Laredo ISD health plan running over budget; trustees briefed on high-cost claims, drug costs and projected shortfalls

LAREDO ISD trustees heard a quarterly update on June 5 from Hub International about the district's self-funded medical plan that showed rising claims, an increase in pharmacy costs and high-cost individual claimants driving a budget shortfall.

Liz Bebo, an employee-benefits consultant with Hub International, told trustees that "on a fiscal year basis, the medical plan cost is $885 per employee per month," and that calendar-year claims through April ran higher, at about $968 per employee per month. She said the cost pressure is concentrated in a small number of very large claimants: "we have 9 claimants that are over $125,000" through April and the plan's stop-loss policy has an individual deductible of $250,000.

The presentation flagged pharmacy spending as another driver: Bebo said pharmacy claims are rising and called out brand-name diabetes medications and specialty oncology drugs as contributors. When trustees asked about the medications often discussed for weight loss, Bebo said the district covers those drugs when prescribed for diabetes but not when prescribed solely for weight loss. She gave an example slide showing an average cost per prescription for Ozempic of $941 and explained plan cost-sharing would determine an employee's out-of-pocket amount.

Trustees and staff also discussed state funding from the recent House bill. Assistant superintendent/finance staff said the district expects roughly $2,000,000 in one-time allotments that could be used to support the health plan; presenters said that amount may cover much of the year-end shortfall but that claims for May and later months were still incoming and could change projections.

During a separate budget-items presentation the administration listed a proposed budget amendment (BA 24-25-52) to transfer $2,000,000 from the general operating fund into the Health Plan Internal Service Fund as a one-time employer contribution to support the self-funded plan. That transfer was presented for trustee review as part of the budget amendment packet.

Trustees asked for additional detail at the district budget workshop, specifically: updated claims data once May has been processed, plan-design scenarios showing whether benefits or contribution levels would change, and an estimate of how much of the 2025 and 2026 shortfalls would remain after the one-time state allotment and transfers. Trustees requested the benefits consultant and district finance staff return to the workshop with those figures.

Trustees were also told the district's internal reserve for health-plan purposes (the plan fund balance) was roughly $1.2 million as of the April financial statements and that, per the consultants, the current projection of a $3 million shortfall for the 2025 plan year and $7 million for 2026 remains based on April claims data. May claims were expected to arrive the week after the meeting and could change the projection.

The presentation included Q&A about stop-loss coverage, pharmacy cost drivers, and how plan design changes (copays, deductibles, or alternative plan options such as TRS) would affect costs. Consultants said they would model alternative plan scenarios for the trustees at the upcoming budget workshop.