No doubt about it. Orange County employees will be seeing a seven percent increase in their health insurance costs. Members of the Texas Association of Counties and the Health Employees Benefit Pool held a workshop Monday afternoon following the Orange County Commissioners’ Court meeting on Health and Benefits Renewal.

Charlotte Collins with TAC told the court the Affordable Care Act, or Obamacare, will have an impact on cost containment measures. She gave a time line presentation on health care reform beginning in 2014. She said the excise tax in 2018 exceeds what the federal government has stated.

The excise tax will be a 40 percent tax on the amount of benefit exceeding specific threshold. For instance, $10,200 ($850/month) per individual and $27,500 ($2,291/month) for a family.

Transitional reinsurance over a three year span starting in 2014 is expected to generate $20-$25 billion. The excise tax, or “Cadillac Tax” in 2018 is expected to generate more than $80,000 in the first five years.

Bill Norwood with TAC said the excise tax is a way to fund subsidies. He added both Republicans and Democrats are modifying or getting rid of the excise tax altogether.

Orange County’s projected excise tax in 2018 is $0 at five percent assumed trend and $16,383 at eight percent assumed trend. The threshold is indexed to CPI and is set to increase annually beginning in 2019.

The cost of health care is rising because:

Members with chronic conditions account for a majority of all health care spending.

ER visits are more expensive than a visit to an Urgent Care facility or a visit to your doctor.

Condition management is key for those employees diagnosed with one for more chronic condition.

Rosalinda DiTommaso of TAC said there are three ways to control costs: informed health care consumers, plan design changes and lower utilization through wellness.

Claims analysis reveals dependents are less costly to the pool compared to employee and spouse utilization. The average out of pocket expense per claimant was $751 for the year to date.

Commissioners also discussed a possible tobacco user surcharge to reduce the county’s risk around smoking related diseases. Each smoker costs an employer an additional $5,128 a year in health care costs and lost productivity. All employees and spouses covered by the county’s plan who are tobacco users and have not enrolled in an approved tobacco cessation program will incur a $25 monthly surcharge.

David Dubose, Precinct 1 commissioner, said he’s not opposed to increasing the monthly surcharge.

DiTomasso said the steps needed for the court’s approval is to adopt incentive structure to proactively prepare for the approaching excise tax and engage employees in healthier lifestyle behaviors.

Collins then gave a presentation on the private exchange.

She said a private exchange is marketplaces of health insurance and other related products. Employers purchase health coverage through the exchange for their employees. Employees can choose a health plan from the menu. The goal is to maintain benefits and control rates so the county government can continue benefits. Employees are given some control over their health benefit plan.

Initial cost will be higher than current plan; cost shifting may adversely impact employees. Counties may see this as a suitable approach to limiting the budgetary impact of their future health benefit costs.

Long-term sustainability will be difficult if health care costs continue to grow faster than increases in contribution rates. There is no one-size-fits-all solution. Circumstances will dictate approach. Evaluate the decision from an overall perspective, not simply from a financial perspective. The renewal rate is $649.84 for each employee. The current rate is $607.34.

County Judge Carl Thibodeaux said the county currently has good insurance, but it has increased due to employee utilization.

“The more we use it, the more it will cost,” he said. Thibodeux told the TAC personnel it was the best presentation he’s seen in the 20 years he’s been county judge.

In other county business, the court approved authorizing Road & Bridge to fill the mechanic position that became vacant eight weeks ago. The mechanic will work on the buses of the transportation department. Thibodeaux said the county needs to keep the buses running. “It’s cheaper than repair,” he said. The department currently has one mechanic certified in propane which the buses run on.

John Banken, Precinct 3 commissioner, voted no to the hiring. He said it makes no sense to hire someone for three or four months only to for them to lose their job due to budget cuts to save the county money.

Owen Burton, Precinct 2 commissioner, said there is a wet/dry alcohol election in his precinct and he was curious if the Orange County Expo & Convention Center on FM 1442 will be placed in a liable situation if alcohol is served there.

Thibodeaux said the court will make a decision after the wet/dry election in November is completed. He added outside concerns such as Miller Lite or Budweiser may cater the center and draw in big name performers for future events.