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District health plan forecast shows projected 10% increase; board to consider options including dropping EPO
Summary
Consultants from Lockton told the board the district's self-funded health plan currently projects a roughly $16.4 million plan cost and modeled a 10.3–10.4% funding increase for next year; consultants described three scenarios including keeping current plan design, shifting more cost to EPO enrollees, or eliminating the EPO.
Lockton consultants Matt Tritz and Anthony Kovacker presented a re-forecast of the district's self-funded medical plan administered through Blue Cross and Blue Shield of Kansas City. The consultants said the district's projected total plan cost for the current plan year is roughly $16.4 million and that, without plan design changes, next year's funding rates are modeled to rise about 10.3–10.4 percent.
"We're calling for a budget increase at 10.3%," Matt Tritz said, explaining the forecast process and the components the actuaries consider (medical and pharmacy claims, stop-loss, administration fees and other plan costs). Tritz and Anthony said a key driver of the increase is a rise in large claims below the specific reinsurance threshold and continued trend in medical and prescription costs.
The consultants presented three modeled scenarios for next year: - Scenario 1: No plan design changes; the projected 10.4% increase would be shared proportionally between the district and employees so the existing cost-share percentage (about 16.8% employee portion) remains unchanged. - Scenario 2: Target a smaller district increase (roughly 6%) while passing more of the increase to employees, especially raising costs for the EPO plan. - Scenario 3: Eliminate the EPO plan; achieve a similar employer-targeted increase (about 6%) by moving EPO enrollees to PPO or HDHP options and reducing the district HSA seed (presently $200 per month) to roughly $150 per month in the model.
Anthony Kovacker noted large claimant costs in the $100,000–$200,000 range had increased about 25 percent year-over-year and that specific reinsurance is purchased for claims over $200,000. The consultants also showed benchmarking that the district's plan designs and net costs compare favorably with peer districts, and they said the high-deductible HSA option is widely chosen by employees.
Board discussion emphasized staff retention and prior administrative choices to avoid passing costs to employees in recent years. Doctor Seagrest said Lockton and district staff will return with additional modeling, including an "equal share" cost comparison and an option eliminating the EPO at equal share cost for board review in two weeks. No final decision was made at this meeting.
Key figures mentioned in the presentation: current projection of total plan cost ~$16,400,000; last year's budgeted plan cost $16,000,000; projected year-over-year funding increase ~10.3–10.4%; district HSA seed $200/month (modeled reduction to ~$150 in one scenario); employee-share roughly 16.8% of total plan in current structure.
