COUNTY OF SAN MATEO
Inter-Departmental Correspondence

Employee and Public Services Department

DATE:

October 8, 2001

BOARD MEETING DATE:

October 23, 2001

TO:

Honorable Board of Supervisors

FROM:

Labor-Management-Retiree Committee

Mary Welch, EPS Director
Paul Hackleman, Benefits Manager

SUBJECT:

Accepting Labor-Management-Retiree Recommendations for Blue Shield Amendments to Health Coverage

Recommendation
Approve a resolution accepting the recommendations of a Labor-Management-Retiree Committee and authorizing the EPS Director to sign amendments to agreements with Blue Shield to provide health care benefits for employees, retirees and their dependents for the period from January 1, 2002 through December 31, 2002.

Background
In 1994, the County formed a Labor-Management-Retiree Committee to oversee the Blue Shield Point-of-Service Plan. In 1998 and 2000, the Committee recommended modifications in plan benefits to reduce overall premium costs. These efforts kept Blue Shield premiums more than 5% lower for active employees and 16.5% lower for retired individuals over age 65.

In September, 2001 the Committee recommended and the Board approved a three month extension of the current Blue Shield contract, with a 6% premium increase for the period from October 1, 2001 through December 31, 2001 to bring the contract period in line with Kaiser and Aetna renewals. This extension also allowed the Committee to develop recommendations for changes to the Blue Shield plan which would control costs.

Discussion
The Labor-Management-Retiree Committee considered the following changes in the plan covering active employees and retirees under age 65:

· Increasing office visit co-pays from $10 to $15,

· Modifying the prescription drug co-pay from $15 to $20 (without changing the $10 generic drug co-pay),

· Increasing the annual deductibles in Tier II of the plan (Preferred Provider Tier) from $100 to $300 for individuals and from $200 to $600 for families and in Tier III of the plan (Out-of-Network) from $250 to $500 for individuals and from $500 to $1,000 for families,

· Increasing the emergency room co-pay from $25 to $50.

The Committee considered the following change in the plan covering retirees over age 65:

· Increasing the prescription drug co-pay of formulary brand drugs from $15 to $20 and of non-formulary brand drugs from $30 to $35 (without changing the $10 generic drug co-pay.

The Committee scheduled four meetings in September to discuss general health plan trends and these specific changes with plan participants. A total of 133 employees and 113 (over age 65) retirees attended the meetings. Acceptance of the changes was virtually unanimous. The impact of the proposed changes represents a 5.5% reduction in the premium increase for active employees and a 2.25% reduction in the premium increase for retirees over age 65.

The September amendments with Blue Shield, approved by the Board, incorporated the changes the County initiated this year in non-discrimination and Equal Benefit requirements.

Fiscal Impact
With the recommended changes identified above, the employee plan is increasing by 21.25% and the retiree supplement to Medicare plan is increasing by 16.31%. The total estimated annual net County increase for these plans is $949,000.