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



Authorization for EPS Director to sign an Agreement with Secure Horizons



Approve a resolution waiving the Request for Proposal process and authorizing the EPS Director to sign an agreement with Secure Horizons (PacifiCare) upon approval by County Counsel for provision of health plan benefits to eligible County retirees and their dependents effective January 1, 2004 through December 31, 2004.



In July, 2000 the County was notified by Blue Shield and Aetna that they were terminating their managed care health benefits for retirees over age 65. As a result, a Labor-Management-Retiree Committee was formed to solicit proposals to replace the two plans that were terminating coverage. Proposals were received from Secure Horizons and HealthNet.

In October, 2000 your Board accepted the recommendations of the Committee to approve an agreement with Secure Horizons because its premium was less and its network more closely matched those of Blue Shield's and Aetna's. The County contracted with Secure Horizons for the past three years from January 1, 2001 and through December 31, 2003.



Retiree healthcare continues to be very volatile. The 1997 Balanced Budget Act continues to limit annual Medicare increases to 2% even when actual cost increases for hospitals and physicians are consistently in double digits. This federal legislation forces health plan providers to terminate coverage or increase premiums. Since the passage of the Balanced Budget Act a total of 3.2 million retirees have been forced off of managed care and back onto Medicare (which does not cover prescription drugs). Another 300,000 retirees are expected to lose coverage in 2004.

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

· Offered the best proposal for 2001 coverage in a formal process and

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


Vision Alignment

The contract with Secure Horizons 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 estimated increased annual cost to the County is $13,000 reflecting a 26.9% increase over the current premium.