESS SCREENINGS & INCENTIVES Employees now receive $25 Beneflex credit each pay period – $650 annually Annual cost to County – $4.4M Propose changing Beneflex credit to Wellness for Life credit

24. 2007 WELLNESS SCREENINGS & INCENTIVES Required Wellness Activities Health Screening Health Risk Assessment (HRA)

25. 2007 WELLNESS SCREENINGS & INCENTIVES Employees who complete both activities earn $25 Wellness for Life credit Employees who choose not to participate forfeit $25 credit

26. DENTAL PLAN RENEWAL

27. BACKGROUND Dental insurance is 100% employee paid Dental Insurance provided by the Standard – three plan options (Low, Middle, High) Employees like current plan, provider network and plan options

28. 2008 DENTAL PLAN Low plan experience increased slightly in past year Middle dental plan remained stable High plan experience continues to increase with high utilization of out of network dentists Plan participants have expressed interest in increased coverage of resin fillings

29. 2008 DENTAL PLAN The Standard proposed two dental renewal options 1.No increase to Low and Middle Plans 4% increase to High plan with 80% UCR coverage for out of network dentists 2.Add coverage of posterior resins with 3% increase to low plan 1.5% increase to Middle plan 5% increase to High Plan – 80% UCR Oversight Committee Recommends Option 2

30. RECOMMEDATIONS Approve 1.35% medical plan premium increase, with recommended co-pay increases Approve mandatory Medicare Part B enrollment for Medicare eligible retirees Approve elimination of $25 Beneflex Credit, and replacement with a $25 Wellness For Life Credit Approve dental contract renewal with the Standard with addition of posterior resin fillings, 3% increase to low plan, 1.5% increase to middle plan and 5% increase to the high plan – with move to 80% UCR

31. FY 07-08 Budget Worksession July 17, 2007 ORANGE COUNTY MEDICAL & DENTAL PLAN RENEWALS