COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee and Public Services

DATE:

November 12, 2003

BOARD MEETING DATE:

December 2, 2003

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, EPS Director

Paul Hackleman, Benefits Manager

SUBJECT:

Waive a Request for Proposal and Authorize the EPS Director to sign an Agreement with Blue Shield.

Recommendation

Approve a resolution waiving the Request for Proposal process and authorizing the EPS Director to sign an agreement with Blue Shield for provision of health plan benefits to eligible County employees, retirees and their dependents effective January 1, 2004 through December 31, 2004.

Background

In 1994, the County formed a Labor-Management-Retiree Health Care Committee to oversee the Blue Shield Point-of-Service Plan. In 1998 and again in 2001, the Committee proposed and the Board adopted modifications to the design of the Blue Shield plans to reduce overall premium costs. These efforts have kept Blue Shield premiums more than 8% lower for active employees and 23.5% for retired individuals over age 65 than they would otherwise have been without modifications.

Discussion

Although Blue Shield co-payments were not changed last year, the significant changes in prior years continue to keep premium increases lower. The modifications to physician and prescription drug co-payments represent reduced cost by the plan and less cost to overall premiums. This year's premium increase is 4.66% which is considerably less than either Kaiser or Aetna.

Blue Shield is being recommended for continuation without a formal Request for Proposal process because:

· They were initially selected n a Labor-Management-Retiree Request for Proposal process that specifically conformed to the County's previous self-funded plan,

· No new options have arisen which would represent comparable design, less costs or less disruption of patient-physician relationships and

· Labor requested the continuation of Blue Shield without changes in co-payments in last year's negotiations.

The resolution authorizes the EPS Director to sign the agreement upon approval by County Counsel.

Vision Alignment

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

Fiscal Impact

The 4.66% premium increase represents an estimated cost of $438,000 for 2004.