1. How We’re Cutting Benefit Costs Without Cutting Benefits APPA Discussion Forum 3:00pm-4:00pm June 21, 2004 Seattle, Washington

2. The Presenter “Joint Health Insurance Initiative” Roger A. Fontes General Manager and CEO Florida Municipal Power Agency 8553 Commodity Circle, Orlando, FL 32819 Ph: 407-355-7767, Fax: 407-355-5794 E-Mail: roger@fmpa.com 1

3. How We’re Cutting Benefit Costs Without Cutting Benefits  Joint Health Insurance Initiative What We Attempted What We Actually Did Why Joint Health Initiative? How We Did It Keys Energy Services Example Important Steps and Program Elements Summary 2

4. How We’re Cutting Benefit Costs Without Cutting Benefits  What We Attempted Establish separate entity (MEBA-Municipal Employees Benefit Association) Articles of “Incorporation” State Insurance Department Contact 3

5. How We’re Cutting Benefit Costs Without Cutting Benefits  What We Actually Did Partnered with benefits broker  Large, reputable firm  Extensive public employer experience  Ability to successfully manage potential accounts Individual plans for each member  Premium rates based on claims history  Ability to customize plans Economy of scale  Using one reinsurance agency  Contracting with one TPA 4

6. How We’re Cutting Benefit Costs Without Cutting Benefits  Why Joint Health Initiative? Escalating costs/premiums Reduced employee benefits Increased co-pay Self-determination Economies of scale New “Member Service” 5

7. How We’re Cutting Benefit Costs Without Cutting Benefits  How We Did It Obtained Board of Directors approval Established Board Oversight Committee/interested members Engaged insurance expert H.R. Manager Program Leader Budget authority from development fund General Counsel assistance Member claims history Broker bid plan to reinsurers and TPAs Program costs paid via Administrative fee Members sign participation agreements 6

8. How We’re Cutting Benefit Costs Without Cutting Benefits  Keys Energy Services Example 260 employee/retiree participants $244,000 first year savings to Keys Energy $104,000 first year savings for 100 Keys Energy employees (dependent coverage—5% savings) Improved services  Flex debit card for Section 125  Employee education and “buy in”  Large claims management 7

9. How We’re Cutting Benefit Costs Without Cutting Benefits  Important Steps and Program Elements Policy/political support Slow and deliberate Get legal assistance Work with reputable broker/consultant Establish in-house (H.R.) expertise and liaison to members Participant understanding of long-term commitment 8

10. How We’re Cutting Benefit Costs Without Cutting Benefits  Summary It CAN be done Economies are available HMOs have pricing power Design long-term sustainable program Negotiate from strength Manage broker and member relationships 9