Board of Aldermen 3-31-2020 Page 4
certainly Mr. Budreau and all of WBS Team.
So we looked at these claims and we looked at our average claims by employee per plan and that’s what you
see here. This is Fiscal 19 Plans, what WBS had come back and indicated to us was that if the City saw all of
our subscribers move to the high deductible health plan, we would save an estimated $6.8 million dollars. So
went back and did this type of exercise. If you move to the next slide in Fiscal 20, you will see that this year
we had 2,136 subscribers, 745 of those are single, 519 are two person and 872 are family. The family and
the single subscribers are fairly balanced throughout the City. But what this does prove to us is that WBS’s
research, not that we didn’t believe it to be true, they have been spot on. on most everything they have
delivered to the City over the years, but it did prove to us that $6.8 million dollar figure, if all of our employees
converted from the HMO and the POS to the high deductible health plan.
So the next slide is the actual data that we received from WBS last fall. | want to note a couple of things here.
This was early last fall so the claims had only been approximately 2 to 3 months in. You see a large
fluctuation when you look at our health plan. Right now, Anthem has done a shift in reporting. So it used to
be that they reported the claim as the claim came in, excuse me, they reported it as it was paid. And now
they are trying to report it as the claims are received by them. Right now, we only have claims data through
the end of February even though they have been receiving claims through the end of March.
This shows that the high deductible healthcare claim cost for the City has actually decreased 21% since
Fiscal 17, or 7.6% annually, where the HMO costs have increased 24% since Fiscal 17 or 7.4% annually. The
expected difference between the HMO and the HSA Plan is approximately 15% and the current actual claim
differential is about 31%. With that | am going to turn it over to Mr. Budreau for a few minutes.
Larry Budreau, Human Resources Director
Thank you, Kim, may | have the next slide please? Health Maintenance Organizations or HMO’s came into
being in the early 1980’s. They followed historical health insurance which was known an indemnity plans in
which you would go to the doctor and you would pay a portion, say 20% and the healthcare plan would pay
the rest. HMO’s were marketed in the early 1980’s as providing managed care, the thought being that the
patient would have a primary care provider who would direct the patient's care through the medical care
system and therefore do so more efficiently. The trouble became over the next 40 years that the HMO’s were
so convenient, you go to the doctor, pay the $20.00 copay, do what the doctor says. The doctors are
certainly most interested in their patient’s care, but they were not necessarily most interested in economizing
healthcare. HMO Members are really unaware of their claim’s costs in New Hampshire, there is no EOB
provided and they pay $20.00 copay for most services.
An HSA or what we refer to as an HSA is known as a Consumer Driven, High Deducible Health Plan with a
Health Savings Account. It is a type of a plan that is endorsed by the IRS. You have to have a high
deducible health plan in order to have a Health Savings Account. The mechanism here is different. Every
time a patient goes and receives medical service, they do get an EOB. The awareness of that claims cost
and the fact that there is a deductible that has to be paid just fosters a natural interest in consumer
involvement. So the concept between high deductible health plans is it is bringing some elements of
consumerism back into healthcare.
The Health Savings Account is a tax-free savings plan. | read a description today that said it is not taxed
when you take it from your pay, it is not taxed when it is invested, it is not taxed when you spend it. The
balance carries over from one year to the next, so unlike the earlier flexible spending accounts, this keeps
growing and growing and growing. It is portable at retirement or resignation; that means that when an
employee leaves an organization with an HSA, that money is theirs, that account is theirs. In addition to
health claims, the tax-free funds may be used to pay other qualified medical expenses.
Mayor Donchess did an earlier message about this plan and mentioned that someone in the City had said,
“Gee I’ve accumulated a fair amount of money” and that is possible for a number of people who are able to
