The 2nd meeting of the Subcommittee on Group Makeup of the Blue Ribbon Panel on Public Employee Health Benefits was held on Wednesday, June 22, 2005, at 1:00 PM, in Room 113 of the Capitol Annex. Erwin Roberts, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Arletta Kennedy, Co-Chair, Erwin Roberts, Co-Chair; Representative Harry Moberly Jr; Bob Arnold, William Hanes, and Gary Harbin.
Guests: Shawn Crouch and Mark Birdwhistell, Cabinet for Health and Family Services; Christine Wilcoxson, Personnel Cabinet.
LRC Staff: Frank Willey and Kristin Burton.
Arletta Kennedy welcomed everyone to the meeting and introduced Mark Birdwhistell and Shawn Crouch, Cabinet for Health and Family Services, and Christine Wilcoxson, Personnel Cabinet, to speak on Health Plan Composition.
Mark Birdwhistell thanked the committee and introduced Shawn Crouch, Executive Director of Health Policy, Cabinet for Health and Family Services and Christine Wilcoxson, Department of Employee Insurance, Personnel Cabinet.
Mr. Birdwhistell began his presentation on Group Composition and Group Analysis by stating that this data would be very helpful in accomplishing their goals in the weeks and months ahead. He went on to explain that they can't manage what they can't measure and a considerable amount of time has been spent with Price Waterhouse Coopers to slice and dice the data to figure out what problems they are trying to address.
He explained that they were here to present data in an informative session rather than making recommendations. He also told the committee that the information being delivered to them is very recent data and had been presented to the cabinet earlier in the week by Price Waterhouse Coopers. Mr. Birdwhistell stated that their intent as of January 1, 2006 is to keep the benefits the same as the benefits that were identified in House Bill 1 for a period of at least six (6) months beginning January 1, 2006 through June 30, 2006 to allow the Blue Ribbon Committee to make their recommendations to the Legislature. He stated that they would not know what the premiums would be until after the bids were received from the Third Party Administrators.
Bob Arnold asked if this is the information that had been sent to them earlier or if it is new information. Mr. Birdwhistell explained that it is new information and had not been sent to the members of the committee. Mr. Arnold requested that in the future he be sent the material beforehand so that he could be familiar with the presentations. Mr. Birdwhistell stated that he would ensure that they were sent the material in advance and pointed out that he would be a little more descriptive than normal due to the material not being provided prior to this meeting.
Some interesting statistics that Mr. Birdwhistell pointed out were that very few employees chose the Commonwealth Essential Plan (the least rich benefit). Another statistic was that the older the member the more likely they were to choose the Commonwealth Premiere Plan (highest available benefits) and this has some ramifications for the state from a risk and pricing standpoint. This also gives a better opportunity for disease and case management because of the utilization issues for this group.
Rep. Moberly pointed out that during the Special Session their consultant, Mercer, had predicted that zero people would choose the Premier Plan and according to this data this had turned out to be incorrect. He asked if they had analyzed the Premiere Plan as opposed to the Enhanced Plan regarding premium rates. Mr. Birdwhistell answered that Price Waterhouse Coopers is looking into this. Representative Moberly pointed out that he was happy to see that the consulting firm had been changed due to the fact that the previous firm had missed the mark. Mr. Birdwhistell stated that he feels very confident with the work that Price Waterhouse Coopers has performed to date.
Mr. Birdwhistell pointed out that one thing they are seeing is a higher-than-average emergency room usage in all of the covered groups. He added that whatever plan they design in the future needs to be structured to reduce the over-usage of emergency room visits. These visits are not the most appropriate and/or cost effective mode of receiving medical care, from either a clinical or financial standpoint.
Gary Harbin inquired about slide number 17 regarding Pharmacy Net Claim per member/per month if the retirees were stratified by age. He asked if a retiree aged 55 was more expensive than an active employee of the same age. Mr. Birdwhistell replied that they were not stratified by age. Mr. Harbin said he would like to see this information stratified by age and not just by active and/or retired status. Mr. Birdwhistell stated that they have asked that the information for pharmacy utilization be broken down by age and not just by employment status.
Mr. Birdwhistell concluded his presentation by pointing out that the population is older and more female and the employee/dependent ratio is significantly lower than the national norm. It also appears that for covered individuals over age 65, there is a Medicare coverage problem relating to coordination of benefits that should be investigated further. Another area that should be investigated is early retirees who comprise 21% of the membership and take a disproportionate share of the cost.
Next on the agenda, William Hanes, Kentucky Retirement Systems, gave a brief presentation on "Unescorted Retirees." He explained that several years ago it was discovered that a cost was being incurred to the state health plan as a result of those counties and cities that were not participating in the state health plans when they were active employees but were covered under the state health plan once they retired.
The next item on the agenda was topics from the previous meeting. Chairman Roberts began by discussing unescorted retirees and how they are impacting premiums in the state group, adding that current estimates indicate a rate of 3.3%. He inquired about current trends and asked if the number is increasing or staying the same. Mr. Hanes commented that this figure will most certainly be higher due to the fact that there will be more retirees requiring usage of the state health system. One of the recommendations that Chairman Roberts would like to make to the entire Blue Ribbon Panel is that an updated study be done by Price Waterhouse Coopers on how the "Unescorted Retirees" are affecting the state health plan and this study be completed in time for use during the 2006 Legislative Session.
Mr. Hanes suggested that a proposal be drafted with the 10 year requirement with the exceptions and bifurcated rates and possible reduction in Flexible Spending Accounts. He suggested that due to the short time frame that drafting could begin immediately with the Legislative Research Commission so that this information could be available to the committee at their next meeting. Chairman Roberts agreed that the committee could take this approach, however, he thought that there would be numerous questions regarding this issue and didn't know if it could be completed by the next meeting.
The next issue that was discussed was a change to a self-insured group and what is the best model for determining which employees to include or exclude from the group. Mr. Hanes pointed out that there is a contractual obligation to include retirees that have been in the system since at least 2003 in the group plan.
The next discussion item was how premiums will be structured for local governments if the state encourages or requires their participation. Chairman Roberts suggested that their premiums be structured just like all other health plan members.
The last issue discussed was the possibility of including state university employees and students in the state health plan. Chairman Roberts pointed out that given their timetable that this would be quite an undertaking and would require some additional studies to be completed. His only recommendation in this area would be that the additional studies and analysis be completed for future use or inclusion in the state health plan.
Chairman Roberts announced that the next meeting would be July 12, 2005 at 1:00 P.M.
There being no further business, the meeting was adjourned at 3:15 P.M.