The Empire Plan is a unique health insurance plan designed especially for public employees in New York State. Empire Plan benefits include inpatient and outpatient hospital coverage, medical/surgical coverage, Centers of Excellence for transplants, infertility and cancer, home care services, equipment and supplies, mental health and substance abuse coverage and prescription drug coverage.
GEORGE E. PATAKI
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
DANIEL E. WALL
COMMISSIONER
JOHN F. BARR
EXECUTIVE DEPUTY COMMISSIONER
PA06-21
TO: Participating Agency Health Benefit Administrators
FROM: Robert W. DuBois, Director of the Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: August 25, 2006
Enclosed are the Second Quarter Empire Plan Experience Report for 2006 and the cover letter to the Chief Executive Officers. This report presents the projected 2006 Empire Plan experience and the projected 2007 premium rates.
August 25 , 2006
Dear Chief Executive Officer:
Attached is the Empire Plan Second Quarter Experience Report for 2006. This report presents the projected 2006 Empire Plan experience, based on claims paid through June 30, 2006, and the projected 2007 premium rates.
For the 2006 Plan Year, the Empire Plan carriers project a net dividend of $182.5 million, 3.8% of premium. This report presents the basis for these projections and future reports will include revisions based on additional claims experience.
The projected 2007 premium rates are presented in Exhibit III and reflect a “best estimated” net premium increase of 10.1%. A range of the potential 2007 premium rate increase is included for your budget development considerations.
I hope this report is informative. If you have any questions, comments or suggestions, please don’t hesitate to contact me.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
EMPIRE PLAN EXPERIENCE REPORT
APRIL – JUNE 2006
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
Daniel E. Wall
President, New York State Civil Service Commission
Exhibits
- Projected 2006 Empire Plan Experience
- Projected 2007 PA Premium Rates
- Empire Plan PA 5-Tier Group Rates 1996-2007
- Empire Plan PA 2-Tier Group Rates 1996-2007
NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
2nd QUARTER REPORT
PROJECTED 2006 EMPIRE PLAN EXPERIENCE
The Empire Plan carriers project a composite dividend of $182.5 million (3.8% of premium), or $85.6 million more than the margin loaded in the 2006 rates. The 2006 annual experience projected by the insurance carriers is reported in Exhibit I.
The projection is based on only six months of 2006 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid as well as the current 2006 trend as compared to the trend assumed during the 2006 rate development:
| % of Paid Claims to Projected Incurred Claims |
Projected 2006 Trend | |||
| 2005 | 2006 | @ Renewal | @ 1st Quarter | |
|---|---|---|---|---|
| Blue Cross | 97.2% | 36.8% | 13.8% | 13.4% |
| UnitedHealthcare | 99.3% | 39.6% | 10.3% | 13.5% |
| GHI | 98.0% | 36.0% | 4.5% | 4.7% |
| Blue Cross Rx | 99.8% | 43.9% | 16.2% | 13.0% |
The 2006 projected dividend for each carrier as compared to the margin level used in the 2006 premium development is as follows:
| Margin | 2006 Projected Dividend/(Loss) | Increase/(Decrease) | |
|---|---|---|---|
| Blue Cross | $26,222,000 | $101,461,000 | $75,239,000 |
| UnitedHealthcare | $47,285,000 | $2,680,000 | ($44,605,000) |
| GHI | $2,628,000 | $5,789,000 | $3,161,000 |
| Blue Cross Rx | $20,771,000 | $72,589,000 | $5,818,000 |
| Total | $96,906,000 | $182,519,000 | $85,613,000 |
The increase in the dividend projection is primarily attributable to the decrease in the 2005 claims base projected during the development of the 2006 rates for the prescription drug and hospital programs coupled with an increase in the projected pharma revenue for the prescription drug program. UHC projects a moderate increase in the 2006 claims based on an increase in recent medical utilization which UHC projects to continue throughout 2006. For GHI, the increase in the dividend projection is primarily attributable to the decrease in their projected 2005 claims base.
2007 PROJECTED PREMIUM RATES
Exhibit II presents the projected 2007 Empire Plan gross and net premium rates assuming the application of $220.8 million in dividend to all payors. In aggregate, the Empire Plan gross premium is projected to increase approximately 10.8% while the net premium is projected to increase approximately 10.1%.
A range of projected gross and net premium rate increase is also included (6.8% - 13.4%). Carrier rate projections made at this time of the year have been historically conservative with the rates ultimately approved and implemented being less than the projections contained in 2nd Quarter Reports. Each agency should assess its budgetary environment in using the enclosed projections.
i??i??i??i??i??i??i??i??i??i??i?? Exhibit III presents the individual and family rate history for the Core Plus Medical and Psychiatric Enhancement option based on the 5-tier Empire Plan billing rate history in effect since January 1, 1996. Exhibit IV presents, for illustrative purposes only, the two-tier rate history from 1996 to 2007.
2006 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
| EMPIRE BLUE CROSS | UnitedHealthcare MEDICAL Core | UnitedHealthcare MEDICAL NY Enhancement | UnitedHealthcare MEDICAL PA Enhancement | UnitedHealthcare MEDICAL Combined | GHI MHSA Core | GHI MHSA NY Enhancement | GHI MHSA PA Enhancement | GHI MHSA Combined | CIGNA | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) Premium (1) | 1,500,075 | 1,409,120 | 186,944 | 174,300 | 1,770,364 | 77,329 | 10,588 | 7,669 | 95,586 | 1,412,896 | 4,778,921 |
| (B) Incurred Claims (2) | 1,296,997 | 1,319,675 | 160,838 | 139,215 | 1,619,728 | 59,333 | 8,418 | 6,515 | 74,266 | 1,265,022 | 4,256,013 |
| (C) Administrative Expense (3) | 101,617 | 125,451 | 12,012 | 10,493 | 147,956 | 12,546 | 1,725 | 1,260 | 15,531 | 75,285 | 340,389 |
| (D) Gain/(Loss) (A-B-C) | 101,461 | (36,006) | 14,094 | 24,592 | 2,680 | 5,450 | 445 | (106) | 5,789 | 72,589 | 182,519 |
(1) Earned Premium - Premium which pays for coverage for the period reported (accrual basis).
(2) Incurred Claims - Represents the cost of covered services provided during the period reported by the insurance company (accrual basis).
(3) Administrative Expenses - All charges by the insurance carrier other than for the payment of claims. Includes carrier's cost to administer the program, interest charges, and other retention.
Source: Carriers 2006 2nd Quarter Reports
Empire Plan
Participating Agency Premium Rates
Comparison of 2006 and Projected 2007 Rates
CORE ONLY
Plan Prime
|
Gross Rates(1) |
Gross Rates(1) |
Gross Rates(1) |
Net Rates(2) |
Net Rates(2) |
Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual Optimistic | 490.93 | 531.53 | 8.3 | 472.92 | 507.07 | 7.2 |
| Individual Best Estimate | 490.93 | 546.47 | 11.3 | 472.92 | 522.01 | 10.4 |
| Individual Pessimistic | 490.93 | 561.64 | 14.4 | 472.92 | 537.18 | 13.6 |
| Family Optimistic | 1,039.70 | 1,125.28 | 8.2 | 1,001.94 | 1,073.64 | 7.2 |
| Family Best Estimate | 1,039.70 | 1,156.77 | 11.3 | 1,001.94 | 1,105.13 | 10.3 |
| Family Pessimistic | 1,039.70 | 1,188.77 | 14.3 | 1,001.94 | 1,137.13 | 13.5 |
Mediprime
|
Gross Rates(1) |
Gross Rates(1) |
Gross Rates(1) |
Net Rates(2) |
Net Rates(2) |
Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual Optimistic | 344.41 | 375.16 | 8.9 | 323.97 | 352.89 | 8.9 |
| Individual Best Estimate | 344.41 | 383.78 | 11.4 | 323.97 | 361.51 | 11.6 |
| Individual Pessimistic | 344.41 | 392.14 | 13.9 | 323.97 | 369.87 | 14.2 |
| Family-1 Optimistic | 893.19 | 968.92 | 8.5 | 852.99 | 919.44 | 7.8 |
| Family-1 Best Estimate | 893.19 | 994.07 | 11.3 | 852.99 | 944.59 | 10.7 |
| Family-1 Pessimistic | 893.19 | 1,019.29 | 14.1 | 852.99 | 969.81 | 13.7 |
| Family-2 Optimistic | 746.68 | 812.57 | 8.8 | 704.04 | 765.27 | 8.7 |
| Family-2 Best Estimate | 746.68 | 831.38 | 11.3 | 704.04 | 784.08 | 11.4 |
| Family-2 Pessimistic | 746.68 | 849.80 | 13.8 | 704.04 | 802.50 | 14.0 |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates.
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS
Plan Prime
|
Gross Rates(1) |
Gross Rates(1) |
Gross Rates(1) |
Net Rates(2) |
Net Rates(2) |
Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual Optimistic | 547.86 | 588.13 | 7.4 | 529.76 | 563.59 | 6.4 |
| Individual Best Estimate | 547.86 | 606.06 | 10.6 | 529.76 | 581.52 | 9.8 |
| Individual Pessimistic | 547.86 | 624.20 | 13.9 | 529.76 | 599.66 | 13.2 |
| Family Optimistic | 1,164.16 | 1,249.04 | 7.3 | 1,126.19 | 1,197.23 | 6.3 |
| Family Best Estimate | 1,164.16 | 1,287.04 | 10.6 | 1,126.19 | 1,235.23 | 9.7 |
| Family Pessimistic | 1,164.16 | 1,325.55 | 13.9 | 1,126.19 | 1,273.74 | 13.1 |
Mediprime
|
Gross Rates(1) |
Gross Rates(1) |
Gross Rates(1) |
Net Rates(2) |
Net Rates(2) |
Net Rates(2) | |
|---|---|---|---|---|---|---|
| Individual Optimistic | 359.35 | 390.00 | 8.5 | 338.88 | 367.70 | 8.5 |
| Individual Best Estimate | 359.35 | 399.39 | 11.1 | 338.88 | 377.09 | 11.3 |
| Individual Pessimistic | 359.35 | 408.54 | 13.7 | 338.88 | 386.24 | 14.0 |
| Family-1 Optimistic | 975.66 | 1,050.91 | 7.7 | 935.32 | 1,001.31 | 7.1 |
| Family-1 Best Estimate | 975.66 | 1,080.38 | 10.7 | 935.32 | 1,030.78 | 10.2 |
| Family-1 Pessimistic | 975.66 | 1,109.91 | 13.8 | 935.32 | 1,060.31 | 13.4 |
| Family-2 Optimistic | 787.16 | 852.80 | 8.3 | 744.45 | 805.44 | 8.2 |
| Family-2 Best Estimate | 787.16 | 873.73 | 11.0 | 744.45 | 826.37 | 11.0 |
| Family-2 Pessimistic | 787.16 | 894.26 | 13.6 | 744.45 | 846.90 | 13.8 |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates.
EMPIRE PLAN
PA 5 TIER GROUP RATES
1996-2007 Monthly Rates
Core Plus Medical & Psychiatric Enhancements
Individual Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 234.59 | 9.3% | 207.66 | 7.3% |
| 1997 | 261.80 | 11.6% | 240.22 | 15.7% |
| 1998 | 267.89 | 2.3% | 246.07 | 2.4% |
| 1999 | 279.56 | 4.4% | 261.18 | 6.1% |
| 2000 | 294.94 | 5.5% | 286.53 | 9.7% |
| 2001 | 325.23 | 10.3% | 314.26 | 9.7% |
| 2002 | 353.81 | 8.8% | 344.66 | 9.7% |
| 2003 | 400.00 | 13.1% | 384.89 | 11.7% |
| 2004 | 448.00 | 12.0% | 438.15 | 13.8% |
| 2005 | 490.41 | 9.5% | 478.49 | 9.2% |
| 2006 | 547.86 | 11.7% | 529.76 | 10.7% |
| 2007 Projected | 608.06 | 10.6% | 581.52 | 9.8% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 9.1% | 9.7% |
| Most Recent 5 Years | 11.4% | 11.0% |
Family Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 521.96 | 7.2% | 459.16 | 4.3% |
| 1997 | 537.96 | 3.1% | 489.22 | 6.5% |
| 1998 | 552.00 | 2.6% | 503.78 | 3.0% |
| 1999 | 573.33 | 3.9% | 531.89 | 5.6% |
| 2000 | 607.33 | 5.9% | 590.16 | 11.0% |
| 2001 | 673.67 | 10.9% | 651.09 | 10.3% |
| 2002 | 742.98 | 10.3% | 723.97 | 11.2% |
| 2003 | 842.38 | 13.4% | 811.41 | 12.1% |
| 2004 | 945.29 | 12.2% | 924.74 | 14.0% |
| 2005 | 1,038.64 | 9.9% | 1,013.68 | 9.6% |
| 2006 | 1,164.16 | 12.1% | 1,126.19 | 11.1% |
| 2007 Projected | 1,287.04 | 10.6% | 1,235.23 | 9.7% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.5% | 9.0% |
| Most Recent 5 Years | 11.6% | 11.3% |
Individual Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 158.65 | -26.1% | 131.72 | -31.9% |
| 1997 | 150.53 | -5.1% | 129.28 | -1.9% |
| 1998 | 167.91 | 11.5% | 151.34 | 17.1% |
| 1999 | 186.46 | 11.0% | 175.61 | 16.0% |
| 2000 | 217.94 | 16.9% | 214.25 | 22.0% |
| 2001 | 245.64 | 12.7% | 239.94 | 12.0% |
| 2002 | 259.96 | 5.8% | 253.82 | 5.8% |
| 2003 | 307.02 | 18.1% | 297.50 | 17.2% |
| 2004 | 341.87 | 11.4% | 334.22 | 12.3% |
| 2005 | 340.50 | -0.4% | 331.93 | -0.7% |
| 2006 | 359.35 | 5.5% | 338.88 | 2.1% |
| 2007 Projected | 399.39 | 11.1% | 377.09 | 11.3% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 6.20% | 6.8% |
| Most Recent 5 Years | 9.1% | 8.4% |
Family - 1 Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 446.03 | -8.4% | 383.23 | -13.0% |
| 1997 | 427.23 | -4.2% | 378.82 | -1.2% |
| 1998 | 452.73 | 6.0% | 409.76 | 8.2% |
| 1999 | 480.95 | 6.2% | 447.05 | 9.1% |
| 2000 | 530.97 | 10.4% | 518.52 | 16.0% |
| 2001 | 595.25 | 12.1% | 577.95 | 11.5% |
| 2002 | 649.14 | 9.1% | 633.13 | 9.5% |
| 2003 | 749.40 | 15.4% | 724.05 | 14.4% |
| 2004 | 839.18 | 12.0% | 820.82 | 13.4% |
| 2005 | 888.71 | 5.9% | 867.09 | 5.6% |
| 2006 | 975.66 | 9.8% | 935.32 | 7.9% |
| 2007 Projected | 1,080.38 |
10.7% |
1,030.78 | 10.2% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 7.1% | 7.6% |
| Most Recent 5 Years |
10.8% |
10.3% |
Family - 2 or More Medprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 369.87 | -24.0% | 307.07 | -30.3% |
| 1997 | 315.24 | -14.8% | 267.15 | -13.0% |
| 1998 | 351.98 | 11.7% | 314.25 | 17.6% |
| 1999 | 387.05 | 10.0% | 360.66 | 14.8% |
| 2000 | 453.22 | 17.1% | 445.51 | 23.5% |
| 2001 | 514.40 | 13.5% | 502.37 | 12.8% |
| 2002 | 555.29 | 7.9% | 542.29 | 7.9% |
| 2003 | 656.42 | 18.2% | 636.67 | 17.4% |
| 2004 | 733.05 | 11.7% | 716.88 | 12.6% |
| 2005 | 738.79 | 0.8% | 720.53 | 0.5% |
| 2006 | 787.16 | 6.5% | 744.45 | 3.3% |
| 2007 Projected | 873.73 | 11.0% | 826.37 | 11.0% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 5.8% | 6.5% |
| Most Recent 5 Years | 9.6% | 9.0% |
(1) Represents premiums paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.
EMPIRE PLAN
PA 2 TIER GROUP RATES
1996-2007 Monthly Rates
(For Illustrative Purposes Only)
Core Plus Medical & Psychiatric Enhancement
Individual
| Year | Gross Rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| 1996 (1) | 219.20 | 2.1% | 192.27 | -0.7% |
| 1997 | 219.87 | 0.3% | 198.37 | 3.2% |
| 1998 | 227.35 | 3.4% | 204.38 | 3.0% |
| 1999 | 239.24 | 5.2% | 222.00 | 8.6% |
| 2000 | 260.67 | 9.0% | 253.98 | 14.4% |
| 2001 | 289.41 | 11.0% | 280.25 | 10.3% |
| 2002 | 313.58 | 8.4% | 305.67 | 9.1% |
| 2003 | 357.44 | 14.0% | 345.36 | 13.0% |
| 2004 | 402.70 | 12.7% | 394.31 | 14.2% |
| 2005 | 433.70 | 7.7% | 423.31 | 7.4% |
| 2006 | 477.33 | 10.1% | 459.25 | 8.5% |
| 2007 Projected | 529.02 | 10.8% | 505.88 | 10.2% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.4% | 8.4% |
| Most Recent 10 Years | 9.2% | 9.9% |
| Most Recent 5 Years | 11.0% | 10.6% |
Family
| Year | Gross Rate | % Change | Net Rate | % Change |
|---|---|---|---|---|
| 1996 (1) | 491.07 | 0.8% | 428.27 | -2.7% |
| 1997 | 495.81 | 1.0% | 447.22 | 4.4% |
| 1998 | 514.28 | 3.7% | 463.62 | 3.7% |
| 1999 | 539.14 | 4.8% | 499.75 | 7.8% |
| 2000 | 578.26 | 7.3% | 563.03 | 12.7% |
| 2001 | 640.64 | 10.8% | 619.28 | 10.0% |
| 2002 | 703.61 | 9.8% | 685.83 | 10.7% |
| 2003 | 805.64 | 14.5% | 778.82 | 13.6% |
| 2004 | 899.98 | 11.7% | 881.48 | 13.2% |
| 2005 | 968.40 | 7.6% | 945.11 | 7.2% |
| 2006 | 1,073.28 | 10.8% | 1,034.40 | 9.4% |
| 2007 Projected | 1,189.18 | 10.8% | 1,138.70 | 10.1% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.8% | 8.7% |
| Most Recent 10 Years | 9.2% | 9.8% |
| Most Recent 5 Years | 11.1% | 10.7% |
(1) Represents 2 tier Empire Plan Rates; See 5 tier rate schedule effective 1/1/96.
Second Quarter – 2006
Medicare Part D Employer Subsidy Update
As indicated in the previous quarterly report, NYSHIP applied for and received an estimated one time Employer Subsidy for the first quarter of 2006. Consistent with our commitment to distribute the subsidy to each Participating Agency as soon as possible after receiving it, we have been crediting the monthly bills for those PAs that have executed the Medicare Part D Retiree Drug Subsidy Agreements. These agreements were initially mailed to all PAs in March and we have recently mailed a reminder to those PAs that have not yet returned their agreements. Please note that your agency must execute and return this agreement to EBD to begin receiving the subsidy credit.
Unless there is an unexpected delay by CMS, we anticipate that we will begin submitting monthly data in October and distributing subsidy payments as soon as possible following receipt from CMS.
GASB 45 Update
Your agency recently received a second mailing from EBD regarding GASB 45 which establishes uniform financial reporting standards for Other Post Employment Benefits (OPEB). This mailing, (PA Memo 06-18) includes a report prepared by the Department of Civil Service’s actuarial consultant and contains assumptions which may be helpful to you and your financial consultant in conducting your own valuation.
PA Regional Meetings
The official announcement is included with this quarterly report. As indicated, please respond by September 21st so that we may finalize luncheon arrangements and plan for adequate materials. You may respond by mail, fax or you may register on-line. The instructions are included on the registration form. Please don’t delay – register as soon as possible!
We hope to see you at our upcoming regional meetings. Following is the schedule:
October 3 - Holiday Inn, Saratoga Springs, NY
October 4 - Comfort Inn, Nanuet, NY (Rockland County)
October 5 - Huntington Hilton, Huntington, NY (Long Island)
NYSHIP Representation at Municipal Events
During the next quarter, NYSHIP’s Empire Plan will be represented at the following events:
- The 2006 Fall Seminar sponsored by the NYS Association of Counties on September 27–29 in Lake George, New York.
- The 2006 Annual Convention and Trade Show sponsored by the NYS School Boards’ Association on October 26–29 in New York City.
If you are planning to attend an event, please stop by the NYSHIP exhibit.
Transmission of Reports Electronically
Many agencies receive the Empire Plan Experience Report via E-mail. If you would like to be added to our distribution list, you may contact us at the address or E-mail below.
CEO & HBA Name and Address Changes
Please be sure to notify EBD of any changes in the names and/or addresses (including E-mail address) of your agency’s CEO or HBA, so that we may keep our mailing lists up-to-date. This updated information should be sent to:
Debbie D’Orazio
Employee Benefits Division
NYS Department of Civil Service
Alfred E. Smith State Office Building
80 South Swan Street
Albany, NY 12239
or E-mail: Deborah.Dorazio@cs.state.ny.us