Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. Analysis of Jamestown Health Benefits Presented by Amy Gallagher, MBA The Taxpayers’ Association of Jamestown January 4, 2010

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Amy Gallagher, MBA  13 Years healthcare insurance industry experience with three major insurance carriers  5 additional years as Senior Consultant with Cornerstone Group advising large employers in SE New England on group employee benefits and wellness  Noted expertise in cost-containment, consumerism and wellness  Frequent healthcare contributor on NBC-10’s Sunrise Show with Frank Coletta  Guest columnist to Employee Benefit News and Providence Business News  Executive Board member, The Taxpayers’ Association of Jamestown  Jamestown resident since 1996

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Our Objectives  Provide insight to town management, town council and taxpayers into actual town and school healthcare benefits and costs by comparing the benefits and costs to those of other employers nationally and in RI  Demonstrate state and national benchmarks

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Our Goals  Increase transparency with regards to the second biggest town budget issue outside of salaries  Contain escalating healthcare costs so that taxpayers do not shoulder an unfair portion of these costs

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Why We Should Address Jamestown Healthcare Costs Right Now?  Town/School Collective Bargaining Arrangements expire June 30, 2010  Revenue shortfalls to cities and towns will continue  State and national economic crisis continues – Jamestown Taxpayers not able to absorb tax increases  Healthcare costs 10% annually  Healthcare Reform likely to further increase employer costs - refer to :(

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState 2009: Town Family Premium is $14,638, Police Family Premium is $15,595 and School Family premium starts at $14,611 and increases based on product. Chart Source: Kaiser Family Foundation, September, 2009

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Town Demographics - Actual  Jamestown employs 52 active employees comprised of: –Nage68(fiscal, clerical) – 9 employees –Nage69(DPW, Water, Sewer) – 11 employees –Police (Local 305) – 14 employees –Nonunion (Department Heads) – 18 employees  There are 16 individual contracts and 36 family contracts  2009 Estimated healthcare premium costs $609,286 –Town pays $562, (92%) –Employees pay $46, varies based on Collective Bargaining Agreements (8%)

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState School Demographics - Estimated  Jamestown Schools employs 72 active employees, 14 employees who waive coverage (do not take) and 24 retirees  There are an estimated 35 individual contracts and 61 family contracts  2008 Estimated healthcare premium costs $1,057,314 –School pays $959,706 –Employees pay $97,608 -varies based on Collective Bargaining Agreements (9.2%) Note: Courtesy of RI Department of Elementary and Secondary Education Final Report Healthcare in RI School Districts, February 4, 2008 (statistics adjusted for increasing employee share from 10% to 15%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Survey Focus  The United Benefit Advisors Health Plan Survey is the largest national benefits survey with close to 13,000 employer participants  Focuses on small to mid-sized companies  Independent and factual comparison of private industry healthcare costs, contribution and plan design  Provides data to allow analysis of municipal benefits with regard to national and RI employer marketplace norms

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Average Annual Premium Cost per Employee

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Monthly Town Premium vs. State Average Town/ Nage 68 Town / Nage 69 PoliceState Average % Differential Individual$ $574.63$ – 32% Family$ $ $ – 27%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Monthly School Premium vs. State Average Teachers Support Staff BCBS Classic Teachers Support Staff BCBS Healthmate AdministrationRetirees Classic Retirees Healthmate State Average % Differential Individual$583.66$493.98$517.59$590.86$517.59$ % Family$ $ $ $ $ $ %

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Average Monthly Employee Contribution – (% of Premium)

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Town - Monthly Employee Contribution % Town/ Nage 68 Town / Nage 69 PoliceState EE Average Individual0% (<1993) 34% Individual5%( ) 34% Individual20% (>1996) 34% Family0% (<1993) 45% Family5%( ) 45% Family20% (>1996) 45%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState School - Monthly Employee Contribution % TeachersTeacher Assistants CustodiansAdministratorsState Average Individual5% (<1997)15%5% (<10/1/09) 5% (<7/1/09)34% Individual15% (>1997)15% (>10/1/09) 15% (>7/1/09)34% Family5% (<1997)15%5% (<10/1/09) 5% (<7/1/09)45% Family15%(>1997)15% (>10/1/09) 15% (>7/1/09)45%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Town - Potential Employer Contribution Strategies Current Employer Contribution Total Annual Premium $ Town Cost% Town Contribution $Savings Potential Current 100%/95%/80%/ 60% $609,286$562,98392% 90%/80%/60%$609,286$542,97689%$20,006 80%/80%/60%$609,286$518,57985%$44,404 75%/75%/60%$609,286$488,66680%$74,317 State Average 66% Individual /55% Family $609,286$317,86252%$245,121

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState School - Potential Employer Contribution Strategies Total Annual Premium $ School Cost% School Contribution $Savings Potential Current 95%/85% $1,057,314$959,70691% 85%$1,057,314$898,71785%$60,989 80%$1,057,314$845,85180%$113,855 75%$1,057,314$792,98675%$166,720 State Average 66% Ind /55% Family $1,057,314$655,53562%$304,171

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Physician CoPays

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Urgent / Emergency / Hospital CoPays

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState In-Network Deductibles

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Type of Rx Plan Design

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Median CoPays for 3-Tier Plans

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Median CoPays for 4-Tier Plans

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Median CoPays for 4-Tier Plans

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Retiree Coverage Offered

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Medical Plan Waiver - Does Not Take Coverage

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Key Benefit Highlight Comparison - Town Town/Nage 68Town / Nage 69 PoliceStatewide Norm % Premium Savings Potential $ Premium Savings Potential Primary Care$10 $15.25%$1,466 Specialist$25 n/a Urgent Care$50* $25n/a Urgent Care Reimbursement $25 if PCP is closed n/aThere is no limit on reimbursement to these benefits Emergency Room$100 n/a Emergency Room Reimbursement $50 if Urgent Care is closed n/aThere is no limit on reimbursement to these benefits Coinsurance100% n/a Deductible$0 $500 ind $1000 fam 9-11%$58,650 Rx$5/$10* Up to 20% copay at RX, reimbursed less $5/$10 $10/$30/$50/$75 Managed Rx 6%$35,189 Total Savings Potential $95,305 % of Current Premium Saved 15.6%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Key Benefit Highlight Comparison - School Teachers/Support Staff & Retirees Classic Teachers/Support Staff Healthmate Administration Healthmate Statewide Norm% Premium Savings Potential $ Premium Savings Potential Primary CareN/A$15.25%n/a SpecialistN/A$25* $25n/a Urgent CareN/A$50* $25n/a Urgent Care Reimbursement N/A$25 * reimbursed through 7/1/09 n/a$5000 cap removed 7/1/10 Emergency Room$25$100* $100n/a Emergency Room Reimbursement $25 reimbursed; ends 7/1/10 n/a$5000 cap removed 7/1/10 Coinsurance80%/100% coverage varies by service 100% n/a Convert Classic to Healthmate $44,261 Deductible$100 Deductible$0 $500 ind $1000 fam 9-11%$78,500 Rx80%/20 % Preferred Network $5/$10* $10/$30/$50/$75 Managed Rx 6%$63,438 Total Savings Potential $196,199 % of Current Premium Saved 19%

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Renewal Market Forecast Estimate  2010 Medical cost increases (trend) estimated to be 10% –Costs could fluctuate based on demographics and claims  Town premium could increase from $609,286 to $670,215  Under current employer contribution, Jamestown’s share could increase to $619,281 – a $56,299 increase  School premium could increase from $1,057,314 to $1,163,045  Under current employer contribution, Jamestown School’s share could increase from $959,706 to $1,055,677 – a $95,971 increase  In total there is a potential $152,270 contribution cost increase in 2010  2011, 2012 likely to have similar increases

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Recommendations  Phase In/Adjust employee contributions each year of 3 year agreements  Consider shorter term collective bargaining agreements  Adjust benefits to marketplace average –$15/$25 PCP/Specialist –$25 Urgent Care –$100 Hospital –$500/$1,000 Deductible –$10/$30/$50/$75 Rx  Eliminate reimbursement of vision, rx, emergency room, urgent care and instead offer employees a Flexible Spending Account (FSA) to help pay for these expenses pre-tax

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Recommendations, Cont’d  Waiver Language and waiver bonus should change to reimburse employee only (not employee plus family) as the family member has other coverage  Consider timing of healthcare reform and “requirement of coverage” – if employers offer coverage, employees have to take it” – this will likely increase costs to Employer  Insurance is specified– all language in collective bargaining agreements needs to be rewritten in accordance with new state law that prohibits naming health and dental insurance carriers  Implement annual RFP process for healthcare (and dental) after GHGRI contract expires in 2011 and go to market to UnitedHealthcare and Tufts to force competitive bidding - Bid results should be shared with the Town Council  Consider hiring independent consultant to perform language and fiscal analysis of Collective Bargaining Agreements to assure that financial concessions gained are not lost in other areas of contracts

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Recommendations, Cont’d  Eliminate reimbursing $5/$10 rx copays for town and police  Consider phase-out of waiver bonus as healthcare reform will eventually mandate coverage if employer provides it  Eliminate opt-out for spouse who is married to town employee (they get coverage through spouse, why are they getting a bonus when they have coverage through town)  Freeze a flat dollar amount to existing retirees; eliminate retiree coverage for all new hires

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Recommendations  Town/Police Retiree coverage –Minimally, contributions should be increased –Paying for retiree and spouse/family needs to be addressed –Consider giving retirees a “fixed” allowance to purchase retiree coverage elsewhere –Retiree language needs to be addressed (i.e. "town agrees to provide coverage for retired employees until such time as they become eligible for equal or better coverage….” –School language “ benefit will remain in effect as long as the retired teacher is not receiving the same coverage from some other source”…Needs to be changed

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Next Steps  Present to Jamestown School Committee  Analyze other avenues of savings in Collective Bargaining Agreements  Invite Independent Consultant to provide rational for fiscal and language analysis of Collective Bargaining Agreements

Copyright © 2009 United Benefit Advisors, LLC. All Rights Reserved. NationalRegionalState Source Documents  UBA 2009 Health Plan Survey  Healthcare in Financial School Districts, February 2009  Town of Jamestown GHGRI Contractual Agreement  Current Nage 68, Nage 69, Local 305 and Jamestown Teacher’s Association Collective Bargaining Agreements  Town of Jamestown and Jamestown School BCBS Rate Documents 