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.
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
COMMISSIONER
PA08-03
TO: Participating Agency Health Benefit Administrators
FROM: Robert W. DuBois, Director of the Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: April 8, 2008
Enclosed are the Fourth Quarter Empire Plan Experience Report for 2007 and the cover letter to the Chief Executive Officers. This report presents the projected 2007 Empire Plan experience and projected 2009 premium rates.
April 8, 2008
Dear Chief Executive Officer:
Attached is the Empire Plan Fourth Quarter Experience Report for 2007. This report presents the projected 2007 Empire Plan experience based on claims paid through December 31, 2007, as well as the projected 2009 premium rates.
The Empire Plan carriers project a 2007 net dividend of $429.0 million, 8.2% of premium. This report explains the basis for this projection. The carriers will issue the 2007 experience statement on March 15, 2008.
The projected 2009 premium rates are presented in Exhibit II and reflect a “best estimated” net rate increase of 10.4%, in aggregate. The report also presents a range of the potential 2009 rate increase for your budget development considerations.
I hope this report is informative and useful to you. 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
FOURTH QUARTER
(October - December 2007)
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
Nancy G. Groenwegen
President, New York State Civil Service Commission
Exhibits
- Projected 2007 Empire Plan Experience
- Projected 2009 PA Premium Rates
- Empire Plan PA 5-Tier Group Rates (2000-2009)
- Empire Plan PA 2-Tier Group Rates (2000-2009)
NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
4th QUARTER REPORT
PROJECTED 2007 EMPIRE PLAN EXPERIENCE
The Empire Plan carriers project a composite dividend of $429.0 million (8.2% of premium), or $295.9 million more than the margin loaded in the 2007 rates. The 2007 annual experience projected by the insurance carriers is reported in Exhibit I.
This projection is based on twelve months of 2007 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid as well as the current 2007 trend as compared to the trend assumed during the 2007 premium rate development:
| % of Actual Paid Claims to Projected Incurred Claims | Projected 2007 Trend | |||
2006 | 2007 | @ Renewal | @ 4th Quarter | |
|---|---|---|---|---|
| Blue Cross | 99.4% | 86.2% | 12.9% | 10.7% |
| UnitedHealthcare | 99.9% | 88.6% | 12.6% | 7.5% |
| GHI | 99.8% | 81.8% | 4.0% | 9.2% |
| Blue Cross Rx | 99.9% | 97.9% | 12.0% | 6.5% |
The 2007 projected dividend/(loss) for each carrier as compared to the margin level used in the 2007 premium development is as follows:
Margin | 2007 Projected Dividend/(Loss) | Increase/(Decrease) | |
|---|---|---|---|
| Blue Cross | $34,710,000 | $103,752,000 | $69,042,000 |
| UnitedHealthcare | $49,267,000 | $160,196,000 | $110,929,000 |
| GHI | $2,573,000 | ($4,788,000) | ($7,361,000) |
| Blue Cross Rx | $46,622,000 | $169,889,000 | $123,267,000 |
| Total | $133,172,000 | $429,049,000 | $295,877,000 |
The increase in the dividend projection is primarily attributable to the experience improvement on the hospital, medical and prescription drug programs modestly offset by the increase in mental health and substance claims. For the hospital program, the increase in projected dividend is attributable to a $32 million reduction in the 2006 claim base used in developing the premium rates coupled with a 2007 trend that is 2.2% lower than the trend initially projected. For the medical program, the increase in projected dividend is primarily attributable to a 2007 trend that is 5.1% lower than the trend initially projected as well as lower 2006 claim base from what was previously projected. For the prescription drug program, the increase in projected dividend is due to a 2007 trend that is 5.5% lower than the trend used in developing the 2007 premium. Also, an increase in pharma revenue is projected. The loss projected by GHI is largely due to the projected increase in claim costs associated with compliance to Timothy’s Law (effective January 1, 2007). This increase in projected claims cost is reflected in the 5.2% increase in the projected 2007 trend.
2009 PROJECTED PREMIUM RATES
Exhibit II presents the projected 2009 Empire Plan gross and net premium rates assuming the application of $350 million in dividend to all payors. In aggregate, the Empire Plan gross premium is projected to increase approximately 9.7% while the net premium is projected to increase approximately 10.4%.
A range of projected gross and net premium rates is also included (7.5% - 13.3%). It should be noted that carrier rate projections made at this time of the year have been historically conservative. Each agency should assess its budgetary environment in using the enclosed projections.
Exhibit III presents the individual and family rate history for the Core plus Medical and Psychiatric Enhancements option based on the 5-tier Empire Plan billing rate history in effect since January 1, 2000. Exhibit IV presents, for illustrative purposes only, the 2-tier rate history from 2000 to 2009.
2007 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
BLUE CROSS HOSPITAL | 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 | BLUE CROSS DRUG | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| (A) Premium (1) | 1,609,494 | 1,578,350 | 242,785 | 221,234 | 2,042,369 | 74,393 | 10,675 | 9,155 | 94,223 | 1,480,774 | 5,226,860 |
| (B) Incurred Claims (2) | 1,399,421 | 1,329,771 | 197,590 | 193,508 | 1,720,869 | 78,671 | 2,201 | 1,405 | 82,277 | 1,246,123 | 4,448,690 |
| (C) Administrative Expense (3) | 106,321 | 132,281 | 14,747 | 14,276 | 161,304 | 16,025 | 437 | 272 | 16,734 | 64,762 | 349,121 |
| (D) Gain/(Loss) (A-B-C) | 103,752 | 116,298 | 30,448 | 13,450 | 160,196 | (20,303) | 8,037 | 7,478 | (4,788) | 169,889 | 429,049 |
(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: Carrier 2007 4th Quarter Report
Includes SEHP
Empire Plan
Participating Agency Premium Rates
Comparison of 2008 and Projected 2009 Rates
CORE ONLY - Planprime: Individual
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
| Optimistic | 557.73 | 597.60 | 7.1% | 519.35 | 556.12 | 7.1% |
| Best Estimate | 557.73 | 612.19 | 9.8% | 519.35 | 570.71 | 9.9% |
| Pessimistic | 557.73 | 623.66 | 11.8% | 519.35 | 582.18 | 12.1% |
CORE ONLY - Planprime: Family
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 1,186.84 | 1,265.77 | 6.7% | 1,105.67 | 1,178.48 | 6.6% |
Best Estimate | 1,186.84 | 1,296.59 | 9.2% | 1,105.67 | 1,209.30 | 9.4% |
Pessimistic | 1,186.84 | 1,327.63 | 11.9% | 1,105.67 | 1,240.34 | 12.2% |
CORE ONLY - Medprime: Individual
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 372.79 | 397.80 | 76.7% | 336.91 | 364.41 | 8.2% |
Best Estimate | 372.79 | 402.55 | 8.0% | 336.91 | 369.16 | 9.6% |
Pessimistic | 372.79 | 406.50 | 9.0% | 336.91 | 373.11 | 10.7% |
CORE ONLY - Medprime: Family-1
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 1,001.91 | 1,065.96 | 6.4% | 923.26 | 986.74 | 6.9% |
Best Estimate | 1,001.91 | 1,086.96 | 8.5% | 923.26 | 1,007.74 | 9.2% |
Pessimistic | 1,001.91 | 1,110.48 | 10.8% | 923.26 | 1,031.26 | 11.7% |
CORE ONLY - Medprime: Family-2
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 816.99 | 866.16 | 6.0% | 740.84 | 795.02 | 7.3% |
Best Estimate | 816.99 | 877.32 | 7.4% | 740.84 | 806.18 | 8.8% |
Pessimistic | 816.99 | 893.32 | 9.3% | 740.84 | 822.18 | 11.0% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates.
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS - Planprime: Individual
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 633.79 | 680.36 | 7.3% | 592.38 | 638.43 | 7.8% |
Best Estimate | 633.79 | 699.31 | 10.3% | 592.38 | 654.90 | 10.6% |
Pessimistic | 633.79 | 715.14 | 12.8% | 592.38 | 673.21 | 13.6% |
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS - Planprime: Family
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 1,346.27 | 1,439.25 | 6.9% | 1,258.78 | 1,350.97 | 7.3% |
Best Estimate | 1,346.27 | 1,479.21 | 9.9% | 1,258.78 | 1,385.73 | 10.1% |
Pessimistic | 1,346.27 | 1,519.38 | 12.9% | 1,258.78 | 1,431.10 | 13.7% |
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS - MediPrime: Individual
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 397.23 | 424.41 | 6.8% | 360.41 | 390.91 | 8.5% |
Best Estimate | 397.23 | 430.56 | 8.4% | 360.41 | 396.25 | 9.9% |
Pessimistic | 397.23 | 435.91 | 9.7% | 360.41 | 402.41 | 11.7% |
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS - MediPrime: Family-1
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 1,109.74 | 1,183.28 | 6.6% | 1,026.86 | 1,103.43 | 7.5% |
Best Estimate | 1,109.74 | 1,210.47 | 9.1% | 1,026.86 | 1,127.09 | 9.8% |
Pessimistic | 1,109.74 | 1,240.16 | 11.8% | 1,026.86 | 1,160.31 | 13.0% |
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS - MediPrime: Family-2
| Gross Rates (1) | Gross Rates (1) | Gross Rates (1) | Net Rates (2) | Net Rates (2) | Net Rates (2) | |
|---|---|---|---|---|---|---|
Optimistic | 873.21 | 927.34 | 6.2% | 794.94 | 855.91 | 7.7% |
Best Estimate | 873.21 | 941.72 | 7.8% | 794.94 | 868.43 | 9.2% |
Pessimistic | 873.21 | 960.94 | 10.0% | 794.94 | 889.51 | 11.9% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates.
EMPIRE PLAN
PA 5 TIER GROUP RATES
2000-2009 Monthly Rates
Core Plus Medical & Psychiatric Enhancements
Individual Planprime
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 600.69 | 9.6% | 564.84 | 6.6% |
| 2008 | 633.79 | 5.5% | 592.38 | 4.9% |
| 2009 projected | 699.31 | 10.3% | 654.90 | 10.6% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.8% | 9.1% |
| Most Recent 10 Years | 9.6% | 9.7% |
| Most Recent 5 Years | 9.3% | 8.4% |
(1) Represents premium paid to the carriers.
(2) Represents cost to a participating agency.
Family Planprime
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 1,273.96 | 9.4% | 1,198.07 | 6.4% |
| 2008 | 1,346.27 | 5.7% | 1,258.78 | 5.1% |
| 2009 projected | 1,479.21 | 9.9% | 1,385.73 | 10.1% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.3% | 8.6% |
| Most Recent 10 Years | 10.0% | 10.1% |
| Most Recent 5 Years | 9.4% | 8.5% |
(1) Represents premium paid to the carriers.
(2) Represents cost to a participating agency.
Individual Medprime
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 363.02 | 1.0% | 333.18 | -1.7% |
| 2008 | 397.23 | 9.4% | 360.41 | 8.2% |
| 2009 projected | 430.56 | 8.4% | 396.25 | 9.9% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 5.7% | 6.2% |
| Most Recent 10 Years | 8.9% | 8.7% |
| Most Recent 5 Years | 4.8% | 3.6% |
(1) Represents premium paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of medprime Rate Structure.
Family - 1 Medprime
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 1,036.30 | 6.2% | 966.44 | 3.3% |
| 2008 | 1,109.74 | 7.1% | 1,026.86 | 6.3% |
| 2009 projected | 1,210.47 | 9.1% | 1,127.09 | 9.8% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 6.9% | 7.2% |
| Most Recent 10 Years | 9.7% | 9.8% |
| Most Recent 5 Years | 7.6% | 6.6% |
(1) Represents premium paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.
Family - 2 or More Medprime
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 798.65 | 1.5% | 734.81 | -1.3% |
| 2008 | 873.21 | 9.3% | 794.94 | 8.2% |
| 2009 projected | 941.72 | 7.8% | 868.43 | 9.2% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 5.5% | 6.0% |
| Most Recent 10 Years | 9.4% | 9.4% |
| Most Recent 5 Years | 5.2% | 4.0% |
(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
2000-2009 Monthly Rates
(For Illustrative Purposes Only)
Core Plus Medical & Psychiatric Enhancement
Individual
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 511.23 | 7.1% | 477.96 | 4.1% |
| 2008 | 536.84 | 5.0% | 498.88 | 4.4% |
| 2009 projected | 587.99 | 9.5% | 549.06 | 10.1% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.1% | 8.0% |
| Most Recent 10 Years | 9.4% | 9.5% |
| Most Recent 5 Years | 7.9% | 6.9% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Family
Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 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 | 1,158.16 | 7.9% | 1,084.90 | 4.9% |
| 2008 | 1,233.38 | 6.5% | 1,150.41 | 6.0% |
| 2009 projected | 1,354.45 | 9.8% | 1,268.21 | 10.2% |
Average Percent Increase
Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.6% | 8.5% |
| Most Recent 10 Years | 9.7% |