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
DANIEL E. WALL
EXECUTIVE
DEPUTY COMISSIONER
PA98-10
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: August 27, 1998
Enclosed are the Second Quarter Empire Plan Experience Report for 1998 and the cover letter to Chief Executive Officers.
This report provides projected 1998 experience and projected premium rates for 1999.
August 27, 1998
Dear Chief Executive Officer:
Attached is the Participating Agency Second Quarter Report for 1998. This report provides projected 1998 Empire Plan experience based on claims paid through June 1998 and projected 1999 premium rates.
The Empire Plan carriers project a combined surplus of approximately $24.9 million or 1.4% of premium. The report includes details for each of the carriers and, as in the past, these projections will be revised in the next quarterly report based on actual claims experience for 1998.
The projections of 1999 premium rates reflect increases of approximately 8.7% in the gross rates and 10.9% in the net rates. The report explains the basis for these projections and future reports will include updates based on additional claims data.
Please note in the Keeping You Informed Section of the report a description of a new program which will provide Medicare Part B reimbursement for low income individuals.
I hope this report is informative and useful to you. If you have any questions, comments or suggestions, please do not hesitate to contact me.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division
EMPIRE PLAN EXPERIENCE REPORT
APRIL - JUNE 1998
produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
George C. Sinnott
President, New York State Civil Service Commission
NYS HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN EXPERIENCE REPORT
2ND QUARTER REPORT
PROJECTED 1998 EMPIRE PLAN EXPERIENCE
Based on claims paid through June 30, 1998, the Empire Plan carriers project a composite dividend of $24.9 million or 1.4% of premium. This represents a decrease of $15.7 million from the margin loaded in the 1998 rates. The 1998 annual experience projected by the insurance carriers is reported in Exhibit I. Individual carrier projections are explained as follows:
Blue Cross
Blue Cross projects a 1998 loss of $6.8 million or 1.3% of premium. This represents a decrease of $20.6 million from the margin loaded in the 1998 rates and is attributable to both a higher 1997 claim base and higher projected 1998 trend level than the respective factors used in the 1998 rate development.
UnitedHealthcare Medical
UnitedHealthcare projects a composite 1998 dividend of $18.9 million or 2.5% of premium which approximates the margin loaded in the 1998 rates.
UnitedHealthcare Mental Health and Substance Abuse Program
UnitedHealthcare projects a 1998 surplus of $4.3 million or 5.4% of premium for the Mental Health and Substance Abuse (MHSA) Program. This represents an increase of $2.5 million over the margin loaded in the 1998 rates and is primarily attributable to lower 1998 incurred claims.
Cigna
Cigna estimates a 1998 dividend of $8.5 million or 2.5% of premium. This is $2.7 million more than the margin loaded in the 1998 rates and is attributable to a modestly lower claim base than what was projected at the time the 1998 rates were developed.
1999 PREMIUM RATES
Exhibit II presents the projected 1999 Empire Plan gross and net premium assuming the application of $129.1 million in dividend to all payors. Empire Plan gross premium is projected to increase approximately 8.7% with a net premium increase of 10.9%. The higher rate increase of net premium in relation to the increase in the gross premium reflects the decreased level of dividend application in 1999 ($127.5 million) compared to the 1998 dividend application ($149.8 million).
Effective January 1, 1999, new contracts are expected to be in place for the Prescription Drug and Managed Mental Health and Substance Abuse Programs. The impact, if any, these contract awards will have on projected 1999 rates has not yet been determined. Each Participating Agency should assess its financial situation in using the quoted range of rates
The projected net rate increase for the MediPrime group is higher than the projected rate increase for the PlanPrime group. Such difference is primarily attributable to the leveraging of the prescription drug trend on the MediPrime rates. Prescription drug costs, which have no Medicare offset, are trending at 15.5% and make up approximately 50% of the total premium for a MediPrime enrollee compared to 17% for a PlanPrime enrollee. In addition, the reduction of prescription drug dividends in 1999 from the 1998 levels compounds the deviation between the MediPrime and PlanPrime group rate increases.
The underlying trend assumptions used by the carriers for the projected 1999 Participating Agency rates are as follows:
| Component | Trend |
|---|---|
| Blue Cross | 4.3% |
| UnitedHealthcare Medical Core | 4.8% |
| UnitedHealthcare Medical Enhancement | 7.8% |
| UnitedHealthcare MHSA Core | 0.0% |
| UnitedHealthcare MHSA Enhancement | 0.0% |
| Cigna | 15.5% |
| Composite | 7.0% |
For comparison purposes, Exhibit Ill presents the Individual and Family rate history for the Core Plus Medical and Psychiatric Enhancements option based on the Two Tier Empire Plan rate structure in effect prior to January 1, 1996, while Exhibit IV presents the five tier history from 1996 to projected 1999.
KEEPING YOU INFORMED
Medicare Part B Reimbursement through the New York State Department of Health
The Governor has signed a bill which grants Medicare Part B reimbursement to low income persons. The New York State Department of Health is responsible for administering this program. This may lead to individuals receiving double Medicare reimbursement - one from this new program and one from NYSHIP.
The new program for low income persons will provide full reimbursement only for those single individuals with a monthly income of between $815 and $917 per month and less than $4,000 in assets, and for couples with a monthly income of between $1 ,095 and $1,232 and less than $6,000 in assets. Low income persons above these levels will only get a $1.07 per month reimbursement.
If any of your retirees, covered by NYSHIP, meet these eligibility requirements and receive reimbursement for Medicare Part B from the NYS Department of Health, please note that your agency is not required to duplicate this reimbursement.
Year 2000 Compliant
Several organizations have inquired about our preparations related to the "Year 2000". As a Participating Agency in the New York State Health Insurance Program, our Enrollment Management System (EMS) is applicable. Please be advised that the EMS is "Year 2000" compliant.
Exhibit I
1998 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)
|
| BLUE CROSS | UnitedHealthcare MEDICAL - Core | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | UnitedHealthcare MEDICAL - | GHI MHSA - Core | GHI MHSA - | GHI MHSA - | GHI MHSA - | CIGNA | TOTAL |
|---|---|---|---|---|---|---|---|---|---|---|---|
| A Premium (1) | 541,673 | 606,173 | 90,944 | 63,240 | 760,357 | 66,402 | 8,074 | 5,585 | 80,061 | 340,818 | 1,722,909 |
| B Incurred Claims (2) | 516,786 | 538,445 | 76,717 | 47,594 | 662,756 | 54,281 | 3,539 | 2,932 | 60,752 | 320,081 | 1,560,375 |
| C Administrative Expense (3) | 31,708 | 64,377 | 8,798 | 5,564 | 78,739 | 12,761 | 1,269 | 930 | 14,960 | 12,240 | 137,647 |
| D Gain/(Loss) (A-B-C) | (6,821) | 3,351 | 5,429 | 10,082 | 18,862 | (640) | 3,266 | 1,723 | 4,349 | 8,497 | 24,887 |
(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 retention.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1998 and Projected 1999 Rates
CORE ONLY
Plan Prime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 233.78 | 247.12 | 5.7% | 213.42 | 232.88 | 9.1% |
| Best Estimate | 233.78 | 254.74 | 9.0% | 213.42 | 240.50 | 12.7% |
| Pessimistic | 233.78 | 261.56 | 11.9% | 213.42 | 247.32 | 15.9% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 483.20 | 508.24 | 5.2% | 438.81 | 476.32 | 8.5% |
| Best Estimate | 483.20 | 524.10 | 8.5% | 438.81 | 492.18 | 12.2% |
| Pessimistic | 483.20 | 538.33 | 11.4% | 438.81 | 506.41 | 15.4% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 161.07 | 183.84 | 14.1% | 144.57 | 174.94 | 21.0% |
| Best Estimate | 161.07 | 187.13 | 16.2% | 144.57 | 178.23 | 23.3% |
| Pessimistic | 161.07 | 189.89 | 17.9% | 144.57 | 180.99 | 25.2% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 411.20 | 445.64 | 8.4% | 370.65 | 419.08 | 13.1% |
| Best Estimate | 411.20 | 457.17 | 11.2% | 370.65 | 430.61 | 16.2% |
| Pessimistic | 411.20 | 467.34 | 13.7% | 370.65 | 440.78 | 18.9% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 337.71 | 381.60 | 13.0% | 301.00 | 360.38 | 19.7% |
| Best Estimate | 337.71 | 388.81 | 15.1% | 301.00 | 367.59 | 22.1% |
| Pessimistic | 337.71 | 394.91 | 16.9% | 301.00 | 373.69 | 24.1% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1998 and Projected 1999 Rates
CORE PLUS MEDICAL ENHANCEMENT
Plan Prime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 265.36 | 276.02 | 4.0% | 244.95 | 258.39 | 5.5% |
| Best Estimate | 265.36 | 285.16 | 7.5% | 244.95 | 267.53 | 9.2% |
| Pessimistic | 265.36 | 293.50 | 10.6% | 244.95 | 275.87 | 12.6% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 546.09 | 566.20 | 3.7% | 501.61 | 527.02 | 5.1% |
| Best Estimate | 546.09 | 585.11 | 7.1% | 501.61 | 545.93 | 8.8% |
| Pessimistic | 546.09 | 602.39 | 10.3% | 501.61 | 563.21 | 12.3% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 167.82 | 191.52 | 14.1% | 151.35 | 179.27 | 18.4% |
| Best Estimate | 167.82 | 195.21 | 16.3% | 151.35 | 182.96 | 20.9% |
| Pessimistic | 167.82 | 198.38 | 18.2% | 151.35 | 186.13 | 23.0% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 449.26 | 482.38 | 7.4% | 408.71 | 448.59 | 9.8% |
| Best Estimate | 449.26 | 495.84 | 10.4% | 408.71 | 462.05 | 13.1% |
| Pessimistic | 449.26 | 507.95 | 13.1% | 408.71 | 474.16 | 16.0% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 350.95 | 397.12 | 13.2% | 314.34 | 368.72 | 17.3% |
| Best Estimate | 350.95 | 405.14 | 15.4% | 314.34 | 376.74 | 19.9% |
| Pessimistic | 350.95 | 412.06 | 17.4% | 314.34 | 383.66 | 22.1% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1998 and Projected 1999 Rates
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS
Plan Prime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 267.89 | 278.30 | 3.9% | 246.07 | 259.47 | 5.4% |
| Best Estimate | 267.89 | 287.57 | 7.3% | 246.07 | 268.74 | 9.2% |
| Pessimistic | 267.89 | 296.03 | 10.5% | 246.07 | 277.20 | 12.7% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 552.00 | 571.61 | 3.6% | 503.78 | 529.26 | 5.1% |
| Best Estimate | 552.00 | 590.81 | 7.0% | 503.78 | 548.46 | 8.9% |
| Pessimistic | 552.00 | 608.39 | 10.2% | 503.78 | 566.04 | 12.4% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 167.91 | 191.64 | 14.1% | 151.34 | 179.30 | 18.5% |
| Best Estimate | 167.91 | 195.33 | 16.3% | 151.34 | 184.48 | 21.9% |
| Pessimistic | 167.91 | 198.51 | 18.2% | 151.34 | 186.17 | 23.0% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 452.73 | 485.63 | 7.3% | 409.76 | 449.78 | 9.8% |
| Best Estimate | 452.73 | 499.26 | 10.3% | 409.76 | 464.89 | 13.5% |
| Pessimistic | 452.73 | 511.55 | 13.0% | 409.76 | 475.70 | 16.1% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 351.98 | 398.20 | 13.1% | 314.25 | 368.85 | 17.4% |
| Best Estimate | 351.98 | 406.28 | 15.4% | 314.25 | 379.90 | 20.9% |
| Pessimistic | 351.98 | 413.26 | 17.4% | 314.25 | 383.91 | 22.2% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit IV
EMPIRE PLAN
PA GROUP RATES
1985-1999 Monthly Rates
Individual
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1985 | 95.71 | 92.85 | ||
| 1986 | 91.97 | -3.9% | 91.45 | -1.5% |
| 1987 | 103.14 | 12.1% | 101.65 | 11.1% |
| 1988 (1) | 142.01 | 37.7% | 141.52 | 39.2% |
| 1989 | 168.72 | 18.8% | 168.05 | 18.7% |
| 1990 (2) | 179.50 | 6.4% | 167.09 | -0.6% |
| 1991 (3) | 202.09 | 12.6% | 185.09 | 10.8% |
| 1992 | 198.85 | -1.6% | 181.81 | -1.8% |
| 1993 | 214.30 | 7.8% | 194.64 | 7.1% |
| 1994 | 213.83 | -0.2% | 197.39 | 1.4% |
| 1995 | 214.70 | 0.4% | 193.54 | -2.0% |
| 1996 (4) | 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 (projected) | 249.79 | 9.9% | 232.33 | 13.7% |
Individual Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 7.6% | 7.3% |
| Most Recent 10 Years | 4.1% | 3.4% |
| Most Recent 5 Years | 3.2% | 3.5% |
Family
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1985 | 203.97 | 197.57 | ||
| 1986 | 195.31 | -4.2% | 194.30 | -1.7% |
| 1987 | 222.39 | 13.9% | 219.20 | 12.8% |
| 1988 (1) | 324.13 | 45.7% | 323.06 | 47.4% |
| 1989 | 383.42 | 18.3% | 381.95 | 18.2% |
| 1990 (2) | 403.75 | 5.3% | 380.15 | -0.5% |
| 1991 (3) | 464.39 | 15.0% | 417.36 | 9.8% |
| 1992 | 445.64 | -4.0% | 407.76 | -2.3% |
| 1993 | 479.37 | 7.6% | 426.35 | 4.6% |
| 1994 | 484.69 | 1.1% | 446.94 | 4.8% |
| 1995 | 486.99 | 0.5% | 440.35 | -1.5% |
| 1996 (4) | 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 (projected) | 557.26 | 8.4% | 517.38 | 11.6% |
Family Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 8.1% | 7.8% |
| Most Recent 10 Years | 3.9% | 3.2% |
| Most Recent 5 Years | 2.9% | 3.1% |
*Statewide Plan Premium Rates
(1) 1988 rates represent the effective amounts of the 1/88 and 8/88 rate changes.
(2) No change in effective net rate over 1989.
(3) Represents rates effective 1/1/91 - 6/30/91.
(4) Represents 2 tier Empire Plan Rates; 5 tier schedule effective 1/1/96.
Exhibit IV
EMPIRE PLAN
PA 5 TIER GROUP RATES
1995 - 1999 Monthly Rates
Core plus Med. & Psych. Enh.
Family Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 | | 193.54 | |
| 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 (projected) | 287.57 | 7.3% | 268.74 | 9.2% |
Family Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 7.6% | 8.7% |
| From 1985 to 1995 | 9.0% | 8.3% |
Family Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | 0.5% | 440.35 | -1.5% |
| 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 (projected) | 590.81 | 7.0% | 548.46 | 8.9% |
Family Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 5.0% | 5.7% |
| From 1985 to 1995 | 9.9% | 9.2% |
Individual Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 | | 193.54 | |
| 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 (projected) | 195.33 | 16.3% | 184.48 | 21.9% |
Individual Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | -0.8% | 1.3% |
| From 1985 to 1995 | 9.0% | 8.3% |
Family - 1 Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | | 440.35 | |
| 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 (projected) | 499.26 | 10.3% | 464.89 | 13.5% |
Family - 1 Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 0.9% | 1.9% |
| From 1985 to 1995 | 9.9% | 9.2% |
Family - 2 or More Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | 440.35 | ||
| 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 (projected) | 406.28 | 15.4% | 379.90 | 20.9% |
Family - 2 or More Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | -2.9% | -2.2% |
| From 1985 to 1995 | 9.9% | 9.2% |
(1) Represents premiums charged by the carriers.
(2) Represents cost o a participating agency.
(3) Inception of Medprime Rate Structure.