Inter-Departmental Correspondence

Employee and Public Services



November 12, 2003


December 2, 2003



Honorable Board of Supervisors


Mary Welch, EPS Director

Paul Hackleman, Benefits Manager



Approve Waiving a RFP Process and Amending an Agreement with Aetna.



Approve a resolution waiving a RFP process and authorizing the EPS Director to sign an amendment with Aetna for the provision of health benefits to County employees, retirees and their dependents for the period from January 1, 2004 through December 31, 2004.



Aetna represents an important alternative to Kaiser and Blue Shield. The Aetna network is less restrictive than Kaiser's (individual providers are based throughout the community rather than being affiliated with a specific facility) and it is less costly than the Blue Shield plan. Aetna provides coverage to approximately 1,400 employees and retirees under age 65.

A County Labor-Management-Retiree Committee conducted a Request for Proposal for HMO benefits in 2001. Aetna was selected in a competitive process that included HealthNet and PacifiCare, the only other two IPA-HMO plans available in California.



Last year, in negotiations with employee organizations, the County made important modifications to the co-pays in the Aetna plan in an effort to reduce long-term premium increases. Although the changes have not reduced 2004 premium increases (because they have been in place for less than a year), they are expected to keep future premium increases lower.

Aetna is being recommended for continuation without a formal request for proposal process because they:

· Offered the best proposal for coverage and cost in 2001 in response to a Request for Proposal process,

· No new options have arisen which would represent less cost and less disruption of patient-physician relationships and

· Labor requested the continuation of Aetna and agreed to changes in co-payments during negotiations last year.


Vision Alignment

The contract with Aetna represents Vision Statement #20 which focuses on careful consideration of future impact and #21 incorporating the County's vision and goals into delivery of services.


Fiscal Impact

The net County cost increase for 2004 for active employees and retirees under age 65 is $1,395,000 which represents a 17% increase.