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
PA99-04
TO: Participating Agency Health Benefits Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: March 18, 1999
Enclosed are the Fourth 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 2000.
March 18, 1999
Dear Chief Executive Officer:
Attached is the Participating Agency Fourth Quarter Report for 1998. This report provides projected 1998 Empire Plan experience based on claims paid through December 1998 and projected 2000 premium rates.
The Empire Plan carriers project a combined surplus of approximately $29.2 million or 1.7% 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 projected 2000 premium rates are included in Exhibit II. These initial projections reflect increases in the gross and net premiums of approximately 10.0% and 14.2%, respectively. The higher rate increase in net premium is due to the decrease in dividend application for 2000 as compared to 1999. Please note that these are preliminary projections which have been made without any claims experience for 1999 and are, historically, more pessimistic than the ultimate increases. The report explains the basis for these projections and future reports will include revisions based on actual claims experience.
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
OCTOBER - DECEMBER 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
4TH QUARTER REPORT
PROJECTED 1998 EMPIRE PLAN EXPERIENCE
Based on claims paid through December 31, 1998, the Empire Plan carriers project a composite dividend of $29.2 million or 1.7% of premium. This represents a modest decrease of $11.4 million from the margin loaded in the 1998 rates. The 1998 annual experience projected by the insurance carriers is reported in Exhibit I with individual carrier projections which are explained as follows:
Blue Cross
Blue Cross projects a 1998 gain of $7.4 million or 1.4% of premium. This represents a decrease of $6.4 million from the margin loaded in the 1998 rates and is attributable to both a higher 1997 claim base and modestly higher projected 1998 trend level than the respective factors used in the 1998 rate development.
UnitedHealthcare Medical
On average, UnitedHealthcare's 1998 underwriting assumptions were on target as evidenced by a composite 1998 dividend of $11.7 million or 1.5% of premium. This dividend level is modestly lower than the margin loaded in the 1998 rates.
UnitedHealthcare Mental Health and Substance Abuse Program
UnitedHealthcare projects a 1998 surplus of $10.3 million or 12.8% of premium for the Mental Health and Substance Abuse (MHSA) Program. This represents an increase of $8.4 million over the margin loaded in the 1998 rates and is primarily attributable to sound utilization and network management which produced lower 1998 incurred claims.
Cigna
A 1998 loss of $1 17,000 or 0.03% of premium is projected by Cigna. This is $6.0 million less than the margin loaded in the 1998 rates and is attributable to a modestly higher claim base than what was projected at the time the 1998 rates were developed.
2000 PREMIUM RATES
Exhibit II presents the projected 2000 Empire Plan gross and net premium assuming the application of $70.2 million in dividend to all payors. The Empire Plan gross premium is projected to increase approximately 10.0% with a net premium increase of 14.2%. The higher rate increase of net premium in relation to the increase in the gross premium reflects the decreased level of dividend application in 2000 as compared to 1999.
Insurance markets in general and NYSHIP, in particular, are rather dynamic and as a consequence these estimates for the year 2000 must be considered soft.
For comparison purposes, Exhibit III 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 2000.
KEEPING YOU INFORMED
NYSHIP Representation at Municipal Events
NYSHIP's Empire Plan was represented at the Association of Towns Annual Meeting in New York City on February 14-17, 1999, and at the NYS Association of Counties Annual Legislative Conference in Albany on February 28-March 2, 1999.
NYSHIP will also participate as an exhibitor and consultant at the Annual Meeting of the NYS Government Finance Officers' Association in Albany on March 24- 26, 1999. If you are planning to attend this event, please visit our Empire Plan exhibit.
Name and Address Changes
Please be sure to notify the Employee Benefits Division of any changes so that we may keep our mailing lists up-to-date. This updated information may be sent to:
Mr. Stephen Kavanaugh
Assistant Director
Employee Benefits Division
State Office Building Campus
Building #1, Rm. 159
Albany, New York 12239
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) | 543,714 | 605,501 | 90,555 | 63,547 | 759,603 | 66,305 | 8,039 | 5,608 | 79,952 | 340,858 | 1,724,127 |
| B Incurred Claims (2) | 506,229 | 542,137 | 79,285 | 50,538 | 671,960 | 49,902 | 3,195 | 2,571 | 55,668 | 328,166 | 1,562,023 |
| C Administrative Expense (3) | 30,131 | 62,665 | 7,790 | 5,470 | 75,925 | 11,988 | 1,189 | 848 | 14,025 | 12,809 | 132,890 |
| D Gain/(Loss) (A-B-C) | 7,354 | 699 | 3,480 | 7,539 | 11,718 | 4,415 | 3,655 | 2,189 | 10,259 | (117) | 29,214 |
(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.
Source: 1998 4th Quarter Report
Exhibit I
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1999 and Projected 2000 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 | 247.05 | 260.07 | 5.3% | 233.20 | 254.29 | 9.0% |
| Best Estimate | 247.05 | 267.40 | 8.2% | 233.20 | 261.62 | 12.2% |
| Pessimistic | 247.05 | 274.80 | 11.2% | 233.20 | 269.02 | 15.4% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 507.42 | 533.88 | 5.2% | 476.31 | 521.93 | 9.6% |
| Best Estimate | 507.42 | 548.96 | 8.2% | 476.31 | 537.01 | 12.7% |
| Pessimistic | 507.42 | 564.17 | 11.2% | 476.31 | 552.22 | 15.9% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 178.22 | 202.02 | 13.4% | 169.33 | 198.49 | 17.2% |
| Best Estimate | 178.22 | 205.39 | 15.2% | 169.33 | 201.86 | 19.2% |
| Pessimistic | 178.22 | 208.81 | 17.2% | 169.33 | 205.28 | 21.2% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net 2000(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 439.33 | 476.63 | 8.5% | 413.18 | 466.92 | 13.0% |
| Best Estimate | 439.33 | 487.77 | 11.0% | 413.18 | 478.06 | 15.7% |
| Pessimistic | 439.33 | 498.99 | 13.6% | 413.18 | 489.28 | 18.4% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 369.71 | 417.75 | 13.0% | 348.51 | 410.29 | 17.7% |
| Best Estimate | 369.71 | 424.92 | 14.9% | 348.51 | 417.46 | 19.8% |
| Pessimistic | 369.71 | 432.18 | 16.9% | 348.51 | 424.72 | 21.9% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1999 and Projected 2000 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 | 277.67 | 292.64 | 5.4% | 260.48 | 282.52 | 8.5% |
| Best Estimate | 277.67 | 301.68 | 8.6% | 260.48 | 291.56 | 11.9% |
| Pessimistic | 277.67 | 310.79 | 11.9% | 260.48 | 300.67 | 15.4% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 568.84 | 599.21 | 5.3% | 484.94 | 578.60 | 9.1% |
| Best Estimate | 568.84 | 617.72 | 8.6% | 484.94 | 597.11 | 12.5% |
| Pessimistic | 568.84 | 636.36 | 11.9% | 484.94 | 615.75 | 16.1% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 186.36 | 210.67 | 13.0% | 175.61 | 206.17 | 17.4% |
| Best Estimate | 186.36 | 214.50 | 15.1% | 175.61 | 210.00 | 19.6% |
| Pessimistic | 186.36 | 218.37 | 17.2% | 175.61 | 213.87 | 21.8% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net 2000(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 478.26 | 518.04 | 8.3% | 446.33 | 503.04 | 12.7% |
| Best Estimate | 478.26 | 531.35 | 11.1% | 446.33 | 516.35 | 15.7% |
| Pessimistic | 478.26 | 544.75 | 13.9% | 446.33 | 529.75 | 18.7% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 386.15 | 435.24 | 12.7% | 360.73 | 425.88 | 18.1% |
| Best Estimate | 386.15 | 443.33 | 14.8% | 360.73 | 433.97 | 20.3% |
| Pessimistic | 386.15 | 451.51 | 16.9% | 360.73 | 442.15 | 22.6% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
Exhibit II
EMPIRE PLAN
Participating Agency Premium Rates
Comparison of 1999 and Projected 2000 Rates
CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENT
Plan Prime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 279.56 | 294.54 | 5.4% | 261.18 | 283.44 | 8.5% |
| Best Estimate | 279.56 | 303.58 | 8.6% | 261.18 | 292.48 | 12.0% |
| Pessimistic | 279.56 | 312.69 | 11.9% | 261.18 | 301.59 | 15.5% |
Plan Prime - Family
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 573.33 | 603.71 | 5.3% | 531.89 | 580.83 | 9.2% |
| Best Estimate | 573.33 | 622.22 | 8.5% | 531.89 | 599.34 | 12.7% |
| Pessimistic | 573.33 | 640.86 | 11.8% | 531.89 | 617.98 | 16.2% |
MediPrime - Individual
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 186.46 | 210.77 | 13.0% | 175.61 | 206.24 | 17.4% |
| Best Estimate | 186.46 | 214.60 | 15.1% | 175.61 | 210.07 | 19.6% |
| Pessimistic | 186.46 | 218.47 | 17.2% | 175.61 | 213.94 | 21.8% |
MediPrime - Family 1
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net 2000(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 480.95 | 520.74 | 8.3% | 447.05 | 504.41 | 12.8% |
| Best Estimate | 480.95 | 534.05 | 11.0% | 447.05 | 517.72 | 15.8% |
| Pessimistic | 480.95 | 547.45 | 11.0% | 447.05 | 531.12 | 18.8% |
MediPrime - Family 2
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) | |
|---|---|---|---|---|---|---|
| Optimistic | 387.05 | 436.14 | 12.7% | 360.66 | 426.39 | 18.2% |
| Best Estimate | 387.05 | 444.23 | 14.8% | 360.66 | 434.48 | 20.5% |
| Pessimistic | 387.05 | 452.41 | 16.9% | 360.66 | 442.66 | 22.7% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
EXHIBIT III
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 | 239.24 | 5.2% | 222.00 | 8.6% |
| 2000 (projected) | 264.23 | 10.4% | 255.36 | 15.0% |
Individual Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 7.4% | 7.5% |
| Most Recent 10 Years | 4.0% | 4.5% |
| Most Recent 5 Years | 4.3% | 5.8% |
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 | 539.14 | 4.8% | 499.75 | 7.8% |
| 2000 (projected) | 592.02 | 9.8% | 571.80 | 14.4% |
Family Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception | 8.0% | 8.0% |
| Most Recent 10 Years | 4.0% | 4.3% |
| Most Recent 5 Years | 4.0% | 5.5% |
*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
1995-2000 Monthly Rates
Individual Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 | 0.4% | 193.54 | -2.0% |
| 1996 (3) | 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 (projected) | 264.23 | 10.4% | 255.36 | 15.0% |
Individual Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 7.4 | 7.5 |
Family Planprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 486.99 | 0.5% | 440.35 | -1.5% |
| 1996 (3) | 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 | 592.02 | 9.8% | 571.80 | 14.4% |
| 2001 (projected) |
Family Planprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 8.0 | 8.0 |
Individual Medprime
| Year | Gross Rate | % Changes | Net Rate | % Change |
|---|---|---|---|---|
| 1995 | 214.70 | 0.5% | 193.54 | -1.5% |
| 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 (projected) | 214.60 | 15.1% | 210.07 | 19.6% |
Individual Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 1.3 | 3.8 |
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 | 480.95 | 6.2% | 447.05 | 9.1% |
| 2000 (projected) | 534.05 | 11.0% | 517.72 | 15.8% |
Family - 1 Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | 2.1 | 3.8 |
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 | 387.05 | 10.0% | 360.66 | 14.8% |
| 2000 (projected) | 444.23 | 14.8% | 434.48 | 20.5% |
Family - 2 or More Medprime Average Percent Increase
| Gross Rate % Changes | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure | -.5 | 1.9 |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.