Jim Wisdom, CFPJames L. Wisdom Insurance Services June, 2012
Skyrocketing health care costs Unaffordable rate hikes Diminished quality of life for employees Less hopeful health outcomes Less perceived value in health plan
Fewer employees monitoring their health and lifestyle ◦ Over 50% of all health care costs are due to lifestyle Chronic illnesses aren’t detected until the later stages, driving up costs and lowering employee’s overall health and productivity Higher absenteeism and presenteeism Lower employer profitability
Allow employees to enjoy better health and a better quality of life Employers to have a healthier, more productive workforce Lower, more stable premiums over the short and long-term Employers gain happier, more loyal clients
Like typical health plans, a Value Based Plans pays an insured’s claim when he/she is sick or injured Unlike typical health plans, Value Based Plans go further, rewarding members to take actions to improve and manage their health The Difference? Health Insurance vs. Healthy Insurance
Remember this formula: The # of detected conditions + the # of undiagnosed conditions = The # of actual health conditions in a group. It’s not uncommon for the # of detected conditions to equal about one third of the total, which means two thirds of conditions are undiagnosed. See Client Example ( SeeChange Health)
Undiagnosed conditions, if left undiagnosed until later stages, result in far higher health care claims
Cervical Cancer Claims Costs ◦ Early Stage Treatment: $16,000/yr. ◦ Late Stage Treatment: $84,000 ◦ Annual Difference: $68,000
Breast Cancer Claims Costs Early Stage Treatment: $16,000/yr. Late Stage Treatment: $108,000/yr. Annual Difference: $92,000/yr.
Prostate Cancer Claims Costs Early Stage Treatment: $13,000/yr. Late Stage Treatment: $54,000/yr. Annual Difference: $41,000/yr.
Colon Cancer Claims Costs Early Stage Treatment: $12,000/yr. Late Stage Treatment: $126,000/yr. Annual Difference: $114,000/yr.
Lower claims costs Lower health care premiums Early detection saves lives Early, smart intervention increases employee health and productivity
1,100 undiagnosed conditions times $50,000 annual savings when treated early equals $55 Million in annual savings. Note: From a group with 75,000 employees
Promote early detection and treatment of serious conditions Encourage members to see their doctor and reward them for taking “Health Actions”
Subscriber and Spouse voluntarily complete Preventive Health Actions to receive financial incentives Online Health Questionnaire Biometric Screening ◦ Phlebotomist ( blood draw)- 15 minute exam Preventive Care Exams ◦ Preventive Health Actions covered at 100% based on age/gender specific guidelines
Female Compliance Criteria ◦ 4 Age Categories ( 18-20; 21-39; 40-49; 50+) ◦ 6 Health Actions Online Health Questionnaire Biometric Screening Preventive Exam Pap Smear Mammogram Colorectal Cancer Screening
Male Compliance Criteria 2 Age Categories ( Age 18-49; 50+) 5 Health Actions Total ◦ Online Health Questionnaire ◦ Biometric Screening ◦ Preventive Exam ◦ Colorectal Cancer Screening ◦ Prostate Cancer Screening
American Heart Assn. American Diabetes Assn. American Cancer Society American Lung Assn. Nat’l Cholesterol Education Program U.S. Preventive Services Task Force Nat’l Asthma Education and Prevention Program Nat’l Heart, Lung and Blood Institute
Personal Dashboard allows employees to track progress online. Results of Health Actions may reveal chronic health conditions ◦ Pre-Diabetic Health Actions ◦ Diabetes Health Actions ◦ Asthma Health Actions ◦ Cardiovascular Disease Health Actions ◦ Coronary Artery Disease Health Actions
Some plans reward members by lowering members’ coinsurance and annual Out-of- Pocket Maximum Children also get enhanced benefits when employee and spouse ( if any) complete Health Actions Added Bonus: Once employee and spouse ( if any) complete Health Actions, all prior claims for the calendar year are re-adjudicated at the Enhanced benefit level.
Some plans offer HIA’s $200-$500 in HIA funds available to both Employee and Spouse/Domestic Partner Add’l financial rewards for completing Health Actions related to specific conditions Available to reduce the deductible or IRS approved medical expenses Unused amount may be carried over from year to year Unlike HSA’s, account balance forfeited if employee or employer leaves plan.
Value Based Plans have offered rate increases averaging 1.5% over the last two years ( far below industry norms) For groups of 51+, some are offering two year rate guarantees Value Based Plans may be attracting a healthier risk pool If this happens, Value Based Plans may continue to experience lower rate increases Conversely, traditional plans may experience higher than average rate increases
Value Based Plans may be the right approach for today’s challenges Other carriers are trying to catch up Employee choice is key with any group health plan. Work with an Employee Benefits Broker who has experience in all types of health plans ( HMO/PPO, HSA, HRA, Value Based Plans) Don’t forget Senior Planning ( for employees 65+)
Jim Wisdom, CFP President James L. Wisdom Insurance Services 4607 Lakeview Canyon Road- Suite 482 Westlake Village, CA 91361 Work: (805) 497-9264 Cell: (818)469-6640 Fax: (805) 435-3636 www.wisdomhealthplans.com CA License #0699524