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Health Care Reform Preparedness: Strategies for Making Your Health Care More Affordable


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Health Care Reform Preparedness: Strategies for Making Your Health Care More Affordable

  1. 1. HEALTH CARE REFORMPREPAREDNESS 105:Strategies for Making Your HealthCare More AffordableBrought to you by:
  2. 2. Recap of Previous SessionsChanges through 201322010 – 2011 • Small employer tax credit rolled out• Employers can declare their plans grandfathered• No lifetime maximum on benefits• Kids covered up to age 26• Preventative care provided with no cost sharing• No over-the-counter drugs under HSA/health FSA2012 • Must report value of health coverage onW2• New SBC format for easier plan comparisons• Expanded preventative care including free contraceptives2013 • Health FSA now limited to $2,500• New PCORI fee of $1 per member per year ($2 next 6 yrs)• New Medicare taxes on those earning over $200,000
  3. 3. Recap of Previous SessionsChanges in 2014 & Beyond3MarketChanges• All policies must be guaranteed issue with no exclusions forpre-existing health conditions• All group policies for 2-50 EE’s will be community rated• New individual and small group exchanges will be available• New fees on insurance companies will be added to premiumsPay or PlayMandate• NO MANDATE ON EMPLOYERSWITH LESSTHAN 50 EE’S• Larger employers must provide coverage or pay penalties• If no coverage, penalty is $2,000 per EE except first 30• If coverage not “affordable,” pay $3,000 for each EE w/subsidyCoverageChanges• Waiting periods can’t exceed 90 days• Cost sharing limits: $2,000/$4,000 deductible for smallemployers, out of pocket max is limited to HSA limits for all• Cadillac tax in 2018 on premiums that exceed $850/mo single
  5. 5. Cost Trends5– Healthcare costs double every 7 years– 8x higher than the Consumer Price Index (CPI)– and 5x higher than the average annual increasein earnings98%160%93%168%24%50%21%38%0%20%40%60%80%100%120%140%160%180%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Health Insurance PremiumsWorkers Contribution to PremiumsWorkers EarningsOverall Inflation
  6. 6. Cost Trends2013 Towers Watson StudyMedian PEPY Cost in 2012: $10,909Expected Median in 2013: $11,461• A recent Dun & Bradstreet publication cited risinghealthcare costs as #1 threat to corporate profits inAmerica today.• And, 60% of CFOs named healthcare costs as their biggestconcern for 2012, according to a recent Bank ofAmerica/Merrill Lynch Survey.Healthcare/GDPHealthcareOther6• Healthcare Spending– $1.4 Trillion in 2001 vs. $3.1Trillion projected for 2012– 17.7% of our GDP projectedfor 2012
  7. 7. Cost Trends:Employees’ Bottom Line7
  8. 8. Cost Trends:Employers’ Bottom Line0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%10% TrendToday5 Years Out10 Years OutMargin Lost to Rising Healthcare Costs8
  9. 9. One More Reason to WatchYour Health Care Costs9Tier Annual Monthly 6% 8% 10% 12%EE $10,200 $850 $635 $578 $528 $482EF $27,500 $2,292 $1,712 $1,560 $1,423 $1,3002018Cadillac Level 2013Premiumthat TriggersTaxin 2018• There will be a 40% excise tax on “Cadillac” plans in 2018 and later• Cadillac plans are defined as those with premium exceeding $10,200 singleor $27,500 family• The limits index very slowly, so this will get harder and harder to avoidThe Cadillac Tax
  10. 10. Impact Strategies that Work1. Savvy Plan Design10
  11. 11. Savvy Plan Design• Partial Self Funding• Health Reimbursement Arrangements(HRAs)• Dual Option High Deductible Health Plan(HDHP) paired with a Health SavingsAccount (HSA)11
  13. 13. Savvy Plan DesignPARTIAL SELF FUNDING ADVANTAGES• Benefits are just like fully insured options,including HSAs• Can be invisible to employees• Escape small group community rating restrictions of theACA• Full claims data at renewal AND mid-year– Early renewal prediction– Customize employee communication– Impact utilization (and, therefore, your own bottom line)Gain bargaining power beyond “normal”small group limitations!13
  15. 15. Savvy Plan Design• Dual Option HDHP + HSA– HDHP + employer HSA contribution allowsemployer to purchase less insurance (i.e. lowerpremiums) while keeping employee spend down– Teaches actual insurance costs (vs. copays) andalmost always for lower out-of-pocket maximums– Tax advantages that remain with employees, plusfunds can be used for a variety of expenses– HSA / HDHP coverage now has 13.5 Millionenrollees15
  16. 16. Impact Strategies that Work1. Savvy Plan Design2. Wellness that Works16
  17. 17. Wellness: The Bottom Line17
  18. 18. What Small Businesses Can Do1. Rising healthcare costs are largely due to lifestylechoices2. Addressing those choices not only reduceshealthcare costs but also absenteeism, disability,and accidents3. Many small group carriers offer included:a) Health assessmentb) Disease managementc) Online education resources4. Others include at an extra cost:a) Online coaching programsb) Biometric screeningsc) On-site weight management or smoking cessationprograms18
  19. 19. Why Most Wellness Doesn’t Work1. LACK of proper incentive structures toengage unhealthy employees2. LACK of strategic coordination with themedical plan AND the year-round support todrive itOver half (54%) of U.S. consumers say they put effort intolearning more about their personal health risks, but fewer thanhalf are actively pursuing healthier behaviors. (Deloitte 2009Survey)19
  20. 20. Wellness that Works• Properly-designed incentivestructures are VITAL:– Getting participation– Behavior changes of those who need it most (i.e. betterclaims)– Coordination with medical plan (e.g. disease management)• Rewards and/or a “wellness budget” canbe built revenue-neutral into your plan– Health Insurance Portability and Accountability Act (HIPAA)– Genetic Information Nondiscrimination Act (GINA)– Americans with Disabilities Act (ADA)• Year-round communication is key• Try various challenges throughout theyear20
  21. 21. Wellness that Works21Revenue Neutral Wellness Participation Rate: 54.3%CurrentEmployeePremiumCurrentEnrollmentNonWellnessParticipantsNonWellnessPPTPremiumWellnessParticipantsWellnessPPTPremiumCombinedPremiumsAfterIncentivesAnnualPremiumDifferenceEE $75 20 9 $125 11 $50 $900ES $150 5 3 $200 2 $100 $1,200EC $125 3 2 $175 1 $75 $1,200EF $300 7 2 $350 5 $225 $1,500Total 35 16 19Monthly Premium $4,725 $2,775 $1,950 $4,725 $0Annual Premium $56,700 $33,300 $23,400 56,700$ $0Revenue Nuetral Wellness Incentive Modeling
  22. 22. Impact Strategies that Work1. Savvy Plan Design2. Wellness that Works3. Create Consumerism22
  23. 23. Create ConsumerismIF Car Insurance were like HealthInsurance:• You’d wait until your car was stolen and then buy apolicy;• Oil changes, wiper blades and new tires would all beFREE or have a $20 copay;• Company cars would all be Mercedes Benz;• Employees would rack up speeding tickets or get inwrecks, then be surprised by rate increases.23
  24. 24. • Consumerism Topics:– Insurance Carrier OnlineResources– Emergency Room vs. Urgent Care– Rx Brand Name vs. Generic + MailOrder– Flexible Spending Account (FSA)– How the ACA affects eachemployee as an individual citizenCreate Consumerism
  25. 25. Create Consumerism• Plan design + contribution: It’s your $$ at stake!– Incentives– Utilization• Year-round communication campaign• Encourage use of cost/quality data• Educate via multiple mediums• Explain “what’s in it for me?”2572011 Mercer Survey
  26. 26. Impact Strategies that Work1. Savvy Plan Design2. Wellness that Works3. Create Consumerism4. Proactive Planning26
  27. 27. The Typical Approach• Waiting Until Renewal– Leaves no time to implement strategy– The ACA demands that you plan ahead!– Continues the cycle of reactivebudgeting/forecasting• Greater Cost-Sharing– Creates dissatisfaction– Jeopardizes participation– Unsustainable long-term• Limiting Eligibility– Limits recruiting– Compliance concerns under healthcare reformDefeat the TruePurposeof BenefitsAnyway!27
  28. 28. • MEDIAN EMPLOYERSThe average large employer,that typically takes multiplesteps to improve their costsachieved a two year trend of7.0%, before plan design orcontribution changes.• BEST EMPLOYERSEmployers who took the mostproactive steps to managetheir costs experienced a Two-Year Trend of only 2.2%.The Value of Proactive Planning0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%Median Performers Best PerformersTowers Watson / NBGH 2013 Study onPurchasing Value in Health Care
  29. 29. Brought to you by:Thank You!Questions?Eden Ripingill(303) 306-2561Eden.M.Ripingill@kp.orgKristen Russell(303)