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District health-plan review: spending above budget; TRS option not recommended now
Summary
Gallagher presented fiscal-year and calendar-year health-plan figures showing the district running modestly over budget (projected calendar-year deficit ~$811,000; fiscal-year deficit ~$402,000). Gallagher said TRS may appear cheaper initially but runout costs and lost rebates reduce year-one savings, so a move to TRS is not recommended this year.
Brad Spring, lead consultant with Gallagher, presented the district's health-plan fiscal review through August and outlined plan drivers, potential options and timing for a decision about TRS (Teacher Retirement System).
Spring said August gross medical expense ran about $1.7 million and year-to-date gross medical expense stood at roughly $10.7 million. "As of right now, current budget, shows a projected deficit of about 811,000," he said, adding that the fiscal-year slice showed a $402,000 overrun (2.8%) and that pharmacy is a major cost driver.
Spring reviewed stop-loss mechanics, rebates and the potential impacts of moving to TRS: while initial rate-to-rate comparisons could show a premium savings (roughly $1.3 million in his illustration), he said runout claim liability, loss of pharmacy rebates and terminal-liability issues would reduce or negate first-year savings. He recommended continued annual review rather than switching into TRS this year and flagged the Dec. 31 opt-in deadline for TRS enrollment as a constraint.
