To save the $7 million necessary to balance Bexar County’s $1.83 billion fiscal year 2017 budget, County commissioners are seeking an alternative, more cost-effective health insurance model for the 4,700 County employees.
The County’s health insurance costs have increased by $7.2 million between FY 2015 and FY 2016, and if nothing changes in its health insurance offerings, costs are expected to increase by another $9.7 million next year. County staff presented four different healthcare options to commissioners Tuesday that will allow them to achieve that $7 million, or more, in savings.
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The County currently offers Exclusive Provider Organization (EPO) and Premium and Base Preferred Provider Organization (PPO) plans, all of which heavily favor the employee. Those on the EPO plan don’t have to meet any deductibles or make any co-payments when accessing services, and those on either of the PPO plans generally have lower deductibles and out-of-pocket maximums, said Assistant County Manager Tina Smith-Dean.
These factors, along with rising costs of prescriptions for specialty drugs, an increase of total cost and amount of high-cost claims, and the number of employees and family members who have joined the healthcare plans all have raised the County’s healthcare expenditures.
The four new healthcare packages Smith-Dean presented to County commissioners Tuesday, which were crafted by County staff, range in offerings and include one or more of the following: increased premium costs for employees and pre-65-year-old retirees to balance costs between the County and its employees, adding tiered spousal coverage, increasing out-of-pocket costs, add-on options, and changing or reducing existing healthcare plans. The County proposed no changes to the over-65-year-old retirees’ plan.
Staff ultimately recommended “Option #2” for adoption, which includes eliminating the EPO all together, which has an overall cost per member that is almost double that of the PPO plans, and increasing premiums for PPO plans by 17%, or $9 per month.
The County hasn’t increased employee PPO premiums since 2010, and EPO premiums since 2013, while the costs for both have gone up – which is part of the reason for next year’s budgeting concerns.
“Basically the County was eating the rising costs,” said Commissioner Paul Elizondo (Pct. 2). “Now we’ve run out of anything to eat.”
Smith-Dean also recommended that County Commissioners allow County staff to present them with premium adjustment options during the annual budget process so they can “make smaller, incremental changes each year” and keep the County from falling behind again in its budget.
Eliminating the EPO concerned several commissioners since 2,558 employees and their dependents are currently on that plan, making it the second popular healthcare coverage choice.
“If we eliminate the EPO and increase premiums, pretty much 100% people are being impacted,” said Bexar County Manager David Smith, adding that essentially every option will affect a large number of employees one way or another.
But that option, Smith-Dean said, gets the County closer to achieving its ideal cost share model. The current cost share model for the EPO plan is 69% County to 31% employee costs, the Premium PPO plan 82%/18%, and the Base PPO plan 86%/14%.
Option #2 also includes adding a specialty drug co-pay of $150, implementing Dispense as Written (DAW) 1 and 2 requiring patients to pay cost difference between name brand and generic drugs, and a spousal surcharge of $100 per month if they have other healthcare options elsewhere, an element that’s new to the County’s healthcare coverage options, but standard for other entities such as SAWS, the City of San Antonio, and several school districts.
Option #3 also involves eliminating the EPO, and increasing deductibles, out-of-pocket maximums, and prescription co-pays. It was viewed by commissioners as the option that best encourages employees to be “smarter” healthcare consumers since the employees, and not the County, would be responsible for any outstanding bills.
The plan essentially requires them to be more conscious about how they use medical services, Smith-Dean said. This option doesn’t call for increasing premiums.
County staff recommended Option #2 because, with the three add-ons listed above, it is projected to save the County $8.2 million. Option #3 would save $7.4 million, Smith said.
Bexar County Judge Nelson Wolff and Commissioner Kevin Wolff (Pct. 3) asked for staff to come back with side-by-side comparisons of Option #2 and Option #3 so that the commissioners could get a clearer sense of how both plans affect individual employees.
“I’d like to see that we make sure we compare apples to apples,” Judge Wolff said.
County staff also proposed a minimum wage increase to $13.50 in an effort to reach the $15 minimum wage rate that commissioners set out to achieve two years ago. They will come back to the Commissioners with a final recommendation for a healthcare plan on Monday, Sept. 12, before they vote on the entire fiscal year 2017 budget on Tuesday, Sept. 13.
Top image: From left: Bexar County Commissioner Paul Elizondo (Pct. 2), Judge Nelson Wolff, and Commissioner Kevin Wolff (Pct. 3) read a report during Commissioner’s Court. File photo by Camille Garcia.