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St. Charles board shown medical plan stress tests as district faces a projected 13.4% cost rise
Summary
District staff and broker USI told the board the health plan is trending up and proposed plan‑design changes, a possible 15% HMO rate increase, and modeled stop‑loss options (current $275,000 spec vs. higher levels) to manage rising claims and pharmacy costs. The board scheduled a Feb. 11 vote on benefit renewals and stop‑loss guidance.
St. Charles Parish School District officials were warned on Jan. 14 that the district’s self‑funded health plan faces rising costs driven by pharmacy and a handful of very large claims, leaving administrators and their broker, USI, recommending both plan‑design changes and careful stop‑loss decisions ahead of budget adoption.
USI financial underwriter Tom Turner and broker David Babin walked the board through data to December and an annualized projection through May 2026. Turner said the district’s three plan tiers are running very differently: the base option was near target, the high option was running well, and the HMO was about 115% of expected claims. Babin summarized: “We’re looking at a projected budget increase of roughly 13.39% — about $36.9 million — if we make no changes.”
Why it matters: administrators said pharmacy costs have spiked (noting GLP‑1 and specialty drug usage) and several large claims — including a prolonged neonatal intensive‑care case — are driving volatility. USI presented two plan‑design packages it called Exhibit A (more conservative) and Exhibit B (more aggressive). Exhibit A focuses on modest increases to ER co‑pays, adding deductibles in the HMO, and modest prescription co‑pay hikes; Exhibit B would be stronger and could reduce projected trend more substantially.
“Behavior is the biggest piece,” said Babin, describing changes meant to steer employees to lower‑cost settings such as urgent care instead of emergency rooms. Miss Samantha Beerus, the district’s insurance technician, emphasized the need to reduce avoidable ER claims, saying the district recorded more than 950 ER visits that accounted for 11% of medical spend in prior analysis.
Stop‑loss choices: USI modeled the district’s individual stop‑loss (ISL) options. The district currently carries a $275,000 ISL. Babin said moving the ISL higher (for example to $375,000) would lower stop‑loss premium but raise the district’s exposure to large individual claims; the firm’s back‑testing across the last three plan years showed mixed results depending on which large claims would have hit the higher deductible. “275 is a conservative and defensible position based on our claims history; 375 is a reasonable alternative if the board wants to assume more risk for prem‑ium savings,” Babin said.
HMO contribution proposal: USI recommended a targeted HMO employee contribution increase to better align the HMO’s rich benefits with cost; staff proposed a 15% premium increase on the HMO for each of the next three years unless larger plan changes are adopted. Board members asked how increases would affect enrollment shifts; presenters said higher HMO costs would likely move members toward the base option, but that contribution design should be reviewed to preserve appropriate incentives.
Next steps: Administration will present formal renewal documents and final stop‑loss quotes for a Feb. 11 special meeting. USI recommended running a continued monitoring period if the board opts to make more modest design changes now and revisit tougher choices next year. In the meantime, staff were asked to return with clearer contribution scenarios and the effect of Exhibits A and B on the district budget and on employee paychecks.
