Discussion
Health care services in California generally, and the Bay Area specifically, continue to deteriorate. The San Mateo and San Francisco Independent Practice Associations (IPAs) closed last year. Numerous smaller IPAs in surrounding counties have closed. Those IPAs and individual providers who remain are demanding double digit increases in reimbursement or, like Stanford, are electing to terminate managed health care contracts altogether. Additionally, housing costs are driving both physicians and nurses out of the area and making recruitment efforts more difficult.
The picture for retirees is even worse. Last year, both Blue Shield and Aetna terminated their Medicare products, driving the County and other employers to seeks contracts with the few remaining providers. As you know, the Labor-Management-Retiree Committee recommended and the Board approved agreements with Kaiser and Secure Horizons to provide managed care benefits for our retirees.
These trends are driving higher annual health care cost increases. The preliminary premium increases we received for employee and retiree plans were 28%+ and 22%+ higher respectively. The Labor-Management Retiree Committee has been working with Blue Shield to identify modifications to plan design to mitigate these increases and determined that they would need additional time to bring proposals before the Board. Blue Shield offered and the Committee recommends an extension of the current contract for three months with a 6% premium increase.
Additionally, because changes in Health Care Financing Administration requirements, employers are required to move to calendar year plan renewals. At present, both Kaiser and Aetna have been converted to calendar year plan renewals so the extension will bring all health plans in line with new requirements.
The extension agreement incorporates the changes the County required this year in non-discrimination enforcement provisions. Blue Shield has also complied with the County's new Equal Benefits Ordinance requirements.
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