Gallagher warns Lafayette Parish health plan faces roughly $7M shortfall; committee weighs savings options

The Lafayette Parish School Board Insurance and Finance Committee on April received a presentation from Gallagher showing the district’s self-funded health plan is projecting roughly $70 million in plan-year costs and recommended several market checks and plan design changes to close a multi‑million‑dollar gap.

The report, delivered by Melody Terrell of Gallagher, found the plan’s recent 7‑month claims average was $516.94 per member per month and that an actuarial projection, accounting for medical and pharmacy inflation, yields a plan-year budget near $70,000,000. “Inflation is the, cost of medical goods and prescriptions,” Terrell said, noting national trend factors of 7.5% for medical and 13% for pharmacy were used in projections.

Gallagher told committee members the district is currently funding about $57,000,000 through premiums, plus a $6,400,000 general fund transfer, for total funding of roughly $63,000,000; that leaves a funding gap that the firm and district staff characterize as requiring a near‑term response. The firm’s projection and the district’s fixed‑cost estimates led to a recommendation that the district consider three basic approaches: increase employer funding, increase employee contributions, or enact plan changes.

The presentation outlined cost savings already taken effect for 2025 — including a pharmacy negotiation with RxBenefits (estimated $1,400,000), a Blue Cross negotiation (about $65,000), implementation of Tria Health (estimated $767,000) and Lantern (estimated $160,000), a dependent audit (about $109,000), modest plan changes (about $885,000), and premium changes for employees and retirees that together totaled roughly $2,500,000. Gallagher said those initiatives amount to just under $6,000,000 in realized or expected savings for 2025 but that those savings do not eliminate the projected plan‑year cost near $70 million.

Looking ahead, Gallagher described ongoing market checks that could produce additional savings effective Jan. 1, 2026. The firm said a full pharmacy market check is expected to yield an estimated $2,500,000 and that a TPA (third‑party administrator) market check is underway with initial favorable responses. “We’re going to continue to evaluate all of the knobs that you can pull in your partnership with your TPA,” Kim Bridal of Gallagher said.

District leaders and committee members discussed timing and the budget calendar. Committee members stressed that most of the plan‑year data arrive late relative to the district’s fiscal calendar — the plan year runs Jan.–Dec., while the fiscal year is July–June — which compresses the timeline for decisions affecting the July 1 budget. The committee was told the PBM and TPA market checks are expected to be completed by May 28; staff said any realized savings could be reflected by revising the budget in June or July after initial adoption.

Superintendent (unnamed) cautioned the committee that, absent additional savings, the district would likely need to provide more general‑fund support or consider tougher plan changes. “We’re closer to $12,000,000 behind,” the superintendent said, urging the committee to take the proposed options seriously to avoid large premium increases for employees or program cuts.

No plan design changes were approved at the committee meeting; Gallagher and district staff said validated numbers for additional initiatives are still being finalized and will be reported back to the insurance committee and the board workshops. Gallagher concluded its presentation and invited committee members to submit questions and await validated return‑on‑investment figures for specific recommended changes.

Votes at a glance: The only formal vote taken at the meeting was approval of the committee minutes from March 18, 2025. That motion passed (yes: 3; no: 0; abstain: 0).