From ELCIC Group Services Inc.
Winnipeg, May 21, 2002, (ELCIC) -- The week of May sixth, the notices for the premium rates for the national health and dental plan were mailed to the plan members and their employers. ELCIC Group Services Inc. (GSI) has received a few letters and emails which detail some concerns about the renewal rates.
Some concerns were raised regarding the timing of the increase. This change is effective for June and the remittance to GSI is due July 15th. Therefore employers have two months to process this change.
The Treasurer’s Information Booklet states that there would be a change June 1. In March 2002, notification was given to the Bishops that the change would be significant. The renewal notice period for premiums in our contract with Liberty Health is one month, leaving GSI very little turn around time to communicate with the members.
We at GSI understand that the time frame is only relevant when it coincides with budget setting. Now that we have developed some claims history we will be able to better estimate what the increases may be. We are reviewing the process and will endeavor to have estimates to the congregations at the time of their budget setting.
Some people were offended by the format of this communication, citing that it was impersonal and unapologetic. We certainly sympathize with the burden this renewal puts on congregations. The method was chosen to ensure the accuracy of the information in the most timely manner. There was a lot of detailed information to relay with several variations based on the regions.
Given the tight time frame the most efficient method of communicating this information was by a newsletter type of format.
Concerns were expressed regarding the large increase in some provinces and how the rates were determined. The new rates are based solely on the actual experience of members in the plan. GSI can not influence the experience and the related rates that are calculated from that experience.
Drug purchases make up 73% of the health claims. In past two years, several new drugs have been approved for use in Canada, specific examples include Vioxx and Celebrex. These drugs are significantly more expensive than their predecessors and usage has increased dramatically, likely as a result of awareness through the media in the United States.
Overall, high usage of plan benefits shows that the plan is providing for the needs of the members. We hope that the members see the value in the plan and that this increase demonstrates exactly how well used the plan is.
The policy that was set when GSI first entered into the contract with Liberty Health was to price the premiums based on the experience in each province and/or synod. With differences in provincial legislation and provincial coverage, it was determined that this method was the most equitable. At the time of the renewal it was confirmed by the Board of GSI and the bishops that we should continue in this manner.
Some members wondered if GSI did anything to guard against this increase. The national health plan was initially designed based on the existing Eastern Synod plan with some adjustments to make the plan design equitable across the country. The proposed plan designs and costs were reviewed with the bishops for feedback. After discussion about containing costs, the drug card and hospital coverage were eliminated.
The premium rates for each province of the national plan were set based on the claims experience provided by each of the existing plans with adjustments for plan changes and anticipated volume discounts for a nationwide plan.
Another question raised was how GSI intends to prevent future increases. The ability to prevent future increases lies solely in limiting what can be claimed. We need to know what parts of the plan the members are willing to give up, in order to determine how that will affect the rates. To the extent that Drug claims comprise over 70% of health claims, the Drug formulary will be the most critical component of cost containment.
Concerns were raised over the tendering process. The request for proposal was sent to insurance carriers asking them to provide quotations. The specifications included a summary of the current plans claims history of existing plans and a national plan design template.
Four carriers responded with quotes: Canada Life, The Co-operators/ Greenshield, Group Medical Services and Liberty Health. Of these, Canada Life and Liberty Health provided the most competitive quotes.
Liberty Health was chosen as the carrier for the National Plan for the following reasons:
Σ No significant deviations in plan design
Σ Longest rate guarantee
Σ Lowest retention charges
Σ Longest retention charges guarantee (initial 18 month period)
Σ Good service record as the underwriters of the existing Eastern Synod Plan
Σ Less disruption as the employees of the Eastern Synod were already enrolled in the plan.
We assure the membership that, in this renewal and in all future renewals, GSI performs due diligence with our consultants to ensure that the rates are warranted and competitive. Normally health increases are in the 15 to 20% range and dental is in the five to eight percent range. Next year rates will again be determined by experience, but we would expect that they would be closer to the normal ranges, pending any changes in government legislation.
Because the premiums are based on experience of the plan members, other companies would require experience history and price the plan similar to our current carrier. When we change carriers there are additional administrative costs and an education process for the members to find out what is covered and what forms to use etc.
The best practice for GSI is to carefully review the claims in conjunction with the renewal to ensure it is appropriate. Our practice is to "go to market" when we have issues of service.
There have been some service issues with Liberty Health. We are currently working to resolve those problems. Should we determine that these cannot be worked out a tendering process will begin.
A personal note from Hildy Thiessen, Executive Director, GSI:
As you are aware I am new to this position. One of my goals is to provide more information and communicate with the members on a timely basis.
The new communications newsletter, which we plan to publish semi-annually is one vehicle whereby I can do this. I also hope to have our web site running soon.
What I have learned in my short time here is that this organization strives to perform its tasks in the best interests of the members of the ELCIC. The staff here is dedicated, caring and has the highest regard for the needs of the members. Our consultants are very knowledgeable and experienced in these matters. The Board members have many personal strengths to offer in setting policy and making decisions. I hope to provide some leadership with my professional designation as a C.A. and my experience from previous environments. Be assured that we are all trying very hard to work through these difficult circumstances.
Please feel free to call me at any time if you have more questions. Your letters and emails can be directed to me. I believe these discussions are healthy for our organization and I look forward to working with you, to provide the best service.