1. 1 Public Employees Benefits Board June 22, 2004 SeaTac Holiday Inn

2. 2 2005 Medical Procurement Overview and Results June 22, 2004 Richard Onizuka, Health Care Policy

3. 3 Summary of 2005 Medical Procurement Health Care Environment Purchasing Strategy Key Facts From PEBB Procurement Procurement Results

4. 4 Health Care Environment Hewitt Associates and Aon Consulting forecast that managed care plans will ask for 2005 premium increases in the range of 12.5% - 14.4% Marketplace moving towards: Higher enrollee premiums & point of service costs Choice of lower premium plan designs New tools, information and plan designs to help employees be better health care consumers

5. 5 Health Care Environment Trends in health care spending are moderating in all service categories Prescription drugs typically showing the largest trend reduction Utilization growth is slowing

6. 6 2005 Purchasing Strategy Build long-term partnerships with carriers to help us realize PEBB’s vision of providing affordable, quality health care.

7. 7 2005 Purchasing Strategy Quality and Access integral to purchasing, but cost continued to be a purchasing priority “Benchmark Rate” for Non-Medicare Non-Medicare and Medicare bids actuarially reviewed and negotiated in comparison with the overall program

8. 8 Key Facts --PEBB Procurement Unlike last year, financial statements to the OIC reflect all Bidders made a profit on PEBB business in 2003 Insufficient data for 2004 conclusions Similar to the national health care market environment, PEBB trends and utilization appear to be moderating

9. 9 Procurement Results Bids from all 6 current carriers Regence bid under Regence BlueShield license, rather than current RegenceCare license All carriers were notified of preliminary contract awards for 2005 No service area reductions and one carrier expanded into a partial county

10. 10 PEBB 2005 MCO Service Areas WHITE = FULL MCO COVERAGE RED = NO MCO COVERAGE PURPLE = PARTIAL MCO COVERAGE Garfield Pend Oreille CHP, GHC/ OPT (Partial) Spokane CHP, GHC, OPT Walla CHP, GHC, OPT Asotin Columbia GHC, OPT Stevens CHP, GHC/OPT (Partial) Whitman GHC, OPT Ferry CHP Lincoln CHP, GHC/OPT (Partial) Franklin CHP, GHC, OPT Adams CHP Douglas CHP Grant CHP Benton CHP, GHC, OPT Yakima CHP, GHC, OPT Klickitat CHP Chela n CHP San Juan GHC, OPT Whatcom CHP, GHC, OPT Okanogan CHP Skagit CHP, GHC, OPT, RBS Kittitas GHC, OPT Snohomish CHP, GHC, OPT, PC, RBS Lewis CHP, GHC, OPT, PC, Kaiser (partial) Pierce CHP, GHC, OPT, PC, RBS Skamania CHP, Kaiser (Partial) Clallam RBS Island GHC, OPT, CHP Clark Kaiser, PC Cowlitz CHP, Kaiser Thurston CHP, GHC, OPT, PC Kitsap CHP, GHC, OPT Mason CHP, GHC, OPT, RBS, PC (partial) Wahkiaku m Kaiser ((Partial) Pacific RBS, CHP (partial) Jefferson RBS Grays Harbor CHP, RBS, GHC/OPT/ PC (Partial) 23,313 RegenceCare members will need to choose a new plan (Regence BlueShield includes all RegenceCare service areas & providers) CHP as Partial in Pacific new for 2005, 2 Counties with no MCO (815 members) & 1 County with partial coverage (approximately 299 members) King GHC, OPT, PC, RBS, CHP

11. 11 Procurement Results Premium Increases, Active Non-Medicare: Budget Assumption15.0% Procurement Results 11.1% –UMP= 13.2%, UMP Neighborhood=14% –MCOs=9.5%

12. 12 Procurement Results 2005 Active Non-Medicare Employee Contributions

13. 13 Procurement Results Increase in Average Employee Contributions

14. 14 Procurement Results Premium Increases, Medicare Retirees: Budget Assumption 21.5% Procurement Results (UMP & MCOs) 21.8% –UMP= 31.5% –MCOs= 11.4%

15. 15 Procurement Results 2005 Estimated Medicare Retiree Contribution

16. 16 Procurement Results Increase in Medicare Retiree Subsidies

17. 17 FUTURE DIRECTIONS

18. 18 Board Vote on 2005 Employee Contributions

19. 19 Board Vote on 2005 Retiree Subsidy 2005 Retiree Subsidy= $116.19 * Rates shown above for the Medicare Advantage Plans are subject to change based on CMS Medicare Advantage Rates.