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
JOHN F. BARR
EXECUTIVE DEPUTY COMMISSIONER
PA04-01
TO: Participating Agency Health Benefit Administrators
FROM: The Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: March 17, 2004
Enclosed is the Fourth Quarter Empire Plan Experience Report for 2003 and the cover letter to the Chief Executive Officers. This report presents the projected 2003 Empire Plan experience as well as projected 2005 premium rates.
March 17, 2004
Dear Chief Executive Officer:
Attached is the Empire Plan Fourth Quarter Experience Report for 2003. This report presents the projected 2003 Empire Plan experience based on claims paid through December 31, 2003 as well as the projected 2005 premium rates.
The Empire Plan carriers project a 2003 net dividend of $136.5 million, 3.9% of premium. The report explains the basis for this projection. The carriers will issue the 2003 experience statement on March 15, 2003.
The projected 2005 premium rates are presented in Exhibit II and reflect a "best estimated" net increase of 12.9%. The report also presents a range of the potential 2005 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
PARTICIPATING AGENCIES
EMPIRE PLAN
2003 Fourth Quarter
Experience Report
OCTOBER - DECEMBER 2003
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
PROJECTED 2003 EMPIRE PLAN EXPERIENCE
The Empire Plan carriers project a composite dividend of $136.5 million (3.9% of premium), or $89.8 million more than the margin loaded in the 2003 rates. The 2003 annual experience projected by the insurance carriers is reported in Exhibit I.
For the Prescription Drug Program, Cigna projects a gain of $65.3 million (6.1% of premium) or $42.7 million more than the margin level used in the development of the 2003 rates. This increase is reflective of the modest improvement in the 2002 claim base that occurred after the development of the 2003 rates coupled with an improvement in the 2003 trend, currently projected at 15.2%, as compared to the 20% level assumed in the rate development.
For the Medical Program, UnitedHealthcare projects a gain of $77.8 million (5.8% of premium) or $54.3 million more than the margin level used in the development of the 2003 rates. This experience improvement is attributable to a modest reduction in the 2002 estimated claim base as well as a reduction in the 2003 trend from 11.3% projected at the time of the 2003 rate development to the current projected trend of 8.5%.
Group Health Incorporated (GHI) projects a gain of $3.4 million (4.0% of premium) for the Mental Health Substance Abuse Program or $2.9 million more than the margin level used in the development of the 2003 rates. This improvement is largely attributable to a reduction in trend from 7% projected at the time of the 2003 rate development to 5.8%, the current projected trend level.
Empire BlueCross BlueShield (EBCBS) projects a net loss of $10.0 million (1.0% of premium) for the Hospital Program. The projected loss represents a $16.2 million improvement from the third quarter projection. This improvement reflects a more reasonable incurred claims projection by EBCBS, based on observed payments and historical completion factors. While the 2003 trend and tax assessments are higher than the amounts projected in the rate development, such higher amounts are offset by the improvement in the projected 2002 claim base that results in the modest projected loss.
2005 PROJECTED PREMIUM RATES
Exhibit II presents the projected 2005 Empire Plan gross and net premium rates assuming the application of $90.0 million in dividend to all payors. In aggregate, the Empire Plan gross premium is projected to increase approximately 12.9% while the net premium is also projected to increase 12.9%. A range of projected gross and net premium rates is also included (9.2% - 16.2%).
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, 1996. Exhibit IV presents, for illustrative purposes only, the two-tier rate history from 1996 to 2005.
KEEPING YOU INFORMED
Transmission of Reports Electronically
The Employee Benefits Division has the capability to transmit the Participating Agency Quarterly Experience Report via E-mail. Using a software product called Adobe Acrobat Readeri??, the PA Quarterly Report is converted into a portable document format (PDF). This is a format that can be read by any recipient, if they have Adobe Acrobat Readeri?? installed on their system. Adobe Acrobat Readeri?? is available free from Adobe Systems, Inc., at http://www.adobe.com.
There are many advantages to receiving the reports electronically including: reports will be received sooner; there will be less paper to handle; and the reports can be stored electronically and/or a hard copy may be printed.
If you would like to receive the report electronically, please provide your E-mail address by completing the bottom section of Attachment 1 and returning it to the Employee Benefits Division.
NYSHIP Representation at Municipal Events
NYSHIP's Empire Plan was represented at the 2004 Training School and Annual Meeting sponsored by the Association of Towns of the State of New York which was held February 15-17, 2004, in New York City.
The following municipal events are expected to take place on:
- The 2004 Local Government Conference sponsored by the New York State Tug Hill Commission on March 31, 2004, in Watertown, New York.
- The 2004 Annual Conference sponsored by the NYS Government Finance Officers' Association on April 1-2, 2004, in Albany, New York.
CEO and HBA Name and Address Changes
Please be sure to notify the Employee Benefits Division of any changes in the names and/or addresses of your agency's CEO or HBA so that we may keep our mailing lists up-to-date. This updated information may be sent to:
Ms. Mary Frye
Director, Employee Insurance Programs
Employee Benefits Division
NYS Department of Civil Service
State Office Campus, Building #1
Albany, NY 12239
Attachment 1
TRANSMISSION OF REPORTS ELECTRONICALLY
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If you would like to receive the report electronically, please complete this form and return it to:
Ms. Mary Frye
Director, Employee Insurance Programs
Employee Benefits Division
NYS Department of Civil Service
State Office Campus, Building #1
Albany, NY 12239
Agency Code: _______________________
Agency Name: _____________________________________________
Contact Person: _____________________________________________
E-mail Address: _____________________________________________
Phone Number: _______________________
Exhibit I
2003 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) | 997,383 | 1,103,713 | 126,697 | 108,134 | 1,338,544 | 69,542 | 9,199 | 5,994 | 84,735 | 1,071,026 | 3,491,688 |
| (B) Incurred Claims (2) | 916,927 | 959,567 | 94,760 | 79,883 | 1,134,210 | 52,691 | 8,420 | 5,732 | 66,843 | 973,573 | 3,091,553 |
| (C) Administrative Expense (3) | 90,502 | 109,613 | 9,174 | 7,761 | 126,548 | 11,911 | 1,577 | 1,026 | 14,514 | 32,105 | 263,669 |
| (D) Gain/(Loss) (A-B-C) | (10,046) | 34,533 | 22,763 | 20,490 | 77,786 | 4,940 | (798) | (764) | 3,378 | 65,348 | 136,466 |
(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: 2003 Carrier 4th Quarter Report
Exhibit II
Empire Plan
Participating Agency Premium Rates
Comparison of 2004 and Projected 2005 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 | 411.56 | 447.69 | 8.8% | 402.20 | 441.31 | 9.7% |
| Best Estimate | 411.56 | 462.71 | 12.4% | 402.20 | 456.33 | 13.5% |
| Pessimistic | 411.56 | 475.85 | 15.6% | 402.20 | 469.47 | 16.7% |
Plan Prime - Family
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 867.11 | 942.76 | 8.7% | 847.55 | 929.38 | 9.7% |
| Best Estimate | 867.11 | 97438 | 12.4% | 847.55 | 961.00 | 13.4% |
| Pessimistic | 867.11 | 1,002.10 | 15.6% | 847.55 | 988.72 | 16.7% |
MediPrime - Individual
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 330.38 | 371.11 | 12.3% | 322.87 | 363.63 | 12.6% |
| Best Estimate | 330.38 | 380.37 | 15.1% | 322.87 | 372.89 | 15.5% |
| Pessimistic | 330.38 | 387.69 | 17.3% | 322.87 | 380.21 | 17.8% |
MediPrime - Family-1 medicare
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 785.94 | 866.17 | 10.2% | 768.24 | 851.72 | 10.9% |
| Best Estimate | 785.94 | 892.05 | 13.5% | 768.24 | 877.60 | 14.2% |
| Pessimistic | 785.94 | 913.92 | 16.3% | 768.24 | 899.47 | 17.1% |
MediPrime - Family-2 medicares
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 704.75 | 789.58 | 12.0% | 688.91 | 774.03 | 12.4% |
| Best Estimate | 704.75 | 809.71 | 14.9% | 688.91 | 794.16 | 15.3% |
| Pessimistic | 704.75 | 825.75 | 17.2% | 688.91 | 810.20 | 17.6% |
Empire Plan
Participating Agency Premium Rates
Comparison of 2004 and Projected 2005 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 | 448.00 | fioyih 485.70 | 8.4% | 438.15 | 479.30 | 9.4% |
| Best Estimate | 448.00 | 502.73 | 12.2% | 438.15 | 491.87 | 12.3% |
| Pessimistic | 448.00 | 517.88 | 15.6% | 438.15 | 511.48 | 16.7% |
Plan Prime - Family
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 945.29 | 1,024.37 | 8.4% | 924.74 | 1,010.96 | 9.3% |
| Best Estimate | 945.29 | 1,060.29 | 12.2% | 924.74 | 1,037.66 | 12.2% |
| Pessimistic | 945.29 | 1,092.32 | 15.6% | 924.74 | 1,078.91 | 16.7% |
MediPrime - Individual
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 341.87 | 383.06 | 12.0% | 334.22 | 375.58 | 12.4% |
| Best Estimate | 341.87 | 392.94 | 14.9% | 334.22 | 384.02 | 14.9% |
| Pessimistic | 341.87 | 400.89 | 17.3% | 334.22 | 393.41 | 17.7% |
MediPrime - Family-1 medicare
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 839.18 | 921.71 | 9.8% | 820.82 | 907.24 | 10.5% |
| Best Estimate | 839.18 | 950.52 | 13.3% | 820.82 | 929.85 | 13.3% |
| Pessimistic | 839.18 | 975.31 | 16.2% | 820.82 | 960.84 | 17.1% |
MediPrime - Family-2 medicares
|
| Gross Rates(1) | Gross Rates(1) | Gross Rates(1) | Net Rates(2) | Net Rates(2) | Net Rates(2) |
|---|---|---|---|---|---|---|
| Optimistic | 733.05 | 819.06 | 11.7% | 716.88 | 803.50 | 12.1% |
| Best Estimate | 733.05 | 840.73 | 14.7% | 716.88 | 821.99 | 14.7% |
| Pessimistic | 733.05 | 858.33 | 17.1% | 716.88 | 842.77 | 17.6% |
(1) Represents premium charged by carrier.
(2) Represents cost to a participating agency.
(3) Projected Rates.
Exhibit III
EMPIRE PLAN
PA 5 TIER GROUP RATES
1996-2005 Monthly Rates
Core Plus Medical & Psychiatric Enhancement
Individual Planprime
| Year | Gross Rate (1) | % Change | Net Rate (2) | % Change |
|---|---|---|---|---|
| 1996 (3) | 234.59 | 9.3% | 207.66 | 7.3% |
| 1997 | 216.80 | 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 (Projected) | 502.73 | 12.2% | 491.87 | 12.3% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.9% | 9.8% |
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 (Projected) | 1,060.29 | 12.2% | 1,037.66 | 12.2% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 8.2% | 9.0% |
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 (Projected) | 392.94 | 14.9% | 384.02 | 14.9% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 7.1% | 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 (Projected) | 950.52 | 13.3% | 929.85 | 13.3% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 7.2% | 8.1% |
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 (Projected) | 840.73 | 14.7% | 821.99 | 14.7% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception of 5 Tier Structure (1996) | 6.6% | 7.8% |
(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.
Exhibit IV
EMPIRE PLAN
PA 2 TIER GROUP RATES
1996-2005 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 (Projected) | 453.63 | 12.6% | 443.72 | 12.5% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.4% | 8.3% |
| Most Recent 10 Years | 8.5% | 9.8% |
| Most Recent 5 Years | 11.7% | 11.8% |
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 (Projected) | 1,016.62 | 13.0% | 994.69 | 12.8% |
Average Percent Increase
| Gross Rate % Change | Net Rate % Change | |
|---|---|---|
| From Inception (1986) | 8.8% | 8.9% |
| Most Recent 10 Years | 8.5% | 9.9% |
| Most Recent 5 Years | 12.0% | 12.1% |
(1) Represents tier Empire Plan Rates; See 5 tier rate schedule effective 1/1/96.