Upload
jasher4323
View
154
Download
2
Tags:
Embed Size (px)
DESCRIPTION
One hour strategic credit approved presentation. Co-Authored and presented by Mary Harwood, PHR, Karen Alter and Janet(Asher)Vreeland, CEBS
Citation preview
Healthcare Costs, HealthCare Reform and Family Wellness
0
SHRM 2012 Trend Book – Top three Benefit Concerns:
1
Health care costs Health care reform Family health
SHRM 2012 Trend Book – Top three Benefit Concerns:
2
Health care costs Health care reform Family health
Hypothesis: Consumer Driven Health plans play an active role and have a track record of success in strategies that address all three concerns So let’s explore our topic in the context of Yesterday, Today and Tomorrow……….
Yesterday
The Social Transformation of American Medicine:
The rise of a sovereign profession and the making of a vast industry
Paul Starr
Winner of 1984 Pulitzer Prize for General Non Fiction
3
Today
The Peculiar American Struggle over Health Care Reform
Paul Starr Winner of the 2011 American Publishers Awards and Scholarly Excellence
(PROSE) in the Government and Politics category, as given by the Association of American Publishers
4
Woodrow Wilson – 28th President of the United States (1913 – 1921)
5
Health Care Reform first begins in 1917
Between 1910 and 1913 Workers Compensation laws passed requiring compulsory insurance against industrial accidents
Political reformers thought Americans could be persuaded to adopt compulsory insurance against sickness which caused poverty and distress among many more families
National debate on health insurance begins on the eve the U.S. enters WWI
6
In Favor of Health Reform and Compulsory Health Insurance Believed workers would benefit from compulsory health insurance as a means of income protection Believed enhanced quality of life and that employers would realize handsome returns from a healthier more productive workforce As an additional cost containment feature, reformers strongly believed that doctors should be paid on a capitated basis instead of fee for service…
7
Opposed to Health Reform - Business, Unions, Insurance Industry and the Medical Profession
Opposition for these groups had more to do with issues of control and power rather than the argument that strong and healthy citizens lead to a strong and healthy country Neither employers nor unions were interested in a social welfare program that would increase workers’ loyalty to either of them Opposition from insurance industry was due to the initial proposed health insurance package that included a funeral benefit. Prudential had 38% of the market and Met 34% of the industrial life insurance market
8
Opposed to Health Reform - Business, Unions, Insurance Industry and the Medical Profession
The medical profession and the AMA believed the patient physician relationship was sacred. Doctors charged what their patients could afford to pay and would do anything in their collective power to defeat a system that introduced intermediation into their compensation
9
What happened instead of national health insurance?
1920s and 1930s
Health care costs began to hit the middle class both with increased physicians fees and hospital costs
1929 Health care costs estimated at 4% of national income or $3.66 billion.
Social Security and The New Deal offered an expansionary vision: increased access to medical care by augmenting nation’s medical resources and reducing financial barriers to their use – yet no threat to physicians’ income.
1940s and 1950s Kaiser, Kaiser Permanente evolved from industrial health care programs for construction, shipyard, and steel mill workers for the Kaiser industrial companies during the late 1930s and 1940s. It was opened to public enrollment in October 1945.
1960s
Academic medicine flourished and hospital growth mushroomed
10
Kaiser’s Legacy
11
Former Broncos owner Kaiser, approved trade for Elway, dies CBSSports.com wire reports Jan. 14, 2012 5:42 PM ET DENVER -- Former Denver Broncos owner Edgar F. Kaiser Jr., who oversaw the trade that brought Hall of Fame quarterback John Elway to Denver, has died, according to a charitable foundation Kaiser established. Cheryl Smith, PHR, Safety and Benefits Specialist Desert Del Oro
Foods – Northwest Arizona Human Resource Association (NWAHRA) – June 2012
Richard Nixon – 37th President of the United States (1969 – 1974)
12
Discovery of a Crisis - Runaway costs and Barriers to access
From 1960 – 1975 the share of health care expenditures paid by third parties increased from 45 to 67 percent (The Blues, private plans, Medicaid, Medicare)
The $10.8 billion government had spent in 1965 became $27.8 billion by 1970
Health expenditures had risen from 4.4% of the federal budget in 1965 to 11.3% of the budget in 1973
13
Discovery of a Crisis - Runaway costs and barriers to access
Specialization flourished and general practitioners grew scarce
Lack of facilities and providers in rural areas
Emphasis on inpatient care over ambulatory and preventive health services
14
Discovery of a Crisis - Runaway costs and barriers to access
Favorable HMO legislation passed during this era
1979 7.9 million people were enrolled in HMOs
HMOs costs were significantly lower mainly because of reduced hospitalization
For every 1,000 people, Kaiser plan subscribers had only 349 days of hospitalization compared to a national average of 1,149
However Nixon’s political dream of national health insurance disappeared in the scandal that ended his presidency
15
Bill Clinton – 42nd President of the United States (1993– 2001)
16
Clinton Health Care Plan of 1993
Provided universal health care coverage for all Americans
Employer mandate to offer coverage to all employees through HMOs
Hillary Clinton was drafted by the Clinton Administration to head a new Task Force and sell the plan to the American people, a plan which ultimately backfired amid the barrage of fire from the pharmaceutical and health insurance industries and considerably diminished her own popularity
By September 1994, the final compromise Democratic bill was declared dead
17
What did happen during Bill Clinton’s first term?
The Family and Medical Leave Act of 1993 (FMLA) is a United States federal law requiring covered employers to provide employees job-protected and unpaid leave for qualified medical and family reasons
The bill was a major part of President Bill Clinton's agenda in his first term. President Clinton signed the bill into law on February 5, 1993
18
Barack Obama – 47th President of the United States (2009 – current)
19
Today
According to Kaiser Family Foundation, the United States spends more per capita on health care than any other country
Spending as a percentage of the gross domestic product has risen from 9 percent in 1980 to 16 percent in 2008; and may top the 20 percent mark in a few years
20
21 21
Since 2006 Today 2012
Total Cost 52% increase Nearly $13,000 per employee annually
Employer 40% increase $8,000 average spent per employee
Employee 82% increase of out-of-pocket and payroll contributions
$5,000 average spent per year
With employee pay typically rising at 3% per year, compare a 19% pay increase to an 82% health care cost increase over the past 5 years. Experts estimate that health care costs will continue to rise at 8-9% per year
Source: Aon Hewitt HHVI Database
Unsustainable Health Care Cost Increases Are a Universal Concern
22 22
Worsening Health Risk – A National Problem
of Americans will be overweight or obese by 2030 based on current trends. Today 33% of adults are overweight and 34% are obese. Childhood weight is also an issue with 32% of US children currently overweight or obese
of all medical spending is accounted for by obesity, compared to 6.5% in 1998
increase in claims cost for each unit increase of BMI
the new onset of diabetes for a weight gain of 11–18 pounds over 10 years
deaths per year may be attributable to obesity
increase in the risk of coronary heart disease mortality for each 2.2 pound increase in body weight
It starts with Obesity: know the NUMBERS
86%
300,000
1%–1.5%
2.3%
10% Double
Sources: various academic and governmental publications
Health Care Reform 2010 Addressed Access to Coverage
23
BUT…did not address cost or population health
Consumer Driven Health Plans To The Rescue?
24
What Is a Consumer Driver Health Plan (CDHP)?
25
A High Deductible Health Plan (HDHP)
A Tax Favored Account HRA or HSA
Integrated with Health
Management/Wellness Framework
Consumer Tools & Resources
A ‘Qualified’ High Deductible Health Plan (HDHP) Minimum Deductible:
2012 $1,200 Single / 2,400 Family
2013 $1,250 Single / 2,500 Family
Maximum Out of Pocket
2012 $6,050 Single / $12,100 Family
2013 $6,250 Single / $12,500 Family
Maximum HSA Contributions
2012 $3,100 Single / $6,250 Family
2013 $3,250 Single / $6,450 Family
Catch up contributions allowed for those over 55
•All expenses apply to deductible with the exception of preventive care
•Preventive care can include physician services, lab/xray and some medications
26
‘Qualified’ HDHP & Health Savings Account (HSA)
27
Gap $2,000 Employee Responsibility
Health Plan (Qualified HDHP)
$2,000/year Deductible
Health Plan Pays After Deductible
HSA (Employer or Employee Funded)
Preventive Care 100%
Limited purpose FSA (vision, dental, expenses
after deductible)
Assumes single, in-network coverage
Health Reimbursement Arrangement (HRA)
28
HRA - $1,000
Employer Provided Coverage
Health Plan (PPO, HMO, HDHP)
$2,000/year Deductible
Health Plan Pays After Deductible
GAP - $1,000
Employee Responsibility
Preventive Care 100%
FSA (If elected)
Assumes single, in-network coverage
HRA/FSA/HSA—Features
30
Strategy and HDHP/CDHP Plan Designs
What type of high-deductible, consumer-driven health plan(s) does your organization offer or plan to offer?
50%
9%
21%
13%
31%
1%
2%
2%
7%
50%
21%
35%
32%
43%
69%
42%
52%
19%
Currently Offer Will Offer in 2012 May Offer in 3–5 Years Not Interested
High-deductible health plan with employer-seeded Health
Savings Account (HSA)
HSA-eligible, high-deductible health plan with no employer
account funding
High-deductible health plan with Health Reimbursement
Arrangement (HRA)
High-deductible health plan without an attached account
Other
Source: Aon Hewitt 2012 Health Care Survey
31 31
Greater CDHP Acceptance—HRA or HSA Option
Consumer
Choice
HRA Prevalence
¹ Source: Aon Hewitt 2012 CDHP Survey Results
HSA Prevalence 2011 – 59% 2012 – 62%
HRA Prevalence 2011 – 41% 2012 – 38%
HSAs Gaining Popularity
Nationwide 11.4 million people were enrolled in HSAs January 2011, up by 1.4 million from a year earlier according to America’s Health Insurance Plans Center for Policy and Research.
In Arizona, 174,720 employees have HSAs – about 5% of the state’s private health insurance enrollees.
Phoenix Business Journal, May 4, 2012
32
THE TOP 5 – Employer Objectives for offering CDHP
1. Promote Self-Service Environment and Accountability (Consumerism)
2. Contain Rising Health Care Costs
3. Provide a Low-Cost Plan Without Increasing Employee Contributions
4. Offer ‘Cutting Edge’ Benefits
5. Expand Choice of Offerings
*Aon Hewitt 2012 CDHP Survey – Middle Market
33
Case Study: Arizona Central Credit Union
Why Did Arizona Central Credit Union Chose a CDHP?
Rising costs of employee benefit costs
Culture shift away from mindset that benefits are free
The need to offer an affordable premium option for employees with dependents
Ability to save using a Health Savings Account (HSA)
Case Study: Arizona Central Credit Union
Transition Process
Transitioned from offering traditional PPO and HMO plans to HDHP with HSA and a Choice Plan (EPO) Started charging premiums for the EPO and offered deductible subsidy for the HDHP Honesty and Transparency Were Key!
Started from the Top with Visible Senior Leadership Support
Educated and Trained our Employees
Case Study: Arizona Central Credit Union
Transition Process
Selected HSA Funding Strategy
Years1 and 2 - Subsidized In-Network Deductible at 50% Contributed - $750 individual Contributed - $1500 Family
Years 3 and 4 - Discontinued HSA subsidy and started charging premiums for
HDHP plan
Case Study: Arizona Central Credit Union
HDHP with HSA Enrollment Results
Year % of Enrollment in HDHP with HSA
2009--Year 1 39%
2010--Year 2 41%
2011--Year 3 40%
2012--Year 4 33%
Case Study: Arizona Central Credit Union
Experience
-9.1
9.6
11.9
8.1
-9.1
4.6
8.9
-2
-15
-10
-5
0
5
10
15
Plan
Res
ults
Plan Years
ACCU Initial Renewal ACCU Final Renewal PPO Trend CDHP Trend
2009 2010 2011 2012
38
Case Study: Arizona Central Credit Union
Wellness Initiatives
Biggest Loser Competition
Partnered with Local Gym
Took Advantage of all the FREE resources
Case Study: Arizona Central Credit Union
Impact of Health Care Reform on Benefit Plan Strategy
90%
Report From the Field – What Do the Carrier’s Say?
“Over five years, cumulative cost savings are sustainable and can grow to $9700 per employee enrolled in a CDHP compared to employees who remained in a traditional plan.” Higher levels of care - preventive care, such as annual office visits and mammograms,
more frequent More savvy consumers of health care – choose generic medications and had 14% lower
pharmacy costs by comparison Source: Cigna Sixth Annual Choice Fund Experience Study released March 2012
“CDH Plans Offer Material Savings “ Savings can result from better decision making HSA plans are associated with higher savings than HRA plans A well designed plan includes a ‘preventive’ drug list Source: UnitedHealthcare Consumer-Driven Health Plan Performance Report 2011
41
Report From the Field – What Do the Carrier’s Say?
“HRA/HSA members spend 7% less on overall health care costs” More frequent use of routine, preventive and chronic care Higher usage of online tools Plan sponsors impact engagement by thoughtful execution of strategy
Source: 8th Annual Aetna Health Fund Sturdy released 2012
42
Lessons Learned
Communication is Key! Early and Often Multimedia Approach
HR & other Senior Leaders Must ‘Walk the Talk’
Focus on the Most Confusing/Impactful Topics How do the accounts work? Changes to prescription drug benefit (copay vs deductible)
Help Me Understand How do I decide what is best for me?
What Do I Need to Do? How Does This Work? Tell Me One More Time!
43
Tomorrow
44
Potential Areas of Health Care Reform impact on CDH plans
Medical Loss Ratio (MLR) - Fully insured plans MLR calculation does not include funds contributed to HSAs
Value of employer sponsored health coverage W-2 forms issued in early 2013 HSA, FSA, HRA, and stand alone vision and dental plans excluded
Minimum Essential Benefits Expected costs for benefits must have actuarial value of 60% Currently under consideration: only a portion of employer’s contribution to HSA or
HRA will be included in actuarial valuation
Stephen Miller, CEBS, 3/21/12 online editor/manager SHRM
45
Potential Areas of Health Care Reform impact on CDH plans
Cadillac Tax - 2018 40% tax calculated based on amount in excess of threshold – aggregated employer
sponsored benefits including value of health insurance premiums; vision, dental and other supplemental insurance premiums; including the employer’s contributions to HSAs, HRAs and FSAs
Affordability Employee contribution for single coverage cannot exceed 9.5% of family income –
unknown if employers’ contributions to HSA or HRA can be included in calculation for affordability
Exchanges CDH plans will be available in Vermont exchange Other states unknown
Stephen Miller, CEBS, 3/21/12 online editor/manager SHRM
46
Questions?
Thank you! 47
Join us for an update