REEP Report for the Jan. 30, 2007 Meeting
R.M. Robertson

This time around there’s a great deal to report from the meeting of your Insurance Advisory Committee (IAC) in Calimesa, at which Ceci Garcia and I represented the College’s interests in the Riverside County Employer/Employee Partnership for Benefits, aka REEP. For those not in the know, REEP is the Joint Powers Association (JPA) that the College joined around 1991, after our insurance rates had started getting out of control. Generally speaking, JPAs offer much of the purchasing power that corporations enjoy: when a lot of people get together, get an administration in place, and start negotiating, they tend to get things done cheaper. In this case, REEP sort of brokers our deals with Blue Cross (BC), Kaiser (our Health Maintenance Organization), Delta Dental, and Vision Services Plan (VSP). They also handle the administration of these plans, answer members’ complaints, and hold meetings like the one I’m reporting on now. Their legal/accounting firm is Keenan&Associates, a national corporation that I like to think of (for those in the know) as our very own Wolfram&Hart. And just so’s you know, REEP serves between around 80, 000 and 220, 000, depending on the plan you’re talking about, and the annual balance sheet shows around 93 million moving in and out of the budget. REEP is regularly audited by an independent firm, as per State and Federal law governing JPAs. There was a lot to cover this time around, so this time around, I’m going to do this in, “bullet points,” form. I will follow the bullets--which are going to be presented as objectively as I can--with a conclusion summarizing my take on the meeting. Please feel free to contact me for further details, and please do let me know if you like this format for the Report.

1. Finances
--Treasurer’s report says assets around $15 million, current liabilities around $9 million
--Utilization rates up in several plans (BC, VSP), so costs spiked in December
--Stop-loss (reinsurance of claims over $200K) reserve is around $518K, good
--Usage/utilization increase is probably from a) 1000 new members, b) seasonal changes
--”Strong,” financial position, but year-end spikes will affect renewal rates.

2. Acupuncture Benefits
--Current offer is $30/visit, 12 visits/yr.
--One member District wanted increase
--Proposal was to remove max. benefit limits
--RMR argued against increase, since, a) NO clinical data to support, b) raise renewal .15%
--Approved, 12-8 vote.

3. Rx Prescription Plan Upcoming Changes
--10/40 Plan to be eliminated; nobody using it
--5/20 (which we’re on?) to be phased out next two years; co-pays will go to 5/25
--Using ExpressScripts “Nat. Preferred Formulary,” would drop renewal rates by 3%
--Formulary Plan would add “third tier,” co-pay of $60 for Rx not on formulary
--NOT ordinary formulary; could get ANY Rx at higher co-pay
--Common arrangement in industry?

4. Renaming, “Delta Dental Premier”
--Currently, dentists take either “Premier,” or, “DPO/PPO,” Dental Plans
--Premier gives dentists higher payouts; DPO/PPO lower pay, higher annual limits
--NO LOWER BENEFIT TO MEMBERS; BENEFIT MAY RISE IN SOME CASES
--Offers dentists lower reimb/visit, but higher annual max. as compensation
--Name change to “Delta Incentive,” approved; RMR abstained.
--Approved

5. VSP Renewal Rates (Preliminary)
--REEP est. is preliminary only; accountant uses, “near-worst case,” assumptions
--Actual rate renewal should drop, but this depends on Jan/Feb utilization
--VSP: 81, 074 members
--Rates to increase 11. 31% (high est.)
--Unusual for VSP; had been running 2-5% increases since 2002
--Cause? probably BIG Aug/Sept usage (“utilization,” in other words) --Approved

6. Delta Dental Renewals (Preliminary)
--REEP est. is preliminary only; accountant uses, “near-worst case,” assumptions
--Actual rate renewal should drop, but this depends on Jan/Feb utilization
--229, 174 members
--Rates to increase 4.54%, about avg. for Delta over last 5 yrs.
--app. for recommendation to Board.

7. Blue Cross (Preliminary)
--REEP est. is preliminary only; accountant uses, “near-worst case,” assumptions
--Actual rate renewal should drop, but this depends on Jan/Feb utilization
--Rates to increase by 10. 54%, a bit lower than last yr.
--Acupuncture increase benefit would raise this to 10.64%
--Adopting “Preferred Formulary,” would give renewal rate of 7.64%
--RMR voted yes; unanimously approved for recomm. To Board.

8. What is, “stop-loss?”
--All big insurance firms “lay off,” the really big claims, buy, “re-insurance”
--Currently REEP reinsures claims over $200K
--This fig. seems to balance costs of insurance/costs of paying claims well
--REEP went out to bid on new re-insurer; some probs. with administration
--full report next meet

9. What Is “Capitation?”
--Only with HMO
--”Cap,” is the per-head charge/fee for belonging to HMO
--”Cap,” is “running cost,” of paying doctors, building, equip,. etc.
--BC HMO cap. fee around $220/mo
--Think of, “cap,” as like car payments, other fees as like gas, oil, maint., insurance., etc.

10. Kaiser HMO
--KP is, “fully insured,” plan; fewer reporting requirements
--Renewal rate will prob. be in 4-8% range, as per last 5 yrs.

11. Administrative Costs
--Every plan cost includes insurer admin costs, plus Keenan $.
--Insurer admin cost varies: usually in 5-12% range?
--TOTAL Keenan costs, BC/Dent/VSP= $7.74/employee/month. PVC=$800/mo., $9600/yr.?

12. “Disease States Management,” Program
--Uses data from ExpressScripts (ESI) to ID 5 main disease states
--Focuses on diabetes, asthma, cong. heart fail. (CHF), coronary art. (CAD), one other?
--Problem: patients don’t a) manage diseases, b) take meds as per Rx
--Solution: a) ID patients, b) set up assessment, c) arr. Nurse Pract to help, d) make plans
--Discussion: member concerns with privacy; can always opt-out.
--NB: BIG diff. between “opt-out,” vs. “opt-in,” plans
--Statistics diff. to keep --Possible 2-3% cost decreases overall
--In Health Savings Acct./Lumenos plans, this already featured
--To be connected to, “wellness,” plans

13. Consumer Driven Health Plans (CDHPs)
--Incl. HDHPs (High Ded. Health Plans) with HSAs (Health Savings Accounts)
--REEP to switch from Chase to Mellon Bank for HSAs: probs. with Chase
--IRS to increase limits to $1050/2100 deductibles and $2500/5000 annual contrib.
--IRS to change from current monthly contrib.
--WARNING WARNING WARNING: personal opinion follows
--CDHPs are pushed by Republican/libertarian grps., to emph., “personal responsibility” WARNING; end of personal opinion.
--Higher ded/contrib limits can mean a) higher out-of-pocket; b) overinvestment
--Great plans for members, a) young, b) gd. health, c) no kids, d) gd. managers
--BUT the availability of HDHP/HSA in REEP has lowered general renewal rate by 1.3%.

14. “Boutique,” Physicians --Some members report solicitation by docs
--If pay $1500-2500 additional fee, get gold-plated, “no-wait,” service, other perqs.
--BC position= oh, hell no. Violation of their Contract with physicians
--Prob: patients who don’t pay extra get less than they pay for
--If solicited, members should, a) get in writing, b) REPORT IT

15. Member Concerns
--Rare prob. with co-pays on diabetes maint. drugs: report if probs.
--Some ESI changeover probs; report any
--Approx. 250-300 ID cards retured to sender (for all REEP): have you got yours?
--RMR raised issue of PuraScript changeover
--RMR has 800 number at Keenan if needed
--RMR raised issue of Keenan “worker comp,” demanding physical req. in faculty jobs
--Informed REEP that the prelim. CTA will be taking a position on issue.

Summary: A Personal Take

1. REEP looks to be in good financial health, overall. There are some concerns about increased utilization rates, but most of this is just the way the cookie crumbles, nothing unusual.

2. The Plan design changes, co-pay increases, etc. are working. Problem is, members don’t like to pay any higher costs--especially when what these changes do is to decrease the rate of the increases in renewal rates.

3. National trend: increased health care costs.

4. Another national trend: fight between, “find the money in the market, cause you’re on your own,” and, “socialized medicine.” Guess which political parties represent which position?

5. As reflected in the push toward “disease management,” and, “wellness,” programs, the, “personal responsibility,” argument is here to stay. It’s also largely true: if Americans stopped smoking, exercised, ate halfway rationally, and cut some of the overwork and stress out of their lives, we’d have much cheaper health care.

6. Some of what goes on in discussions of insurance, at REEP or anywhere else, is based on irrationality. For example, my asking, “Where’s the clinical data to support the hypothesis that acupuncture does anything at all, let alone has serious benefits?” was met with, “Well, I know that it does cause I feel it and anyway millions around the world use it so it must work.” For this we’re paying?

7. Some of what goes on in these discussions exemplifies the Spanish Prisoner dilemma. If you prefer, it exemplifies the dog-eat-dog argument: you know, it’s a dog-eat dog world, so I’m gonna do unto others before they do unto me.

8. Some of the problems REEP address are unsolvable on the level of REEP. They are global and national issues, so whatever we do amounts to cost-containment and cutting the rate of increases.

9. The rate increases we’re seeing are lowish, considering what’s going on in the country.

10. REEP has several Plans available that would drastically cut costs. a) the “Preferred Formulary;” about 3% drop in renewal rates. b) the HDHP/HSAs; about 30-40% drops in costs. c) a “high-deductible,” catastrophic plan; about 50% drop in costs.

11. Problems with cheaper insurances include: a) radically higher deductibles; b) restrictions on drug benefits; c) much more difficult paperwork for individuals; d) individual bad choices that lead to disaster--for example, anybody over 50 is unwise to choose one of the “high deductible,” plans, because of the higher probability that they will get sick.

And that’s the REEP Report for Jan. 30, 2007. Let me know what you thought, and what concerns you have.