HomeMy WebLinkAboutAgenda - 6-b - Resolution Authorizing the Participation in the North Carolina Health Insurance Pool (NCHIP)ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 6, 2018
Action Agenda
Item No. 6 -b
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SUBJECT: Resolution Authorizing the Participation in the North Carolina Health Insurance
Pool (NCHIP)
DEPARTMENT: Human Resources
ATTACHMENTS:
1. Draft Resolution Authorizing the
Participation in the North Carolina
Health Insurance Pool (NCHIP)
INFORMATION CONTACT:
Brenda Bartholomew, Human Resources
Director, (919) 245 -2552
PURPOSE: To approve the Manager's recommendation to join the North Carolina Health
Insurance Pool (NCHIP) effective July 1, 2018. NCHIP is a new health risk pool coordinated
through Gallagher Benefit Services, which provides economies of scale and risk pooling to
provide greater financial stability among participating North Carolina counties, cities, and towns.
BACKGROUND: The County provides health insurance coverage for employees and pre -65
participating employees. With North Carolina healthcare costs trending at 7.5 percent annually,
it is imperative that the County provides financial stability and predictability in funding healthcare
costs over the coming years. Orange County can anticipate, based on continued good
experience and stable enrollment, a five year projection of $17.3 million dollars for July 1, 2022.
The NCHIP projects a 3.3 percent increase based on proven statistical findings from Illinois,
Missouri and Florida co -op programs, representing a five year projection of $14.7 million dollars
(not including additional savings for return of dividends).
With a 7.5 percent medical trend increase from year to year; the annual budget will double by
2027. The County's health insurance budget has cumulatively increased by 12 percent in the
past 4 years compared to a 9 percent cumulative increase in the overall County budget,
demonstrating the importance of planning stability in future budgets.
North Carolina State Law allows local governments to enter into contracts to establish health
insurance pools as a means of providing health insurance to employees. NCHIP operates with
a Board of Directors with members having a voice and vote in how the Pool operates. Each
2014 -15
2015 -16
2016 -2017
2017 -18
Health Insurance Budget
$10,900,000
$11,082,953
$11,784,305
$12,265,000
Health Budget % Increase
1.68%
6.33%
4.08%
North Carolina State Law allows local governments to enter into contracts to establish health
insurance pools as a means of providing health insurance to employees. NCHIP operates with
a Board of Directors with members having a voice and vote in how the Pool operates. Each
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local government member has representation on the Pool's Board which is vital to the long -term
success of the pool. The Executive Board will be responsible for reviewing financials, evaluating
vendor relationships, evaluating new members /partners, discussing trends and innovative
strategies in planning stability in funding health insurance costs. Members of NCHIP retain the
right to create and change their plan designs. Additionally, Orange County may have the
possibility of collaborating with local Fire Districts and smaller municipalities to encourage
participation in the pool.
Other benefits of NCHIP participation include:
• No reserves are needed for an internal service fund.
• No penalty to withdraw from the pool; only a one -year commitment is required.
• Full transparency and reconciliation provided by independent accounting and auditing
firms selected by the NCHIP Board.
• Volatile claims over $40,000 become a fixed cost offering more predictable and stable
budgeting.
• Ownership /partnership of NCHIP allows Orange County to help drive decisions.
• Participation on the onset of co -op allows input to the structure of the by -laws.
• Orange County pays the same monthly bill to NCHIP (approximately $1.1 million);
offering more stability in cash flow and the pool administers payment of claims.
• Return of savings as dividends directly to Orange County.
• Possibility of targeting dividends to Other Post - Employment Benefits (OPEB) funding.
With NCHIP vendor partners would include BlueCross BlueShield of North Carolina (BCBSNC)
for network and claims administration and BCBS Prime Therapeutics for pharmacy benefits
management for three years. Thereafter, additional vendor /partnership relationships can be
considered and recommended to the BOCC. Stop loss coverage is currently out to bid. NCHIP
leverages partners for best -in -show contracts and pricing.
Overall, participation in NCHIP would mean the County would terminate its current vendor
relationships with UnitedHealth care and Envision Rx.
NCHIP is fundamentally different than the North Carolina Association of County Commissioners
(NCACC) insurance pool participation in that:
• NCHIP is member - driven, giving its members the authority to make decisions to drive the
pool forward.
• NCHIP believes a long -term partnership with BCBSNC is foundational to the success of
the pool while, at the same time, allowing NCHIP members the flexibility to offer
additional network and pharmacy solutions if there is a need to do so.
Numerous local governments across the State are currently in the process of evaluating their
participation in NCHIP.
FINANCIAL IMPACT: An increase of $750,000 in the FY2018/2019 Health Insurance
appropriation.
SOCIAL JUSTICE IMPACT: The following two Orange County Social Justice Goals are
applicable to this agenda item:
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• GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND
INEQUITY
The fair treatment and meaningful involvement of all people regardless of race or color;
religious or philosophical beliefs; sex, gender or sexual orientation; national origin or
ethnic background; age; military service; disability; and familial, residential or economic
status.
• GOAL: ENSURE ECONOMIC SELF - SUFFICIENCY
The creation and preservation of infrastructure, policies, programs and funding necessary
for residents to provide shelter, food, clothing and medical care for themselves and their
dependents.
RECOMMENDATION(S): The Manager recommends that the Board:
1) Approve Orange County to join the North Carolina Health Insurance Pool (NCHIP)
effective July 1, 2018, allowing long -term stability and predictability in future health
insurance budgets, greater buying power, continued ownership in plan design and the
opportunity to capture savings through dividends. This will allow Orange County to
demonstrate how, by working together, governments across North Carolina may
collaborate to create a stable, predictable, and sustainable health program;
2) Approve and authorize the Chair to sign the Resolution for Participation in the North
Carolina Health Insurance Pool (Attachment 1); and
3) Authorize the County Manager to sign the applicable bylaws /contract and subsequent
vendor contracts when applicable following the County Attorney's review.
RES -2018 -007 DRAFT
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ATTACHMENT 1
RESOLUTION AUTHORIZING THE
PARTICIPATION IN THE
NORTH CAROLINA HEALTH INSURANCE POOL
WHEREAS, North Carolina local governments, including any North Carolina county,
city, or housing authority, may enter into contracts or agreements under Article 23 of Chapter 58
of the North Carolina General Statutes (the "Local Government Risk Pool Act ") to establish
pools providing for life or accident and health insurance for their employees on a cooperative or
contract basis with one another;
WHEREAS, this local government anticipates the creation of the North Carolina Health
Insurance Pool (NCHIP), a pool providing for accident and health insurance for employees of
North Carolina local governments in accordance with the Local Government Risk Pool Act; and
WHEREAS, this local government wishes to become a member of the NCHIP on certain
conditions;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS
OF THE OF , as follows:
SECTION 1 If the conditions described in Section 2 of this Resolution are satisfied, this
local government, as of July 1, 2018, will become a Member of the North Carolina Health
Insurance Pool (NCHIP), an intergovernmental cooperative to pool health insurance risks with
other North Carolina local governments.
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SECTION 2 This local government will participate in NCHIP effective July 1, 2018, only
if the following conditions are satisfied no later than May 31, 2018:
(A) NCHIP is properly formed under the laws of the State of North Carolina and the
provisions of the Local Government Risk Pool Act and a board of trustees
meeting the requirements of N.C.G.S. § 58 -23 -10 is properly empaneled.
(B) The board of trustees of NCHIP adopts bylaws and/or a form of agreement or
contract that meets the requirements of N.C.G.S. § 58 -23 -15 and other applicable
provisions of the Local Government Risk Pool Act.
(C) The NCHIP risk pool includes commitments for participation on July 1, 2018,
from local governments that together will consist of no fewer than two thousand
five hundred (2,500) lives in the risk pool.
The terms and conditions of membership in NCHIP will be such terms and conditions as are
imposed by the board of trustees of NCHIP in the acceptance motion, and the contractual
obligations under the terms of the contract and by -laws of NCHIP as such document is adopted
by the board of trustees of NCHIP and as it may be amended in accordance with its terms.
SECTION 3 If, on May 31, 2018, all of the conditions identified herein are satisfied,
then, in accordance with N.C.G.S. § 58- 23 -5(e), County Manager of this local government, or
such other officer, as shall be authorized, is directed to give notice (or cause notice to be given)
to the North Carolina Commissioner of Insurance no later than June 1, 2018, in a form prescribed
by the Commissioner that this local government intends to participate in NCHIP as of July 1,
2018.
SECTION 4 If, on May 31, 2018, all of the conditions identified herein are satisfied,
then, the County Manager of this local government, or such other officer, as shall be authorized,
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is directed to execute, after review and approval by the County Attorney or his designee, any
documents necessary to complete the membership of the local government in NCHIP.
SECTION 5 This Resolution shall be in full force and effect upon its passage, approval
and publication in pamphlet form, if required by law.
PASSED this day of , 20
AYES:
NAYS:
ABSENT:
Mark Dorosin, Chair
Orange County Board of Commissioners
ATTEST:
Clerk
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