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 Kaiser

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 Kaiser 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

99%

99%

Total percentage of enrolled employees

47%

49%

BACKGROUND:

The Kaiser plan currently covers 2,495 employees and 853 retirees.

Kaiser is the sole “closed panel” HMO option available to employers. It also consistently provides the lowest premium cost as well as the lowest out-of-pocket costs for plan participants.

DISCUSSION:

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

• Offer the lowest cost premium for employer-provided health coverage,

• Provide a closed panel network of physicians that is not offered by any other health plan and

• Provide a network that, if changed, would cause 100% patient disruption because no new plan would be able to offer coverage through the Kaiser primary and specialist physicians.

The increase in Kaiser’s premium for the County plan for active employees and retirees under age 65 is 11.18% compared to the increase provided to CalPERS active employees which is 11.6%.

The premium increase for retirees age 65 and older is 15%.

The County continues to work with Kaiser on risk reduction programs. In addition to the PHASE (Preventing Heart Attacks and Strokes Everyday) Program Kaiser is preparing a report identifying new initiatives the County and Kaiser can jointly implement in 2007.

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 2006 is an estimated $2,168,685. This cost has already been included in the FY 06-07 budget.