How ORS develops its retiree health care plans:
The Health Initiative Strategic Plan
Every year since the early `90s, ORS staff, consultants, retiree organizations, and board members have been part of the Health Initiative Strategic Planning Process. Through this process, we demonstrate both our commitment to providing a quality plan to our members while remaining fiscally responsible for the future of our retirement system.
The Strategic Planning Process has allowed us to offer quality health care plans while saving the school employers who fund the retirement system more than $1.2 billion since it began. From 2001-10, it kept employer contribution increases to 2.3 percent per year on average when national increases were at six percent per year. By keeping the costs down for the plan overall, we've been able to keep member deductibles and coinsurances from rising as much as they would have otherwise.
What is the Health Initiative Strategic Plan and Process?
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It's a process that helps us ensure a quality health care plan for public school retirees that is affordable to both members and the schools. The goal of this process is to keep the actual costs of the health care plan in line with the rate of regular inflation, rather than the rate of health care inflation. We call this the cost goal. ORS staff works to generate ideas, look at what other systems are doing, review federal programs, and gather practical ideas to consider.
ORS staff and consultants look for ideas in three categories: cost reduction, cost avoidance, and cost sharing. Cost reduction generally refers to initiatives that reduce the system's cost without affecting member costs. Cost avoidance is any program that will ultimately avoid or reduce member's need to use services, or shift the costs to another party, often through coordination of benefits. Cost sharing includes routine updates to deductibles, out-of-pocket maximums, prescription drug coverage, and other benefits, to maintain the balance between payments by the members and the system. This can also encourage more prudent customer behavior and lower total plan cost.
Federal dollars have been a big help in meeting our past cost goals. Programs like Medicare Advantage and the Early Retiree Reimbursement Program (ERRP) have provided a great way to meet our cost goal, with virtually no increased costs to members. As federal subsidies get reduced, however, ORS staff and our consultants and vendor partners are working together on ideas that use the three approaches to meet the cost goal. These ideas come from collaborative strategic planning, national health care reform concepts, or from other health plans.
Once the following year's initiative package is drafted, ORS staff and our consultants bring it to the public school retirement board for review. Public comment forums are held where retiree organization representatives give feedback on the proposed package. After all comments are in and have been considered, the package is presented to the board for approval. Once approved, we finalize the details and contracts with our vendors. We then begin communicating the plan updates to members in the fall for the following year.
Have we met our cost goals?Yes. The plan for 2014 was approved by the Public School Employees board on July 11, 2013. This year's plan is actually a two-year package, and is expected to save the system and retirees significant funds over the next two years.