1. Proposed 2011 Medical Plan Design May 25, 2010

2.  Background  Challenges  Recommended Strategy  Summary Presentation Outline

3.  Background  Challenges  Recommended Strategy  Summary Presentation Outline

4.  BCC  Comptroller  Tax Collector  Supervisor of Elections  Expressway Authority  Housing Finance Authority  OBT Development Board  Metroplan Orlando  Property Appraiser  Lynx  Clerk of Courts  Research and Development  I-Ride Trolley Background 8,344 Covered Employees Total Plan Members: 18,536

5. Background $42M

6. Background $42M $96M

7. Background 2009: HR In the Loop airs its first “webisode” communicating HR information to County employees each pay day. 2008: Implemented the County’s first online open enrollment. 2007: County plan goes self-funded saving $6.5 million in the first year. 2007: By 2007 a total of six fitness centers were available to employees. 2009: Implemented a Diabetes Management Pilot Program to employees as a result of the Wellness for Life Screenings. 2008: Began Wellness for Life Credit and Screenings increasing employee engagement in personal health. 200720082009 2009: Implemented the healthy pregnancy program to waive delivery co-pays. 2009: Implemented generic differential for prescriptions and carved out pharmacy with Express Scripts.

8. Background Annual Premium Increases Moved to Self-Insured (Proposed increase 8%)

9. Background  Since becoming self-insured, projected savings of over $26 million to date  Medical claims and pharmacy costs continue to increase at 10.4%  Significant savings have been realized through reduced administrative costs

10. Background 2010: Began assessing a surcharge to tobacco users on the County’s medical plan. 2010: Orange County became a Tobacco-Free County, prohibiting tobacco use on County property. 2010 2010: Changed inpatient co- pays to $300 on day one, and $100 for days two – four. 2010: Increased hospital based outpatient surgery from $100 to $200. 2010: Implemented prescription step therapy and voluntary select home delivery. 2010: Began a Dependent Audit to remove ineligible dependents from the County’s medical plan.

11. Background $96M $229M 9%

12. Background 0% 0% Trend

13. Background Since February 23, 2010 BCC Presentation:  Weekly Medical Plan Oversight Committee Meetings  Multiple staff level meetings  Employee Benefits Committee meetings

14.  Background  Challenges  Recommended Strategy  Summary Presentation Outline

15. Challenges  Overall cost of claims is trending at 10.4% and is expected to increase without major plan design changes  Unable to sustain funding for large increases year after year  Need to address total cost of plan and increase share of cost paid by employees

16. Challenges  The County’s premium cost share is more generous than other employers  More evenly share the costs of health insurance premiums  Decrease the overall cost of our health insurance plan Orange County Employees 87% Employer Florida Industry Norm 76% Employer 24% Employees 13%

17. Challenges  Disproportionate cost share for medical services  True costs hidden from both the health care provider and the plan member Average Annual Costs Measure Average Total Cost Employee Co-Pay Average Plan Cost % Spent Annually Primary Care Visits $108$15$938% Specialist Visits $210$25$18523% Ancillary MRI/CT $481 $25 $4561% Home Healthcare $482 $0 $4821% Outpatient Visits $1,159$100$1,05917% Inpatient Visits $13,413$600$12,81325%

18. Challenges Nationally, between 50 and 85 percent of all diseases are linked to the health choices you make. For every 100 employees, many have lifestyle- related health risk factors: Risk FactorNationallyOrange County Overweight or Obese 6680 Diabetes610 Smoke216

19. Challenges Keep Current Plan Major Plan Restructure

20. Challenges $17.2 Million Deficit Revenues / Expenditures If current plan is kept… Millions $107.7M $90.5M

21. Challenges  Premiums will increase by at least 50%  Bi-weekly premium increase as much as $100 for family coverage  Co-pays will increase substantially  Financial challenges will continue to compound If current plan is kept…

22. Challenges  The trend will continue to rise due to the disconnect between cost and awareness  Premiums will continue to increase year after year at very high rates  Coinsurance would be needed for some services  Deductibles would be instituted at some point in the near future If current plan is kept…

23. Challenges Implementing a Major Plan Restructure will…  Lessen premium increases (held to approx. $15 per pay period)  Address the underlying problem to begin to reverse the trend  Create informed consumers  Focus on Wellness and Preventive care

24.  Background  Challenges  Recommended Strategy  Summary Presentation Outline

25. Recommended Strategy  Implement a Consumer Driven Health Plan for 2011

26. Recommended Strategy Consumer Driven Health Plan  Preventive Care at 100%  Preventive Medications outside of deductible  Individual Health Savings Account (HSA)  High-Deductible Health Plan  Remove disconnect between the member and the true cost of services

27. Recommended Strategy Two Major Plan Components  HSA Account  Funding Vehicle/Partially Funded  $750/$1,250 County contribution  High Deductible Health Plan  Deductible : $1,500/$3,000  20% Coinsurance  Out of Pocket Max ($3,000/$6,000)

28. Recommended Strategy An HSA is... An account to help you meet your deductible and out of pocket maximum A great investment and savings vehicle Your Money Your Account You Own It You Manage It A Tax Savings Vehicle

29. Recommended Strategy With an HSA, you can... Receive a County contribution if you complete the wellness screening Decide how much you will contribute, if any Earn interest Opt to invest (once balance is over $2k) Take it with you when you leave employment Use it now, or save for later Relax... because the funds rollover year to year

30. Recommended Strategy Deductible  $1,500 Employee Only  $3,000 Family  Amount paid by covered member before plan begins  Member pays full cost of the negotiated rate, until deductible  Can be paid from the HSA

31. Recommended Strategy 20% Co-Insurance  Starts after deductible is met  20% to be paid by member each time a medical service is accessed  80% remaining is paid by the Medical Plan  Can be paid from the HSA

32. Recommended Strategy Out of Pocket Maximum  $3,000 for Employee only  $6,000 for Family  Designed to protect member in the event of a catastrophic illness (safety net)  Once the out of pocket max is met, all services are covered at 100% by the Plan

33.  Background  Challenges  Recommended Strategy  Summary Presentation Outline

34. Summary  10.4% annual increase in healthcare cost is not sustainable  Fundamental changes to the health plan are needed  Recommend transitioning to a Consumer Driven Health Plan to control costs, change behavior, and begin to reverse the trend

35. Summary  BCC Consent Agenda June 8, 2010  Communication campaign beginning in June  Open Enrollment for 2011 in October 2010  Implement health plan changes and fund HSA accounts in January 2011

36. Recommended Strategy Premiums  Portion paid each pay period by employee and county Proposed 2011 Annual Premium Schedule CoverageTotal $ Orange County $Employee $ Employee Only 5,8545,490364 Employee + Spouse 12,24610,2442,002 Employee + Child(ren) 11,2909,4701,820 Full Family 16,73912,7094,030

37. Recommended Strategy Employee Annual Contribution Comparison Employee Only Employee + Spouse Employee + Child(ren)Full Family 2010 Contribution 01,5641,4063,604 2011 Proposed Contribution 3642,0021,8204,030 County Paid HSA 7501,250 Net Savings $386$813$836$824

38. Summary $17.2 Million Deficit Revenues / Expenditures If current plan is kept… Millions $107.7M $90.5M

39. Summary $17.2 Million Deficit: 1.Keep current plan and significantly increase premiums 2.Find other areas in the budget to fill the $17.2 million shortfall 3.Implement a major plan restructure

40. Proposed 2011 Medical Plan Design May 25, 2010

41. Challenges Total Bi-Weekly HMO Rates 2010 Total EmployerEmployee Employee Only$198.57 $0.00 Employee + Spouse$427.74 $367.53$60.21 Employee + Child(ren) $397.17 $343.08$54.09 Employee + Family$587.07 $448.46$138.61 2010 Rate Schedule