COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Resources Department

DATE:

November 7, 2006

BOARD MEETING DATE:

December 5, 2006

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Donna Vaillancourt, Human Resources Director

Paul Hackleman, Benefits Manager

SUBJECT:

Renewal of Agreement with Aetna

RECOMMENDATION:

Approve a resolution waiving the Request for Proposal process and authorizing the Human Resource Director, upon approval by County Counsel, to sign an amendment to the current agreement with Aetna for provision of health plan benefits to County employees, retirees and their dependents for the period from January 1, 2007 to December 31, 2007.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government

Goals 20 and 21: Government decisions are based on careful consideration of future impact rather than temporary relief or immediate gain; and County employees understand, support and integrate the County vision and goals into their delivery of services.

Performance Measure(s):

Measure

FY 2005-06
Actual

FY 2006-07
Projected

Percentage of employees enrolled in a health plan within 30 days of employment

98%

98%

Total percentage of enrolled employees

23%

25%

BACKGROUND:

The Aetna plan current covers 1,259 employees (23%). Aetna does not offer retiree health coverage to retirees age 65 and older as they terminated HMO coverage in Northern California in 2001.

Aetna is an Independent Physician Association (IPA) HMO which represents an important alternative to Kaiser and Blue Shield. The Aetna network is less restrictive than Kaiser’s since 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.

There are only three IPA HMOs operating in Northern California. A County Labor-Management-Retiree Committee conducted a Request for Proposal in 2001. Aetna was unanimously selected over both HealthNet and Pacificare based on both cost competitiveness and size of network.

DISCUSSION:

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 and

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

There is no increase in the Aetna premium for the County plan for active employees and retirees under the age of 65. Aetna attributes this no increase to the co-payment changes made in 2002 and the introduction in 2005, at no cost to the County, of the Simple Steps program which reduces diabetes and cardiovascular disease.

The contractor has assured compliance with the County’s Contractor Employee Jury Service Ordinance, as well as all other contract provisions that are required by County ordinance and administrative memoranda, including but not limited to insurance, hold harmless, non-discrimination and equal benefits.

FISCAL IMPACT:

The net County cost increase for 2007 is $0.