1
A Conversation on Healthcare Reform
“Setting a New Strategic Direction”
The City of Greenville, NC
NCLGBA Conference
Wri...
2
Panelists
 Frank Salvato, Benefits Manager,
City of Greenville, North Carolina
 Steve Graybill, Principal,
Mercer Cons...
3
Discussion Topics
 “Tough decisions in this new environment”
 Evaluating “pay or play” and market “exchanges”
 The Ci...
4
Tough decisions
 Complex law with varied guidance
 Added cost implications
 Employee anxiety over changes
 Maintaini...
PREPARING FOR
HEALTH CARE EXCHANGES
Steve Graybill
Steve.graybill@mercer.com
Not Peer Reviewed
6MERCER
CONTENTS
Evolution of health care benefits environment
Exchange environment
• Public exchanges
• Private exchanges...
7MERCER 7
EVOLUTION OF HEALTH CARE BENEFITS ENVIRONMENT
Managed care: thru 2003
Consumerism: 2004 thru
2010
Reform: 2011+
...
8MERCER
WHAT IS A PUBLIC EXCHANGE?
• Created by ACA
• Structured marketplace to sell and purchase health
insurance
• Subsi...
9MERCER 99
2014 State Exchange Timeline
2012
Dec
2013
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Dec
2014
Jan
Dec. 14, 20...
10MERCER
PUBLIC EXCHANGES
STATUS OF STATE ELECTIONS AS OF 17 MAY 2013
1010
Source: Kaiser Family Foundation
Default to fed...
11MERCER 11
WHAT DO THE PUBLIC EXCHANGES DO?
Provide financial management
Ensure plan accountability
Assist consumers
Dete...
12MERCER
2014: PRODUCTS OFFERED IN EXCHANGES
EXCHANGE PRODUCTS WILL DIFFER FROM GROUP PLANS
Plan options in public exchang...
13MERCER
ELIGIBILITY FOR EXCHANGE PREMIUM TAX CREDITS
BASED ON SECOND-LOWEST COST SILVER PLAN IN 2014
Maximum monthly cont...
14MERCER
2014: FAMILY COVERAGE IN A PUBLIC EXCHANGE
PREMIUMS AND SUBSIDIES WILL DETERMINE APPEAL
Individual product costs ...
15MERCER 15
State Exchanges: Interactions Among the Players
W-2, SBC, Communication
Enrollment Coordination
Benefit Eligib...
16MERCER
WHAT IS A PRIVATE EXCHANGE?
Marketplace with core and voluntary product offerings across
many benefits and servic...
17MERCER 17
PUBLIC VS PRIVATE EXCHANGES
Medical,
prescription
Dental, vision, life,
voluntary, plus more
Government
sponso...
18MERCER
GROWING INTEREST IN PRIVATE HEALTH CARE EXCHANGES
18%
56%
2011 2012
Why are employers looking at
private health c...
19MERCER
HOW DO PRIVATE EXCHANGES WORK?
Funding:
DB or DC
Employer defined
contribution
Employee
contribution or
combinati...
20MERCER
Member
service
center
Online
tools
 All benefits – core and voluntary
 Vendor management
 Financial projection...
21MERCER
PRIVATE EXCHANGE
VALUE TO EMPLOYERS, EMPLOYEES AND RETIREES
EMPLOYERS
• Improved decision making
• Predictable co...
22MERCER 22
STRATEGIC OPPORTUNITY FOR EMPLOYERS
MERCER 23
Group
Self-
insured
Individual
InsuredRISK
ControlNone Total
DIFFERENT INDUSTRIES,
CHALLENGES AND DIRECTIONS
Exc...
MERCER 24
BROADER REWARDS CONSTRUCT
Benefits
Life balance
Pay
Career
24
25MERCER
The City of Greenville’s Approach
Frank Salvano, Benefits Manager
25
26
The City of Greenville’s approach
 Key challenges to address with PPACA
 Continued sustainability of affordable healt...
27
The City of Greenville’s approach
 Strategic plan to reduce the cost of health care
 Started in January 2010 for Heal...
28
The City of Greenville’s approach
 Our health plan strategies to reduce costs
 Had two self funded health plans – bas...
29
The City of Greenville’s approach
 Wellness strategies to reduce costs
 Introduced monetary incentive for employees t...
30
The City of Greenville’s approach
 What’s next ?
 Introduction of a third health plan
 CDHP with an H S A or H R A
...
31MERCER
Strategies Getting More Attention
Reggie White, General Manager, Cigna
31
32
Strategies getting more attention
 Wellness and health management engagement
 More comfort with privacy around engage...
33
Closing and Q & A
We appreciate your participation in this discussion
Thank you
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Healthcare Reform Discussion (Summer 2013 NCLGBA Conference)

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Healthcare Reform Discussion (Summer 2013 NCLGBA Conference)

  1. 1. 1 A Conversation on Healthcare Reform “Setting a New Strategic Direction” The City of Greenville, NC NCLGBA Conference Wrightsville Beach, North Carolina July 11, 2013
  2. 2. 2 Panelists  Frank Salvato, Benefits Manager, City of Greenville, North Carolina  Steve Graybill, Principal, Mercer Consulting  Reggie White, General Manager, Cigna Government & Education Segment
  3. 3. 3 Discussion Topics  “Tough decisions in this new environment”  Evaluating “pay or play” and market “exchanges”  The City of Greenville’s approach to reform  Strategies that are getting greater attention
  4. 4. 4 Tough decisions  Complex law with varied guidance  Added cost implications  Employee anxiety over changes  Maintaining competitive benefits package
  5. 5. PREPARING FOR HEALTH CARE EXCHANGES Steve Graybill Steve.graybill@mercer.com Not Peer Reviewed
  6. 6. 6MERCER CONTENTS Evolution of health care benefits environment Exchange environment • Public exchanges • Private exchanges…and defined contribution Strategic opportunity for employers 6
  7. 7. 7MERCER 7 EVOLUTION OF HEALTH CARE BENEFITS ENVIRONMENT Managed care: thru 2003 Consumerism: 2004 thru 2010 Reform: 2011+ Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, US City Average of Annual Inflation (April to April) 1990-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2012. Managed care Consumerism Reform
  8. 8. 8MERCER WHAT IS A PUBLIC EXCHANGE? • Created by ACA • Structured marketplace to sell and purchase health insurance • Subsidies provided for those who qualify based on income • Goal: Insure all Americans
  9. 9. 9MERCER 99 2014 State Exchange Timeline 2012 Dec 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 Jan Dec. 14, 2012 States interested in operating a state-based exchange in 2014 were required to submit a declaration letter and an blueprint application to HHS. In January 2013, HHS said it will give states more time to decide whether to create a state- run exchange Feb. 15, 2013 States must submit a declaration letter and blueprint application to HHS to participate in a state partnership exchange. Approvals will be made on a rolling basis Jan. 1, 2014 Exchanges operational, providing health insurance to individuals and small business employees Apr. 1 – July 31, 2013 HHS advises states operating a Plan Management Partnership Exchange to complete the plan certification process during this time Jan. 1, 2013 HHS issues conditional approval for state-based exchanges Oct. 1, 2013 – Feb. 28, 2014 Proposed initial open enrollment period for exchanges Mar. 29, 2013 HHS advises states operating a Consumer Assistance Partnership exchange to begin education and outreach efforts
  10. 10. 10MERCER PUBLIC EXCHANGES STATUS OF STATE ELECTIONS AS OF 17 MAY 2013 1010 Source: Kaiser Family Foundation Default to federal exchange 27 Declared state exchange 17 Planning partnership exchange 7
  11. 11. 11MERCER 11 WHAT DO THE PUBLIC EXCHANGES DO? Provide financial management Ensure plan accountability Assist consumers Determine eligibility, enroll individuals Manage plan activities
  12. 12. 12MERCER 2014: PRODUCTS OFFERED IN EXCHANGES EXCHANGE PRODUCTS WILL DIFFER FROM GROUP PLANS Plan options in public exchange are named after metals Public exchanges ER | Group Bronze Silver Gold Platinum Catastrophi c age <30 and those eligible for a hardship waiver Plan design1 Features Plan value 60% 70% 80% 90% under 60% >60% • Silver – second-lowest cost plan – is baseline for calculating government subsidy • Government subsidy and member contribution requirement calculated based on income, vary by level between Medicaid eligibility and 400% FPL • Once subsidy determined for silver plan, can use for gold plan (pay more) or bronze plan (pay less) • No subsidies are available for catastrophic coverage 12 1.Some provisions apply differently for grandfathered and non-grandfathered plans. Employer plans generally must offer coverage of at least 60% value to full time employees to avoid shared responsibility penalties.
  13. 13. 13MERCER ELIGIBILITY FOR EXCHANGE PREMIUM TAX CREDITS BASED ON SECOND-LOWEST COST SILVER PLAN IN 2014 Maximum monthly contribution to avoid employer penalties if using FPL safe harbor $11,490 x 9.5% ÷ 12 = $90.96 (based on 2013 FPL; safe harbor for 1/1/14 calendar year plans) Other options for affordable contribution safe harbor are: W-2 earnings and rate-of-pay. % Poverty level Annual household income Plan value with cost-sharing credit Maximum monthly employee contribution in exchange % Household income Dollars <100% <$11,490 Medicaid / Access gap N/A N/A <138% <$15,856 Medicaid (if expanded) N/A N/A 138% $15,856 +24% to 94% 3.00% $40 150% $17,235 +17% to 87% 4.00% $58 200% $22,980 +3% to 73% 6.30% $121 250% $28,725 70% 8.05% $193 300% $34,470 70% 9.50% $273 400% $45,960 70% 9.50% $364 >400% >$45,960 70% No maximum Full cost Individual in 2014 (Based on 2013 FPL of $11,490) 13
  14. 14. 14MERCER 2014: FAMILY COVERAGE IN A PUBLIC EXCHANGE PREMIUMS AND SUBSIDIES WILL DETERMINE APPEAL Individual product costs will vary by state Total monthly premium at 150% of average Family of 4 Averag e Iowa New York Silver plan $2,653 $2,202 $2,918 Average group plan total premium 150 % Silver plan 110% Pay full premium $83/month $49,000$33,000 $100,000 2014 family silver plan total premium at 150% = $2,653/month Full premium at 100% $1,769/month 1.Oliver Wyman. Impact of PPACA on costs in individual and small-employer health insurance markets 2.Mercer Survey of Employer-Sponsored Health Plans, 2012 – Employers 500+; All employers = $148/month for individual; $544/month for family Individual product prices could be higher than in group plans1 – and may rise faster Average monthly employee contribution for PPO coverage2 Individual $111 Family $391 Family of 4 average household income $261/month 14
  15. 15. 15MERCER 15 State Exchanges: Interactions Among the Players W-2, SBC, Communication Enrollment Coordination Benefit Eligibility Plan Value Coverage Value Employee Data Participation Employer Plan Data Tax Filing Penalties Reporting & Filing Verify Coverage Participation Enforce Coverage Mandate Marketplaces EMPLOYEES EMPLOYER HHS | IRS
  16. 16. 16MERCER WHAT IS A PRIVATE EXCHANGE? Marketplace with core and voluntary product offerings across many benefits and services Exchange sponsor stocks products and manages end-to-end consumer experience
  17. 17. 17MERCER 17 PUBLIC VS PRIVATE EXCHANGES Medical, prescription Dental, vision, life, voluntary, plus more Government sponsored Broker, insurer, TPA technology firm Actives, retirees PUBLIC PRIVATE Open Closed Single or multiple carrier Individuals Small Group Group plans Insured or self-funded
  18. 18. 18MERCER GROWING INTEREST IN PRIVATE HEALTH CARE EXCHANGES 18% 56% 2011 2012 Why are employers looking at private health care exchanges?  One-stop shopping across core medical, life, disability and voluntary benefits  Technology eases employee decision- making  Collective buying power and influence help control total benefit cost  Some allow employers to retain control  Employees are not necessarily opposed to change, as long as they see financial benefit Percent of employers that would consider offering a private exchange 18
  19. 19. 19MERCER HOW DO PRIVATE EXCHANGES WORK? Funding: DB or DC Employer defined contribution Employee contribution or combination Administration Eligibility determination Data-driven events Election management Contribution calculation HR profes- sionals Reporting & premium data Employee support Online Call center Print & e-mail Integrated benefit processes PayrollDeductions Carriers Election data 19
  20. 20. 20MERCER Member service center Online tools  All benefits – core and voluntary  Vendor management  Financial projections  Open enrollment  Ongoing event management  Payroll reporting  Carrier eligibility reporting  Premium reporting  Member service center  Member communications  Compliance  FSA administration  Health savings accounts  COBRA administration Comprehensive solution MERCER MARKETPLACESM WHAT WE DELIVER 20 Employee experience  All insurance needs met with one-stop shopping  Best prices  Personalized experience and portfolio  Multi-channel, targeted messaging  Experienced, objective benefits counselors Employer experience  Comprehensive, one-stop benefits management  Facilitates defined contribution  Proactive project management and accountability  Compliance with evolving legislation  Purchasing strength
  21. 21. 21MERCER PRIVATE EXCHANGE VALUE TO EMPLOYERS, EMPLOYEES AND RETIREES EMPLOYERS • Improved decision making • Predictable costs • Increased employee engagement • Turnkey, end-to-end solution • Delegate compliance EMPLOYEES/RETIREES • Increased appreciation of benefits • Expanded choice • Informed health care decisions • Better health behaviors • User-friendly process 21
  22. 22. 22MERCER 22 STRATEGIC OPPORTUNITY FOR EMPLOYERS
  23. 23. MERCER 23 Group Self- insured Individual InsuredRISK ControlNone Total DIFFERENT INDUSTRIES, CHALLENGES AND DIRECTIONS Exchange Exit Maintain Delay 23
  24. 24. MERCER 24 BROADER REWARDS CONSTRUCT Benefits Life balance Pay Career 24
  25. 25. 25MERCER The City of Greenville’s Approach Frank Salvano, Benefits Manager 25
  26. 26. 26 The City of Greenville’s approach  Key challenges to address with PPACA  Continued sustainability of affordable health benefits  Engagement of employees in living a healthier life style  Moving from an entitlement mentality to one of partnership  Migrating to an outcome based Health Management Program  Address paying for the coverage of dependents
  27. 27. 27 The City of Greenville’s approach  Strategic plan to reduce the cost of health care  Started in January 2010 for Health Plan and Wellness Initiative  Detailed discussion with consultant Mercer  Ensuring alignment with current PPACA mandates  Developed employee communication plan  Key mandates of particular focus  Eligibility of employees working 30 hours of more  Paying for at least 60% of health care expense  Available to 95% of employees  Affordable at 9.5% of household income
  28. 28. 28 The City of Greenville’s approach  Our health plan strategies to reduce costs  Had two self funded health plans – basic (90/10 plan) and enhanced (co-pay only)  Moved to new basic 80/20 and enhanced 90/10 plan  Created larger cost differential between basic and enhanced plan  85% of employees on the enhanced plan  City paid for 100% of premium increase to basic plan  Shared increase with enhanced plan  Result- employees migrated to basic plan  Ensured alignment with current PPACA mandates
  29. 29. 29 The City of Greenville’s approach  Wellness strategies to reduce costs  Introduced monetary incentive for employees to complete biometric screening and health risk assessment  $25 gift certificate produced 23% engagement  $150 gift card produced 43% engagement  Moved to a Health Management Points Program in year three  Employees earn points in three areas Preventive care Health carrier programs (disease management) Wellness activities (2,000 activity minutes per quarter) $150 gift care incentive with possibility of drawing entry Also introduced a spousal and tobacco user surcharge
  30. 30. 30 The City of Greenville’s approach  What’s next ?  Introduction of a third health plan  CDHP with an H S A or H R A  Hoping to migrate about 20% of employees to this plan  Use Health Mgmt Points Program as gateway to enhanced plan or to qualify for premium discounts on all plans  Believe we will engage greater than 80% of employees.
  31. 31. 31MERCER Strategies Getting More Attention Reggie White, General Manager, Cigna 31
  32. 32. 32 Strategies getting more attention  Wellness and health management engagement  More comfort with privacy around engagement  Focus on employee communication to drive adoption  ROI discussions and vendor guarantees on improvement  Chronic condition management (ex. Diabetes)  Greatest consistent impact on health care costs (5/50)  More client attention to intervention and true health impact  Provider, facility, and network solutions  High performing networks for quality/cost steerage  “Accountable care” and patient centered medical “homes”  Client/hospital partnerships expanding
  33. 33. 33 Closing and Q & A We appreciate your participation in this discussion Thank you

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