5. WHY CDHC 1.0 FAILED
CDHC 1.0 SHIFTED COST FROM EMPLOYERS TO
EMPLOYEES AND OFFSET A PORTION OF THAT COST
VIA INCENTIVES (HRA/HSA) OFFERED TO INDIVIDUAL
PLAN MEMBERS.
• “Money is not a motivator.” ~ Maslow
• Benefits are more important than $$$ to most employees.
• We do not live in caves but in communities.
• Sense of Team / Peer Pressure trumps self-interest.
• Unaffordable care is not Consumer Directed care.
• You can’t “direct” what you can’t afford!
6. WHY DO WE NEED CDHC 2.0™?
• We need economically sustainable health benefits.
• Health Benefits for a family of 4 are on track to cost $40,000 by
2019.
• We need employees with healthier lifestyles.
• 70% of all cost is related to preventable conditions.
• We need members to shop for healthcare value & we need
healthcare that treats patients’ actual conditions effectively and on a
timely basis.
• 30% of all cost is for inappropriate treatment.
7. CDHC 2.0™ : THE PROCESS
• Employer designs plan:
• Meet Company & Member needs.
• Employer sets budget & acceptable rate of increase.
• Including Employee Contribution Formula.
• Employer communicates Benefit Partnership:
• “Past performance WILL determine future benefits!”
• Employer offers tools & resources to help meet goals.
• Employer varies plan design at renewal based on results.
8. CDHC 2.0™ : THE PARTNERSHIP MESSAGE
• The Company is committed to providing benefits that meet members’ needs.
• We have designed a plan to meet those needs.
• Health benefit resources are not unlimited & annual double digit increases
are not sustainable.
• We have agreed to absorb reasonable cost increases.
• Future benefit levels will be a direct reflection of members’ health care costs.
• We will provide the tools & resources to help control costs.
9. CDHC 2.0™ PARTNERSHIP : AN EXAMPLE
• Company designs plan with broad coverage and modest employee out-
of-pocket cost sharing.
• Company agrees to pay 70% of the cost of this plan.
• Company also agrees to pay 70% of each annual cost increase up to
a total cumulative increase of 6%/year.
• If cumulative cost increases total more than 6%/year,
SBP benefits will be adjusted downward.
• If cumulative cost increases total less than 6%/year, SBP benefits will be
adjusted upward OR surplus will be credited to a Benefit Stabilization
Fund (BSF).
10. CDHC 2.0™: Model
$1,500,000
Total Plan Cost
$1,000,000
$500,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Budget $1,000,000 $1,060,000 $1,124,000 $1,191,000 $1,262,000 $1,338,000
Premium Trend 12% 10% 8% 6% 4%
Cost of HDHP $800,000 $896,000 $986,000 $1,064,000 $1,128,000 $1,173,000
Cost of SBP $100,000 $103,000 $106,000 $109,000 $113,000 $116,000
Surplus/Deficit $100,000 $61,000 $32,000 $18,000 $21,000 $49,000
Benefit Stabilization Fund $100,000 $161,000 $193,000 $211,000 $232,000 $281,000
11. CDHC 2.0™: What If It Doesn't Work?
$1,500,000
Total Plan Cost
$1,000,000
$500,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Budget $1,000,000 $1,060,000 $1,124,000 $1,191,000 $1,262,000 $1,338,000
Premium Trend 12% 12% 12% 12% 12%
Cost of HDHP $800,000 $896,000 $1,004,000 $1,124,000 $1,259,000 $1,410,000
Cost of SBP $100,000 $103,000 $106,000 $109,000 $113,000 $116,000
Surplus/Deficit $100,000 $61,000 $14,000 -$42,000 -$110,000 -$188,000
Benefit Stabilization Fund $100,000 $161,000 $175,000 $133,000 $23,000 -$165,000
12. How CDHC 2.0™ Works: Case Studies
Milliman Index 50 Life Tech 120 Life Retail 50 Life Distributor 30 Life Credit Union
Plan Year Increase Increase Increase Increase Increase
2002 - 2003 Base Year Base Year Base Year
2003 - 2004 10% 12% -1% Base Year
2004 - 2005 11% 13% 4% -16%
2005 - 2006 9% 0% 9% 12%
2006 - 2007 10% Base Year 0% 5% 6%
2007 - 2008 8% -1% 7% 10% 0%
2008 - 2009 8% -3% -1% 1% 1%
2009 - 2010 7% -1% -2% 5% 11%
2010 - 2011 8% 2% 12% 5% 4%
Cumulative 9% -2% 6% 5% 2%
13. PRIMING THE PUMP FOR CDHC 2.0™
• Implement a Value Based Benefit Design:
• Focus limited resources on meeting members’ needs.
• Kick-off process with a survey to ID employee priorities.
• Incent wellness & consumerism.
• Fund Benefits Cost Effectively:
• Self-fund what’s predictable & affordable; insure the rest!
• Communicate Incessantly:
• The CDHC 2.0™ Partnership Philosophy.
• The Content of the Benefits themselves.
• Via Concierge Service & Member Advocacy.
14. WHY CDHC 2.0™ WORKS
• Employer & Employees share a common goal:
• Sustainable benefits that meet members’ needs.
• Employer & Employees share a common road map:
• Healthier members, higher quality care, greater value.
• Employer is incented to create a culture of health:
• Tools & resources to promote health and consumerism.
• Employees are incented to succeed in that culture.
• Use tools & resources, join company sponsored activities.
15. QUESTIONS?
For Additional Information, Please Contact:
David Cowles I Principal
1-800-528-1530 x 117
david@benemax.com
www.benemax.com
