Gallagher tells Lafayette Parish committee health plan ran a multi‑million dollar shortfall; consultants outline fixes

The Lafayette Parish School Board Insurance and Finance Committee on Feb. 11 heard Gallagher consultants present a year‑end financial monitoring report showing the district's self‑funded health plan had higher claims than current funding, and a set of near‑term actions including rate projections and an RFP process for plan vendors.

Tony Murray, a consultant with Gallagher Insurance, told the committee "The absolute total, the total health plan cost is $60,708,216," and said the plan as funded by premiums shows about a $6,000,000 deficit but that after prior‑year fund balance and a July transfer the plan would show roughly a $2,000,000 surplus.

The report matters because the committee must recommend budget and contribution decisions before the July 1 plan year. The consultants identified class‑level cost drivers and told the board the district should expect more detailed forecasts and vendor work this spring.

Gallagher presented both plan‑year (Jan.–Dec.) and fiscal‑year (July–June) views. On a fiscal‑year basis through December, Gallagher reported total health plan costs of $36,762,390 and a net employer cost to Lafayette Parish School System (LPSS) of $28,786,802. Murray said that, "when we're looking at just how the plan is funded based on the premiums collected," the fiscal‑year view shows a deficit of $9,354,990. He added the consultants remain confident in their original budget projection of about $5.76 per member per month (PMPM) when the year settles and rebates/subsidies are booked.

The consultants broke costs down by enrollment class. Gallagher displayed class deficits on a fiscal‑year basis: a roughly $4,700,000 shortfall for active employees, about $3,800,000 for retirees without Medicare, and about $6,466,000 for retirees with Medicare (the consultants noted Medicare beneficiaries often have most medical bills processed outside the district plan and that pharmacy comprises a large share of their costs). Murray explained differences in average contract size and utilization as primary reasons the per‑member costs differ between classes.

Pharmacy was highlighted as the fastest rising cost driver. Gallagher's slides showed that about 40% of combined plan cost is pharmacy (55% medical, 40% pharmacy on a different slide), and that the plan's top 10 drugs account for about 50% of pharmacy spend. Murray said the consultants are monitoring GLP‑1 drugs (transcript: "Monjero's, Eurosempics"), and large specialty drugs such as Humira, and noted these drugs generate significant rebates that will be reflected when pharmacy rebates are posted.

Gallagher also reviewed provider and drug concentration reports (top inpatient/outpatient facilities and top drugs by paid amount) and recommended continued population‑management strategies and targeted solutions. The consultants will deliver more detailed forecasting and a final set of recommended rates after actuaries finish modeling updated enrollment counts from open enrollment.

On next steps, the committee reviewed an annual service calendar that calls for: final budget and contribution models and a Gallagher recommendation for July 1 rates; issuing an RFP for the third‑party administrator (TPA) and pharmacy services with results expected in March; review of Medicare benefit programs for 2026 in March; education sessions with Humana and SHIP; a surgical carve‑out center beginning March 1; stop‑loss reconciliation; an ERAP meeting; and additional point‑solution evaluations.

Committee members asked for clearer, larger-format reports for members and retirees (the consultant acknowledged the print and digital slides were small and said they would provide legible versions). The committee also asked Gallagher to provide a concise year‑to‑date recap showing where the plan stands now versus prior forecasts and to deliver a forecast for the remainder of the fiscal year based on historical claim patterns.

Votes at a glance: the committee formally selected Jeremy Hidalgo as Board Insurance Committee chairperson by nomination and an appointment made on the record (no roll‑call vote recorded). The committee also moved and seconded to approve the Dec. 18, 2024 Board Insurance Committee meeting minutes; committee members present voted to approve and the motion carried.

The committee scheduled an insurance workshop (noted for March 12) so board members and administration can review day‑to‑day contract work and be briefed before future BIC meetings. The committee chair said next month's BIC meeting will include more data and lengthier discussion.

Attendance and attribution: the report and the numerical totals quoted above come from Gallagher consultant Tony Murray and Gallagher materials presented to the committee. The Lafayette Parish School System staff and board members asked for follow up data and better formatted materials before the committee's March meeting.