PATHS TO SOLVENCY II

Transcription

1 PATHS TO SOLVENCY II HEALTHCARE SPEND & PENSION SOLVENCY June 19, 2012 Bridget Gainer Cook County Commissioner Tenth District Chairman, Pension Subcommittee

2 Cook County Healthcare Spend The annual cost to Cook County for employee healthcare is $13,964 per employee Cook County Healthcare Spend 2011 Employee Contribution $13,964 There are 22,960 County employees and 32,454 dependents receiving healthcare for a total cost to the County of $304.4MM. $13, The average County employee contributes $ annually, or 5.05%, for a total cost to employees of $16.2MM. $706.00

3 Per Employee Healthcare Spend: Public Sectors $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 US Private Sector 2011* $0 Per Employee Cost $9,792 City of Boston 2009 $11,044 Cook County 2011 $13,964 City of Chicago 2011 $12,000 Philadelphia 2009 $12,594 *National Study, October 2011

4 Employee Contributions Towards Healthcare Spend: Private & Public Sectors 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2011 Cook County 5.05% 2011 S tate of IL HM O 11.74% 2011 S tate of IL P P O 12.55% 2011 Kaiser S tudy, P ublic & P rivate; S ingle 18.00% 2010 HHS, US P rivate S ector, S ingle 21.80% 2012 Hewitt S tudy, P ublic & P rivate 22% 2010 HHS, US P rivate S ector, Family 23% 2011 Kaiser S tudy, P ublic & P rivate; Family E mployee Cost S hare 28%

5 Healthcare Exchange & Paths to Pension Solvency Cook County spends $304.4MM on healthcare benefits and $195 million in retirement benefits annually. Thus of the $499.4MM in total employee benefits, 61% goes towards healthcare and 39% to retirement. The introduction of a Healthcare Exchange can reduce the County s overall healthcare costs and free up revenue for increased contributions to the County pension fund. The County can also incorporate current retirees into a County healthcare exchange and take over the payment of retiree healthcare costs. The transfer of retiree medical costs to the County combined with a reduced COLA for retirees and current employees, plus a 1% increase in employee contributions, will result in a funded status that improves to 88.1% by 2050.

6 Pension Fund and County Healthcare Costs Pension Fund Cook County 7,925 members with 2,409 dependents Total Cost: $46.9m Cost per member under 65: $16,075 Cost per member over 65: $7,128 Retiree Cont: 45-50% of premium, total $35.6 Total Healthcare Cost: $82.5MM 22,960 members with 32,454 dependents Total Cost: $304.4MM Cost per member:$13,964 Avg. EE cont.: $706 (5.05%), total $16.2MM Total Healthcare Cost: $320.6MM Total Members: 65,748 Total Cost: $403.1MM Total Cost (less employee/retiree cont.): $351.3MM Pension Funded Status without HC liability in 2011: 62.5% Pension Funded Status without HC, a reduced COLA and a 1% increase in EE contributions in 2050 : 88.1%

7 Structure of Healthcare Exchange Plan All active employees and retirees begin participating in a private healthcare exchange where all participating insurers offer a minimum level of coverage approved through negotiations with employee organizations. The County pays between $10,000-$12,000 in premium costs for active employees: Active Employees 22,960 $10,000 per employee = $229,600,000 $12,000 per employee = $275,520,000 The County pays between $3,500 and $5,550 in premium costs for all Medicare eligible retirees and $8,500-$10,500 for non-medicare eligible retirees: Medicare Eligible Retirees: 5,291 $3,500 per retiree = $18,518,500 $5,500 per retiree = $29,100,500 Non-Medicare Eligible Retirees: 2,422 $8,500 per retiree = $20,587,000 $10,500 per retiree = $25,431,000 The total County spend in a defined contribution medical exchange healthcare system for all current employees and retirees would be $268.7MM to $330.1MM depending on the subsidy amount per member. A County healthcare exchange can save between $82 to $21 million.

8 Healthcare Exchange and Pension Reform Moving the retiree healthcare obligation from the fund to the County will reduce the pension funds total liability by $1.68 billion. The removal of the retiree healthcare obligation plus a COLA reduction for retirees and current employees to 3% simple or half of CPI and will decrease the overall pension fund liabilities by $2.95 billion. These changes plus a 1% increase in employee contributions and a 1.54% in County contributions will increase the Pension Funded Status to 88.1% by 2050.

9 Pension Reform Proposal Reduce COLA for Current Employees and Retirees, Increase Employee Contributions by 1% (County Contributions Increase by 1.54%) and move the payment of Retiree Healthcare to the County Operating Budget % Cook Count Pension Funded Status 80.00% 60.00% 40.00% 20.00% COLA reduced for all, 1% EE cont. increase, and transfer of retiree healthcare costs to County Do Nothing 0.00% % %

10 Sources Annual Healthcare Contract as approved by the Cook County Board on September 7, Additional Healthcare information provided by Lisa Walik, Director of Cook County Risk Management. Pew Center on the States, Quiet No More: Philadelphia Confronts the Cost of Employee Benefits. June Hewitt, Average Cost of U.S. Health Coverage per Employee. October Commission on Government Forecasting & Accountability, Liabilities of the State Employees Group Health Insurance Program Fiscal Year March Hewitt Health Value Initiative database HHS; Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. Table II.C.3(2010) Percent of total premiums contributed by employees enrolled in single coverage at private-sector establishments that offer health insurance by firm size and State: United States, HHS; Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. Table II.D.3(2010) Percent of total premiums contributed by employees enrolled in family coverage at private-sector establishments that offer health insurance by firm size and State: United States,