Lavaca County approves health-plan renewals as medical costs drive 5.7% rate increase

Lavaca County commissioners on June 9 approved renewal of the county's employee health plans, voting to adopt medical plan 700-G2 with a $30 copay and a $680 deductible (Rx plan 4AG2) and to accept a 5.7% overall rate increase for medical and prescription coverage.

The vote came after a presentation from Daniel Brown, a broker with the Summit Agency, and Lacey Jones, benefits consultant for the TAC Health and Employee Benefits Pool. Brown told the court that Lavaca County paid $1,956,245 in premiums over the last 12 months while TAC and Blue Cross paid $2,177,000 in claims, producing a 99% loss ratio. Brown said of that figure, "It's not ideal." Jones said the pool board found the full funding need at 6% and the county was allocated 5.7% based on its experience: "The board found that the full needed amount is 6 percent."

Why it matters: county officials said the renewals affect the county's budget and employees' payroll costs and that prescription drug claims were a central factor in the rate increase. Jones told the court the pool will narrow its pharmacy network in an effort to control Rx costs going forward.

Key approvals and actions - Medical and Rx: The court approved medical plan 700-G2 with Rx plan 4AG2 and a 5.7% rate increase (motion made by Precinct 2, seconded by Precinct 3; approved by voice vote). The motion passed with all members voting in favor. - Dental: The court approved Dental Plan 1 with orthodontia and a 13% rate increase (motion made by Precinct 2, seconded by Precinct 1; approved by voice vote). - Vision: The court approved the Value-12-12-24 vision plan with no rate change (motion made by Precinct 3, seconded by Precinct 4; approved by voice vote). - Basic life: The court approved the basic life plan providing $10,000 coverage per employee with no rate change (motion made by Precinct 2, seconded by Precinct 1; approved by voice vote).

Separately, the court tabled two administrative items to give staff more time to review: the benefits waiting period for new hires and the COBRA administration arrangement. Commissioners voted to table the waiting-period question for two weeks to allow the court's advisory committee and staff additional time to review implementation options (motion to table made by Precinct 2, seconded by Precinct 3; passed). The court also tabled further action on COBRA administration (motion to table made by Precinct 2, seconded by Precinct 1; passed).

Details and context: Brown and Jones walked the court through plan-level details in materials included in the renewal packet. Brown said three claims exceeded $100,000 in the 12-month period, several others exceeded $50,000, and that prescription drugs accounted for a substantial portion of recent paid claims. Jones said target pool loss ratio is 94% (94 cents of every dollar to claims) and that the pool's board allocated less than the full 6% increase to Lavaca County based on the county's relative history.

The county will continue with its grandfathered plan structure. Staff said changes to plan design could jeopardize grandfather status and that option changes should be evaluated carefully.

Next steps: Staff and the county's benefits advisors will provide additional detail to the court, and officials said they expect to revisit the waiting-period and COBRA items at a future meeting or committee session.