Cook County Commissioner Bridget Gainer - 10th District: Citizens' Guide to P...
Commissioner Bridget Gainer - Path to Solvency II, Health Care Spend & Pension Solvency Current Employee Insurance Information
1. PATHS TO SOLVENCY II
HEALTHCARE SPEND & PENSION SOLVENCY
June 19, 2012
Bridget Gainer
Cook County Commissioner – Tenth District
Chairman, Pension Subcommittee
2. Cook County Healthcare Spend
The annual cost to Cook County 2011 Cook County Healthcare Spend
for employee healthcare is 2011 Employee Contribution
$13,964 per employee. $13,964
There are 22,960 County
employees and 32,454
dependents receiving healthcare
for a total cost to the County of
$304.4MM. $13,258.00
The average County employee
contributes $706.00 annually, or
5.05%, for a total cost to
employees of $16.2MM.
$706.00
3. Per Employee Healthcare Spend: Public Sectors
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
Per Employee Cost
US Private Sector $9,792
2011*
City of Boston 2009 $11,044
Cook County 2011 $13,964
City of Chicago 2011 $12,000
Philadelphia 2009 $12,594
*National Study, October 2011
4. Employee Contributions Towards
Healthcare Spend: Private & Public Sectors
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00% E m p loyee Cost S h are
2011 Cook Cou n ty 5.05%
2011 S tate of IL HM O 11.74%
2011 S tate of IL P P O 12.55%
2011 Kaiser S tu d y, P u b lic & P rivate; 18.00%
S in g le
2010 HHS , US P rivate S ector, S in g le 21.80%
2012 Hewitt S tu d y, P u b lic & P rivate 22%
2010 HHS , US P rivate S ector, F am ily 23%
2011 Kaiser S tu d y, P u b lic & P rivate; 28%
F am ily
5. Healthcare Exchange & Paths to Pension Solvency
Cook County spends $304.4MM on healthcare benefits and $195 million in retirement
benefits annually. Thus of the $499.4MM in total employee benefits, 61% goes towards
healthcare and 39% to retirement.
The introduction of a Healthcare Exchange can reduce the County’s overall healthcare costs
and free up revenue for increased contributions to the County pension fund.
The County can also incorporate current retirees into a County healthcare exchange and
take over the payment of retiree healthcare costs.
The transfer of retiree medical costs to the County combined with a reduced COLA for
retirees and current employees, plus a 1% increase in employee contributions, will result in a
funded status that improves to 88.1% by 2050.
6. Pension Fund and County Healthcare Costs
Pension Fund Cook County
7,925 members with 22,960 members with
2,409 dependents 32,454 dependents
Total Cost: $46.9m Total Cost: $304.4MM
Cost per member under Cost per
65: $16,075 member:$13,964
Cost per member over Avg. EE cont.: $706
65: $7,128 (5.05%), total $16.2MM
Retiree Cont: 45-50% Total Healthcare Cost:
of premium, total $35.6 $320.6MM
Total Healthcare Cost:
$82.5MM
Total Members: 65,748
Total Cost: $403.1MM
Total Cost (less employee/retiree cont.): $351.3MM
Pension Funded Status without HC liability in 2011: 62.5%
Pension Funded Status without HC, a reduced COLA and a
1% increase in EE contributions in 2050 : 88.1%
7. Structure of Healthcare Exchange Plan
All active employees and retirees begin participating in a private healthcare exchange where all
participating insurers offer a minimum level of coverage approved through negotiations with
employee organizations.
The County pays between $10,000-$12,000 in premium costs for active employees:
Active Employees 22,960
$10,000 per employee = $229,600,000
$12,000 per employee = $275,520,000
The County pays between $3,500 and $5,550 in premium costs for all Medicare eligible retirees
and $8,500-$10,500 for non-Medicare eligible retirees:
Medicare Eligible Retirees: 5,291
$3,500 per retiree = $18,518,500
$5,500 per retiree = $29,100,500
Non-Medicare Eligible Retirees: 2,422
$8,500 per retiree = $20,587,000
$10,500 per retiree = $25,431,000
The total County spend in a defined contribution medical exchange healthcare system for all
current employees and retirees would be $268.7MM to $330.1MM depending on the subsidy
amount per member.
A County healthcare exchange can save between $82 to $21 million.
8. Healthcare Exchange and Pension Reform
Moving the retiree healthcare obligation from the fund to the County will
reduce the pension funds total liability by $1.68 billion.
The removal of the retiree healthcare obligation plus a COLA reduction for
retirees and current employees to 3% simple or half of CPI and will
decrease the overall pension fund liabilities by $2.95 billion.
These changes plus a 1% increase in employee contributions and a 1.54%
in County contributions will increase the Pension Funded Status to 88.1%
by 2050.
9. Pension Reform Proposal
Reduce COLA for Current Employees and Retirees, Increase Employee
Contributions by 1% (County Contributions Increase by 1.54%) and move the
payment of Retiree Healthcare to the County Operating Budget.
Cook Count Pension Funded Status
100.00%
80.00%
60.00%
COLA reduced for all, 1% EE
cont. increase, and transfer of
40.00% retiree healthcare costs to
County
Do Nothing
20.00%
0.00%
2010 2015 2020 2025 2030 2035 2040 2045 2050
-20.00%
-40.00%
10. Sources
Annual Healthcare Contract as approved by the Cook County Board on September 7, 2011. Additional Healthcare
information provided by Lisa Walik, Director of Cook County Risk Management.
Pew Center on the States, “Quiet No More: Philadelphia Confronts the Cost of Employee Benefits. June 2009
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Philadelphia-
area_grantmaking/PewBenefits_June2909.pdf
Hewitt, “Average Cost of U.S. Health Coverage per Employee”. October 2011
http://ir.aon.com/phoenix.zhtml?c=105697&p=RssLanding_pf&cat=news&id=1612590
Commission on Government Forecasting & Accountability, “Liabilities of the State Employees’ Group Health
Insurance Program Fiscal Year 2012.” March 2011
http://www.ilga.gov/commission/cgfa2006/Upload/StateEmployeesInsuranceFY2012.PDF
Hewitt Health Value Initiative database
HHS; Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. “Table
II.C.3(2010) Percent of total premiums contributed by employees enrolled in single coverage at private-sector
establishments that offer health insurance by firm size and State: United States, 2010”
http://meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/state/series_2/2010/tiic3.pdf
HHS; Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. “Table
II.D.3(2010) Percent of total premiums contributed by employees enrolled in family coverage at private-sector
establishments that offer health insurance by firm size and State: United States, 2010”
http://meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/state/series_2/2010/tiid3.pdf