BHR Budget Presentation Joint Committee on Appropriations F e b - PowerPoint PPT Presentation

BHR Budget Presentation Joint Committee on Appropriations F e b rua ry 12, 2019 L a urie R. Gill, Co mmissio ne r https:/ / bhr .sd.gov/ 1

Be a Better BHR 2019-2023 Strategic Plan Overview Our mission is to build, develop, and support a high-performing and healthy workforce. Our vision South Dakota: An Employer of Choice. Work Provide Acquire Engage Communication Together Talent Employees Goal Goal Goal Goal We will communicate in an We will build a collaborative We will create and retain an We will assist agencies to effective, transparent, and and communicative BHR engaged, healthy, and recruit and hire diverse, timely manner to the people culture. motivated workforce. qualified, and talented we serve. employees.  Enhance internal communication  Administer quality benefits  Sharpen external communication  Recruit quality  Lead by example  Engage Employees  Diversify communication channels  Hire wisely  Collaborate with agencies 2

Classification Employee Benefits & Compensation E lle n Ze lle r , Dir e c tor T om Ste c ke l, Dir e c tor He athe r Pe r r y, Dir e c tor Aar on Ar nold, Dir e c tor Employee Legal & Human & Organizational Resource Services Development 3

BHR Workforce F Y17 • Budg e te d F T E : 73.5 • Ac tua l F T E use d: 69.9 • Unutilize d F T E : 3.6 • T urno ve r: 9.7% F Y18 • Budg e te d F T E : 73.5 • Ac tua l F T E use d: 68.0 • Unutilize d F T E : 5.5 • T urno ve r: 7.1% 4

FY20 Governor’s Recommended Budget Ge ne r al F e de r al Othe r T otal Budge t Ite m F unds F unds F unds F unds F T E 284,699 - 6,855,381 7,140,080 73.5 T ota l Cha ng e - - - - - F o und o n pa g e 7 o f L RC Budg e t Brie fing 5

Employee Compensation 6

Compensation Philosophy Wha t the sta te pa ys fo r a nd why E sta b lishe s g uide line s fo r: o F le xib ility o Co mpe tive ne ss o L a b o r ma rke t o Ma inte na nc e o Affo rda b ility 7

Market Pricing Co mpe nsa tio n study e ve ry fo ur ye a rs E xa mine c o mpe nsa tio n c o mpe titive ne ss: o Pa y struc ture s o Ba se pa y o L e a ve b e ne fits o He a lth, de nta l, visio n, a nd life insura nc e o Re tire me nt 8

Market Comparison 2013 T otal Re mune r ation Study • 17.3% be low ma rke t 50 th pe rc e ntile fo r c a sh c o mpe nsa tio n • 11.6% a ve ra g e be low ma rke t 50 th pe rc e ntile fo r to ta l re mune ra tio n 2017 T otal Re mune r ation Study • 10.9% be low ma rke t 50 th pe rc e ntile fo r c a sh c o mpe nsa tio n • 8.2% a ve ra g e be low ma rke t 50 th pe rc e ntile fo r to ta l re mune ra tio n 9

Market Pricing Illustr atio n o f a pay r ange Artific ial Marke t Minimum Minimum Maximum Mar ke t Value 50 th Pe r 80 - 90% o f 110 - 125% o f c e ntile o f Curre ntly marke t value marke t value mar ke t data 69 - 78% o f marke t value 10

Location in Range E mplo ye e s unde r dir e c tio n o f Go ve r no r No e m (7,200 e mplo ye e s) Artific ial Marke t Mar ke t Value Minimum Minimum Maximum 48.7% 48.7% 2.6% 11

Retirement Eligible Employees 12.1% e mplo ye e s unde r the dire c tio n o f Go ve rno r No e m e lig ib le to re tire a s o f Ja nua ry 1, 2019 12

BHR Recruiting Efforts • Ne w sta ff re c ruite r po sitio n • Use o f spe c ia l pa y pla ns a nd inc e ntive s fo r ha rd-to -fill jo b s • E nha nc e d use o f so c ia l me dia a nd te c hno lo g y to re a c h a pplic a nts 13

FY20 Salary Policy Go ve rno r No e m ha s re c o mme nde d a 2.5% ma rke t a djustme nt fo r sta te e mplo ye e s. Ge ne r al F unds $9.6M F e de ra l F unds $4.6M Othe r F unds $11.7M T o ta l $25.9M 14

Employee Benefits 15

BHR & He a lth Go ve rno r’ s Ma na g e me nt Offic e Pa rtne rs DAK OT ACARE Se g a l Gro up CVS/ Ca re ma rk Sta ywe ll He a lth Audito rs Dia lo g Dire c t Pla n 16

Health Plan Overview • Se lf-funde d pla n • E mplo ye r a ssume s the risk • No pre miums pa id to a n insura nc e c o mpa ny • Se lf-funding a vo ids b uilt-in pro fit ma rg in • Allo ws fo r g re a te r fle xib ility in pla n de sig n 17

Health Plan Challenges • Co ntra c ting with ve ndo rs • Cla ims vo la tility • Risk mitig a tio n • I ntro o f ne w, ve ry e xpe nsive spe c ia lty drug s • Me dic a l infla tio n mo re tha n 2x g re a te r tha n o ve ra ll infla tio n 18

Health Plan Design Changes Y18 -I nc re a se d a nnua l de duc tib le in L o w De duc tib le F He a lth Pla n fro m $750 to $850; intro duc e d pre ve ntive fo rmula ry pre sc riptio n pla n Y19 -I nc re a se d de duc tib le s fo r b o th pla ns: L o w F De duc tib le He a lth Pla n fro m $850 to $1,000 a nd Hig h De duc tib le He a lth Pla n fro m $1,800 to $2,000 • I nc re a se d Out-o f-Po c ke t Ma ximum fo r the Hig h De duc tib le He a lth Pla n b y $900 to $5,000 • I nc re a se d the c o insura nc e fo r b ra nd na me drug s to 37.50% o n Hig h De duc tib le He a lth Pla n 19

Medical Cost Trends F Y15 F Y16 F Y17 F Y18 e vious ye ar 8.0% 7.6% 6.8% 7.7% 7.1% 6.0% 6.9% pr c e nt c hange ove r 4.0% 2.0% 0.0% 1.1% 1.2% -2.0% - 1.2% Pe r SD Me dic a l Na tio na l Me dic a l 20

Prescription Cost Trends 10.3% F Y18 14.0% F Y17 11.6% 8.7% National RX F Y16 SD RX 8.1% 4.7% F Y15 11.1% 5.8% 0% 5% 10% 15% 21

Health Plan Enrollment Total covered employees, pre-65 retirees, spouses, dependents, and COBRA participants on January 1, 2019* 30,000 26,980 25,000 20,000 15,000 12,923 9,810 10,000 4,247 5,000 0 E mplo ye e s Spo use s De pe nde nts T o ta l Me mb e rs *As o f Ja nua ry 1, 2019, the re we re 415 o pt o uts. 22

Health Plan Members by County 26 15 6 52 13 92 57 1,422 111 53 126 66 43 29 38 382 5 205 538 37 49 16 93 90 794 501 3,026 499 47 4,354 267 141 67 0 37 2,166 16 90 29 735 64 86 2,840 29 89 58 243 103 41 31 165 982 47 42 86 25 147 245 19 50 127 309 Cha rt inc lude s c o ve re d e mplo ye e s, pre -65 re tire e s, spo use s, de pe nde nts, a nd COBRA pa rtic ipa nts; the re a re 673 me mb e rs o f the he a lth pla n who live o utside So uth Da ko ta . 23

Total Health Plan Enrollment members as of January 1, 2019 L o w De duc tib le He a lth Pla n ($1,000 de duc tib le ) 36% Hig h De duc tib le He a lth Pla n 64% ($2,000 de duc tib le ) 24

Wellness Incentives Wellness Qualifications He a lth • Qua lify fo r L o w Sc re e ning De duc tib le He a lth Pla n o r Online • E a rn ma ximum He a lth c o ntrib utio n into Asse ssme nt He a lth Sa ving s Ac c o unt (HSA) o n Hig h De duc tib le He a lth Pla n We llne ss Points 25

Wellness Qualification Completions 70% 63% 60% 60% Pe rc e nt Comple tion 50% 45% 40% 30% 20% 10% 0% SD F Y17 SD F Y18 Staywe ll Book of Busine ss 26

Recommended FY20 Plan Changes L ow De duc tible He alth Plan: • I nc re a se pre sc riptio n de duc tib le b y $25 to $125 • I nc re a se pre sc riptio n o ut-o f-po c ke t ma x b y $250 to $1,250 27

Recommended FY20 Plan Changes Pr e sc r iption c o- pays for both he alth plans: • I nc re a se e a c h tie r b y $5 (30-da y supply), e xc luding g e ne ric s • I nc re a se c o pa y fo r b ra nd pre fe rre d drug s b y $12.50 to $125 (60-da y supply) • I nc re a se c o pa y fo r b ra nd no n-pre fe rre d drug s b y $12.50 to $175 (60-da y supply) 28

State Employee Health Plan Full Accrual Financial Statement ONE-TIME RECOMMENDED PLAN INCREASE OF NO PLAN CHANGES AND RATE $863.50 CHANGES INCREASE $1,601 $8,470+$863.50 Employer Rate $9,333.50 $8,470 $8,470 $10,071 Actual Estimated Estimated Estimated FY 2018 FY 2019 FY 2020 FY 2020 Revenue Contributions to Plan Employer Paid $122,198,558 $110,624,112 $110,617,678 $129,784,795 COBRA and Employee Paid for Dependents $9,807,644 $9,590,969 $9,574,944 $9,574,944 Interest Revenue $376,651 $300,000 $300,000 $300,000 Refund of Prior Years Expenses* $4,848,037 $4,500,000 $4,500,000 $4,500,000 Total Revenue $137,230,890 $125,015,081 $124,992,622 $144,159,739 Expenses Claims $115,630,759 $118,664,421 $126,042,733 $125,721,733 Employer Life Claims $7,500 $3,750 $3,750 $3,750 Administration $17,823,957 $18,132,357 $18,424,694 $18,424,694 Total Expenses $133,462,216 $136,800,528 $144,471,177 $144,150,177 Current Year Over/(Underrecovery) $3,768,674 ($11,785,447) ($19,478,555) $9,562 Prior Year Over/(Underrecovery) $12,059,698 $15,828,372 $4,042,925 $4,042,925 Cumulative Over/(Underrecovery)**/Reserve Level $15,828,372 $4,042,925 ($15,435,630) $4,052,487 IBNP/Allowable Reserve Level $12,239,800 $16,441,700 $17,315,900 $17,315,900 (Incurred But Not Paid included in claims amount) *Includes subrogation, adjustment of prior year claims and pharmacy rebates. **Cumulative Over/(Underrecovery) is the analysis of the revenues and expenses since the beginning of the program. 29 When this line is zero we have collected enough to pay all liabilities for this program that would be paid out in the next fiscal year. Any amount above zero is considered reserve.