Financial Review Financial Review Self-Insured Employee Benefits

							          Financial Review:
Self-Insured Employee Benefits Plan
              July 14, 2009




                                      1
                         Presentation Objective:

      To provide a financial review of the employee self-
        insured medical/pharmacy plan by looking at

              The past – the plan’s performance over time.
              The present – the current trust fund status.
              The future – performance projections.




Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only

                                                                                                     2
What does “self-insured” mean?

      Claims costs are paid directly out of the BPS trust
       fund.
      Cigna, Blue Cross Blue Shield of Florida, and
       Walgreens Health Initiatives provide plan
       administration only.
      Stop-loss insurance protects the plan from
       catastrophic losses.


Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only

                                                                                                 3
                         The Self-Insured Model
   Sources of Revenue                                   Sources of Spending
   Board Contributions                                  Medical Claims
   Employee Contributions                               Pharmacy Claims
   Interest Income                                      Behavioral/EAP Costs
   Other sources                                        Administrative Fees




                           Health Care Trust Fund
Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only
                                                                                                 4
 The Past

        The plan was established in 2000.
        Initially, it operated in the red.
        The Board loaned the trust $14M over three years.
        With loans, plus decent claims experience and a
           sound premium structure, trust reserves grew to
           very healthy levels.




Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only
 The Past (cont.)
     The Board used reserves to help employees:
        Sponsored a “premium holiday”
        Has not increased premiums since 2005
        Has kept the same plan design since 2000
        Reduced PPO premiums in 2007
        Provided care management and wellness activities


           Over time, the Board also called in the prior loans.


           Meanwhile, healthcare costs grew 9 percent annually,
                  compounded.
Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only
The Present
         Trust fund reserves at 5/31/09 = $10 million.
         Approximate “burn rate” of reserves is $600,000/mo.
         Claims costs continue to rise at about 9 percent annually.
         Government mandates are impacting costs.
         Increased occurrence of high-cost individual claims.




Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only

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The Future
   Projected year-end reserves of approximately $5 million.
   2010 revenue estimated at $58 million.
   2010 expenses projected at $75 million.
   This leaves a gap of approximately $12 million.
   At our current trajectory, trust reserves will be depleted
      during 2010.




Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only

                                                                                                 9
In Summary
   There is a financial cliff in 2010 over which we must avoid
    falling.
   Maintaining a viable self-insured medical/pharmacy plan
    best serves our employees.
   To accomplish this, by whatever means, plan costs must go
    down, trust revenues must go up, or some combination of
    the two.



Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only

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                                 Questions and
                                  Comments…




Financial Review: Self-Insured Employee Benefits Plan   Information For Presentation Purposes Only


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