Although Sarasota County’s employee medical expenses have been trending below national averages, County Commission hopes to see them even go lower

In 10 years, costs have risen close to $15 million, Commissioner Moran points out

A chart shows increases in county medical expenses over the past several years. Image courtesy Sarasota County

Although Sarasota County’s employee medical expenses have risen less in comparison with national trends, Commissioner Michael Moran has cautioned staff that “Sarasota, Fl., is very, very different from New York, California or [Los Angeles].”

From 2007 to 2016, the county its claims payments climb about $14.7 million, Moran pointed out during an Oct. 11 discussion the County Commission conducted with Human Resources Department staff. “We need to drill down why, why,” he added, especially since the county has 194 fewer employees than it did in 2007.

“I’m not suggesting you can control [the expenses],” Moran told Chris Louria, director of the Human Resources Department, and Nancy Paradise, manager of employee health and benefits. Nonetheless, Moran indicated, the more county staff can do to contain those costs, the better for the overall budget situation. (See the related story in this issue.)

Given his expertise on health benefits, as a result of his professional background, Moran has pressed staff over the past several months about the expenses the county incurs in covering its employees and retirees.

From 2010 to 2016, Paradise pointed out during the Oct. 11 workshop, the average annual increase in county medical expenses went up about 5.1%, or approximately $1,950,000 per year. Price Waterhouse Cooper, which produces reports on national health care cost trends, has shown that the average rise per year across the country for the same period was 7.4%, Paradise added.

Although the county’s 2017 fiscal year expenditures have not been finalized, she continued, the total medical expense is anticipated to be $47,070,000. That would mark a 5.6% climb from the FY16 figure of $44.58 million.

A chart shows the history of medical expenses per covered employee. Image courtesy Sarasota County

For FY18, Louria pointed out, the projected overall total is $54.9 million, with $46.6 million of that for claims, $2,590,000 for administrative fees, $680,000 for the Wellness Program and $510,000 for the personnel handling benefits, among other line items.

Deputy County Administrator Steve Botelho, who also is the county’s chief financial management official, noted that approximately $22.2 million of the county’s FY18 expenses will come from the county’s General Fund, which is made up mostly of property tax revenue.

From 2010 to 2017, Paradise said, employees’ health care costs have risen an average of 4% a year. Yet, another national study has shown that the figure for the United States was 5.7% from 2010 to 2016.

The cost per employee in Sarasota county was expected to be $13,069 in the 2017 fiscal year, having risen 2.9% from the 2016 fiscal year, a chart showed.

The median age of county workers is 49, Louria added, compared to 42.2 for the national workforce, based on 2016 data from the Bureau of Labor Statistics.

Altogether, 3,206 active county employees were covered as of Sept. 1, another chart noted. Of those, 2,003 were in departments under the purview of the County Commission, Louria said. The next largest group — 848 — comprised employees of the Sarasota County Sheriff’s Office, according to the slide Louria showed the board.

In the latest survey of county employees, Paradise said, staff found that the value of health benefits was ranked 4.34 on a 5.0 scale. That is an important factor, she added, in explaining why the county was able to keep its 12-month turnover rate — through June 2017 — at 12.3%, compared to the 18.2% national average in 2016.

Additionally, the county in FY17 was covering 282 retirees under the age of 65 and 37 that age or older, Paradise said. The net cost to the county for their expenses from FY11 through FY16 was $8.7 million, a chart showed.

“Most of our retirees leave our plans once they reach 65,” Paradise pointed out.

Self-insurance and plans

Human Resources Director Christopher J. Louria. Image courtesy Sarasota County

The county is self-insured, Louria explained. “We pay for each out-of-pocket claim as they are incurred,” he added, instead of providing a fixed premium to an insurance carrier.

It is quite common for an organization the size of Sarasota County Government to be self-insured, Louria noted. A survey conducted of Florida counties in June found that 95% of the 46 respondents with more than 1,000 employees were self-insured, he said. When Sarasota County staff followed up with the counties that did not participate in the survey, he continued, staff learned that all seven of those with more than 1,000 employees also were self-insured.

One advantage of being self-insured, Louria noted, is the fact that the county achieves “significant savings,” as it would be expected to pay 10% more per year if it were contracting with an insurance company. Additionally, he told the board, “We have the ability to control costs and data.”

Additionally, Louria said, “We realized over $180,000 in interest income” from the fund set aside to pay health benefits.

Paradise explained that the county offers two choices for coverage to its employees: an Aetna point-of-service (POS) plan and a consumer-driven health plan. (A point-of-service plan is a hybrid of HMO and PPO plans, health guides explain.)

In the consumer-driven plan, she continued, the premiums are lower, but the employees pay more for services. That plan does not include co-pays for visits to doctors’ offices or for lab work, she added. The people on that plan pay 100% of their costs for service “until they have met the deductible and out-of-pocket maximum each year,” she said.

However, Paradise told the board, the county provides a Health Reimbursement Account for employees on that plan; it pays $500 for a single person and $1,000 for those with family coverage. If workers do not need that money, she noted, it rolls over and accumulates.

Only 19% of county employees are covered by the consumer-driven health plan, Paradise said. Staff has learned that the majority of county workers “prefer the security of paying a fixed co-pay,” even if that means higher premiums.

A graphic shows the breakdown of expected expenses for the 2018 fiscal year, which began Oct. 1. Image courtesy Sarasota County

Paradise added that under state law, the county must maintain a reserve fund reflecting 60 days of projected claims. For FY16, she said, the county’s total in that reserve was $7,512,991.

“We are consistently reviewing our claims and our program performance,” Paradise continued. Some monitoring takes place weekly, she said, while other efforts — such as reviews of reports regarding paid claims — occur every month.

Additionally, the county has implemented a number of initiatives in an effort to reduce health care expenses. Among them, Paradise said, are the Diabetes Education Lifestyle Improvement — DELI — program and on-site cardiovascular screening. The latter, she added, has led to employees reporting changes in lifestyle and follow-up consultations with their physicians, which have lead to their improved health.

She attested to the value of a third initiative: telemedicine. She was able to speak “to a licensed Florida doctor at 5 a.m.” one day and pick up a prescription on the way to work, she said, instead of having to leave her job to see her primary care doctor.

Year-to-date for 2017, she told the board, the rate of return on use of telemedicine is nearly $28,000.

A graphic shows the breakdown of covered employees by department, along with retirees, and the number on each county benefits plan. Image courtesy Sarasota County

At the conclusion of the presentation, Commissioner Moran thanked Louria and Paradise. “I know I’ve come in super intense on this issue,” he said, “and you’ve completely stepped up and just done fantastic work on this.”

Still, this is just a start, Moran added. Going forward, the design of the county’s health care plans will be “extremely important” in helping contain costs, he pointed out, as plans can motivate behavior.

Commissioner Charles Hines also talked of the value of the discussion. “Every year, we need to have this presentation.” That would give the board members extra confidence, Hines said, that staff is doing all it can to control the county’s health benefit costs.