It just doesn’t pay to provide quality health care.
Sacramento County supervisors learned that hard economic lesson Tuesday, when they grappled with Blue Shield’s decision to pull a type of health plan the county has offered employees the past five years. As a result, more than 130 active and retired county employees will lose a plan that appeals to those with special treatment issues or who need greater access to specialists.
Blue Shield actually wanted to cancel its “preferred provider organizations” plan last year due to dwindling enrollment figures, said David Devine, the county’s director of personnel services, but stuck around an extra 12 months as officials sought to replace the fully-insured PPO option through a different medical carrier.
Aetna, Blue Cross and UnitedHealthcare all declined, despite already having PPO coverage elsewhere in the state. The county’s new HMO carrier, Western Health Advantage, offers a PPO-style plan, but only to those who can’t access any “health maintenance organizations” coverage.
Blue Shield has insured fewer and fewer of the roughly 11,000 people working for the county. In 2008, 161 were enrolled in its PPO option, while 917 signed up for the company’s HMO plan. Cut to five years later and both figures are much lower: There are only 83 PPO enrollees this year, and only 347 signed up for HMOs.
“There’s just not enough people picking them up and they can’t spread the risk,” observed Supervisor Jimmie Yee.
Of the 83 active employees who have PPO plans, Devine said nearly half indicated their intent to transition to HMO coverage, now provided by Western Healthcare Advantage.
Concerned about the remainder, including some 50 retired employees with PPOs, Supervisor Don Nottoli pursued the idea of a self-funded PPO “for those that are undergoing treatments and have severe challenges, life-threatening in some cases, to give them some time to transition.”
“Time is not on people’s side in a number of cases,” he added. “The human side of this, I believe, outweighs the risk.”
Supervisors Roberta MacGlashan and Yee disagreed, knotting the board in a 2-2 vote. (Chairwoman Susan Peters was absent.)
They were joined by Devine and county executive Bradley Hudson, who said there were large hurdles to making a self-funded PPO work, even for just a yearlong transition period.
The county would need at least 95 employees to commit to a self-funded option to be able to purchase stop-loss reinsurance to protect against high-cost claims, such as if a stroke patient fell into a coma and required a lengthy hospital stay late in the calendar year. And if those claims fall outside the terms of the stop-loss contract or exceed actuarial estimates, the county would bare sole financial responsibility.
Best projections put the annual cost of a self-funded PPO at $1.87 million, with $967,000 of that coming from active employee and early-retiree contributions. The worst case cost estimates couldn’t be determined, but fears of spiraling medical expenses convinced the board to move forward with its reduced medical plan options.
Nottoli accepted the new reality, but didn’t like it.
“Our county employees are people that serve this county,” he said.
