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3 <br />of 3% effective January 2010. Because employees' and retirees' utilization of health care in <br />2009 was less than the previous year, the NCACC based the renewal on the improved <br />performance of the most recent year. The final renewal rate is well below the average NCACC <br />renewal of 10.7%. <br />The first half of 2009 showed several significant improvements that directly led to the low <br />renewal. Key changes to utilization by employees/retirees that impacted the 3% renewal <br />included: <br />Increased use of the mail order prescription service <br />Elimination of diabetes as a top 10 diagnosis codes (it was replaced by bronchitis) <br />A drop of 30% in Emergency Room usage for January-June 2009 compared to January- <br />June 2008 <br />During a year when employees will not receive a COLA or in-range increase, are not receiving a <br />County 401(k) contribution (except for law enforcement officers) and are facing increased <br />workloads due to the retirement incentive and hiring freeze, staff is pleased that reduced <br />utilization resulted in an increase below the budgeted amount. Staff has developed several <br />renewal options, each of which enhances current employee benefits: 1) The County continues <br />to pay the full cost of employee coverage, with enhancements to both plans; 2) The County <br />continues to pay the full cost of employee coverage, with enhancements to both plans; AND <br />employees are encouraged to complete a Health Risk Assessment. Attachment 2 compares <br />the current premiums with the renewal. <br />Option 1: Enhanced Renewal: The County pays the employee premium as in previous years, <br />for both plans. Both HMO and PPO plan designs are renewed at the same level with 2 <br />enhancements. <br />a) Improved prescription coverage to provide a $0 co-pay for generics, whether purchased <br />at retail (30 day supply) or mail order (90 day supply). The current co-pays are $5 fora 30 day <br />supply and $13 for a 90-day supply. This benefit will encourage employees to ask providers for <br />lower cost yet effective generic medications, thus reducing the cost to employees and Orange <br />County. <br />b) An increase in the number of physical and occupational therapy visits per year from 20 to <br />30 with no increase in premium. <br />Option 2: Enhanced Renewal with Incentive: The benefits of both HMO and PPO are <br />enhanced as above; however, each employee contributes a $10.00 health insurance premium <br />each month. By completing the confidential Health Risk Assessment (HRA), this premium will <br />be waived. Option 2 rewards employees for healthy behaviors and enables employees to <br />achieve a feature they highly value: no employee cost for health insurance. <br />More importantly, the HRA informs employees about their health risks and provides guidance <br />on how to become healthier. Healthier employees have a higher quality of life, and lower health <br />care costs aid in reducing future premiums. Aggregate results from the confidential HRA can <br />be used to design additional wellness programs and to further tailor health insurance coverage <br />to best meet the needs of employees. Employees continue to have very competitive health <br />benefits but become more responsible for their health. Attachment 3 provides a more complete <br />description of Option 2. <br />The Manager recommends Option 2. <br />3 <br />