The K–12 Public School Employee Health Benefits Report

THE K–12 PUBLIC SCHOOL EMPLOYEE HEALTH BENEFITS REPORT DESIGN PROPOSAL HCA 52-151 (12/2011) VOLUME 1 2 VOLUME 1 THE K–12 PUBLIC SCHOOL EMPLOYEE HEALTH BENEFITS REPORT Volume 1 – design proposal TABLE OF CONTENTS proJect OVerVieW ......................................................................................... 7 introduction ............................................................................................................................. 7 background ................................................................................................................................ 8 scope .............................................................................................................................................11 methodology ........................................................................................................................... 12 challenges and limitations .............................................................................................. 15 consolidated purchasing system scenarios ................................. 19 SCENARIO: consolidated purchasing system utiliZing the EXisting public employees’ benefits board program (PEBB PROGRAM) ...............19 OVerVieW .................................................................................................................................... 19 assumptions ............................................................................................................................ 19 initial analysis ........................................................................................................................ 20 adapted strategy .................................................................................................................. 26 summary of findings ........................................................................................................... 26 conclusion ............................................................................................................................... 28 recommendations ................................................................................................................. 28 SceNARIO: SEPARATE PUBLIC SCHOOL EMPLOYEES’ BENEFITS PURCHASING SYSTEM ................................................................................................30 OVERVIEW .................................................................................................................................... 30 DESIGN GOALS ............................................................................................................................ 30 DESIGN ASSUMPTIONS ............................................................................................................. 32 1. RISK POOL AND INSURANCE RISK ............................................................34 risk pool ...................................................................................................................... 34 insurance risk .......................................................................................................... 34 recommendation ..................................................................................................... 35 impacts to current K-12 public school system .......................................... 35 reQuired changes.................................................................................................... 36 continuing Work ..................................................................................................... 37 2. goVernance structure .......................................................................38 OVerVieW .................................................................................................................... 38 the options ............................................................................................................... 40 recommendation .................................................................................................... 43 impacts to current K-12 public school system ........................................ 44 reQuired statutory changes ........................................................................... 44 DESIGN PROPOSAL VOLUME 1 3 3. eligible entities and indiViduals......................................................45 OVerVieW ...................................................................................................................... 45 employer groups ..................................................................................................... 45 employee groups ..................................................................................................... 45 Employees ................................................................................................................... 46 recommendations ................................................................................................... 48 impacts to current K-12 public school system .......................................... 49 reQuired statutory changes ............................................................................. 49 4. benefit plan portfolio .........................................................................50 OVerVieW ...................................................................................................................... 50 proVision of coVered benefits .......................................................................... 50 types, numbers and relatiVE Value range of benefits plans ............. 52 benchmark plan ....................................................................................................... 53 recommendations ................................................................................................... 55 impacts to current K-12 public school system .......................................... 56 reQuired statutory changes ............................................................................. 56 5. reVenue sources and cost sharing responsibilities .............57 OVerVieW ...................................................................................................................... 57 reVenue sources ..................................................................................................... 57 premium structure ................................................................................................ 58 point of serVice cost obligation ..................................................................... 60 premium payment responsibility ...................................................................... 60 2010 mercer national employer surVey ........................................................ 60 recommendations ................................................................................................... 60 impacts to current K-12 public school system .......................................... 61 reQuired statutory changes ............................................................................. 62 6. participation reQuirements ...............................................................63 OVerVieW ...................................................................................................................... 63 basic reQuirement for participation .............................................................. 64 Voluntary non-participation EXception With terms .............................. 66 entity authoriZed to reQuest EXception to mandatory participation .............................................................................................................. 69 recommendation ..................................................................................................... 70 alternate approach ............................................................................................... 71 impacts to current K-12 public school system .......................................... 71 reQuired statutory changes ............................................................................. 72 4 VOLUME 1 THE K–12 PUBLIC SCHOOL EMPLOYEE HEALTH BENEFITS REPORT administratiVE saVings ........................................................................... 73 background .............................................................................................................................. 73 health care authority data research ..........................................................................74 other information AVailable about administratiVE costs ............................... 75 consolidated K-12 purchasing system ......................................................................... 76 timing of saVings ................................................................................................................... 76 attributes of the current K-12 system ............................................. 77 indiVidual district improVements .................................................................................. 77 health benefits in relation to other human resources decisions ................ 78 benefits consultants and contractors .................................................................... 78 year-round actiVities of benefit plan carriers to support employee informed choice ..................................................................................................................... 79 school employees are role models for students ................................................

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