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Harris County Healthcare Allianceand Texas Department of Insurance
Houston Small Employer Pilot Project
February 9, 2007Karen Love
Texas Department of Insurance
HRSA State Planning GrantsHRSA State Planning Grants
Overall Goal: To analyze the Overall Goal: To analyze the uninsured and evaluate options for uninsured and evaluate options for coveragecoverage
Texas Phase 1: $1.3M in 2001 for an Texas Phase 1: $1.3M in 2001 for an in-depth phone survey of in-depth phone survey of uninsured, small employer survey, uninsured, small employer survey, health insurance fairs, and focus health insurance fairs, and focus groupsgroups in 15 citiesin 15 cities
HRSA State Planning GrantsHRSA State Planning Grants(cont.)(cont.)
Texas Phase 2: $175K in 2003 for Texas Phase 2: $175K in 2003 for follow-up small employer survey and follow-up small employer survey and study risk poolsstudy risk pools
Texas Phase 3: $398K in 2005 to design Texas Phase 3: $398K in 2005 to design a product for Houston small employers, a product for Houston small employers, develop a marketing plan, conduct develop a marketing plan, conduct focus groups with employers and focus groups with employers and employees and assist in implementation employees and assist in implementation of productof product
Research Research ResultsResults
Why Does Texas Have Why Does Texas Have Such a High Uninsured Such a High Uninsured
Rate?Rate? Lower average wagesLower average wages A higher proportion of small businessesA higher proportion of small businesses Lower participation in public programsLower participation in public programs A higher proportion of non-legal citizensA higher proportion of non-legal citizens A large Hispanic populationA large Hispanic population Low union participationLow union participation Lower participation in employer-Lower participation in employer-
sponsored programs sponsored programs
Government-based Government-based InsuranceInsurance
StateState2004 2004
Uninsured Uninsured RateRate
Percent with Percent with Government-Government-
based based InsuranceInsurance
U.S.U.S. 15.7%15.7% 27.2%27.2%
TexasTexas 25.0%25.0% 23.5%23.5%
ArkansasArkansas 16.4%16.4% 33.2%33.2%
CaliforniaCalifornia 18.7%18.7% 28.1%28.1%
MinnesotaMinnesota 8.9%8.9% 20.3%20.3%
New Mex.New Mex. 21.0%21.0% 33.5%33.5%
New YorkNew York 14.2%14.2% 29.9%29.9%
Employment-based Employment-based InsuranceInsurance
StateState2004 2004
Uninsured Uninsured RateRate
Percent with Percent with Employment-Employment-
based based InsuranceInsurance
U.S.U.S. 15.7%15.7% 59.8%59.8%
TexasTexas 25.0%25.0% 53.2%53.2%
ArkansasArkansas 16.4%16.4% 51.2%51.2%
CaliforniaCalifornia 18.7%18.7% 52.9%52.9%
MinnesotaMinnesota 8.9%8.9% 69.2%69.2%
New Mex.New Mex. 21.0%21.0% 50.3%50.3%
New YorkNew York 14.2%14.2% 60.8%60.8%
Who Are The Uninsured Who Are The Uninsured by Employment Status?by Employment Status?
72%
10%
18%
Family member(s) working full-timeFamily member(s) working part-time
Non-working
Who Are The UninsuredWho Are The Uninsuredby Age?by Age?
25%
75%
Ages 0 - 18 Ages 18 - 64
Who Are The Uninsured Who Are The Uninsured by Income Level?by Income Level?
71%
29%
0 - 199% of FPL 200+% of FPL
Who Are The Uninsured by Who Are The Uninsured by Race/Ethnicity?Race/Ethnicity?
Hispanic57%
Black11%
White29%
Other3%
Who Are The Uninsured Who Are The Uninsured by Citizenship?by Citizenship?
Native U.S. Citizen
68%
Naturalized U.S. Citizen
5%
Not a U.S. Citizen
27%
Working Uninsured Working Uninsured FactsFacts
23% of uninsured work for firms with 23% of uninsured work for firms with 500 or more employees500 or more employees
Nearly 50% of uninsured adults work in Nearly 50% of uninsured adults work in firms with 24 or fewer employeesfirms with 24 or fewer employees
Approximately 80% of uninsured live Approximately 80% of uninsured live with one adult working for a small with one adult working for a small businessbusiness
Fewer than 20% of the uninsured had Fewer than 20% of the uninsured had access to employer-sponsored access to employer-sponsored coveragecoverage
It’s the Cost Stupid!It’s the Cost Stupid!
Texas Small Employers 2004 SurveyTexas Small Employers 2004 Survey
Reason Coverage Isn’t Reason Coverage Isn’t OfferedOffered
StatewidStatewidee
Tried to buy insurance, but too Tried to buy insurance, but too expensiveexpensive 38%38%
Haven’t tried to buy because Haven’t tried to buy because we know it is too expensivewe know it is too expensive 27%27%
Most employees cannot afford Most employees cannot afford their share of premiumtheir share of premium 8%8%
Most employees have coverageMost employees have coverage 14%14%
Average Small Average Small Employer Insurance Employer Insurance
Costs in TexasCosts in TexasYearYear Single CoverageSingle Coverage Family CoverageFamily Coverage
19991999 $2,539$2,539 $6,486$6,486
20002000 $2,955$2,955 $6,784$6,784
20012001 $3,299$3,299 $7,974$7,974
20022002 $3,580$3,580 $8,800$8,800
20032003 $3,793$3,793 $9,831$9,831
20042004 $4,217$4,217 $10,932$10,932
20052005 $4,605$4,605 $11,937$11,937
Sources: Medical Expenditure Panel Survey – AHRQ and Employer Health Benefits Annual Survey – Kaiser and HRET
How Much Can How Much Can Small Employers Small Employers
Afford?Afford?Cost Per-Employee-Per-Month Cost Per-Employee-Per-Month
that Employer Can Paythat Employer Can Pay20012001 20042004
Less than $50Less than $50 23%23% 17%17%
$50$50 22%22% 17%17%
$100$100 20%20% 20%20%
$150$150 9%9% 8%8%
$200$200 5%5% 6%6%
$250$250 2%2% 2%2%
$300 or More$300 or More 2%2% 1%1%
Would Not Purchase at Any CostWould Not Purchase at Any Cost 14%14% 14%14%
Houston Pilot Houston Pilot ProductProduct
Plan ObjectivesPlan Objectives
Develop an affordable benefit Develop an affordable benefit plan that will appeal to both plan that will appeal to both employers employers andand employees employees
Use TDI grant data and research Use TDI grant data and research to guide plan designto guide plan design
Engage a locally based steering Engage a locally based steering committee of broad committee of broad representationrepresentation
Plan Objectives (cont.)Plan Objectives (cont.)
Target cost: Average $150 Target cost: Average $150 PMPMPMPM
Simple rate chart with no Simple rate chart with no “added costs”“added costs”
Easy enrollment processEasy enrollment process Benefits for typical expensesBenefits for typical expenses
Plan Development Plan Development ProcessProcess
Plan design and pricing goals Plan design and pricing goals discussed with Milliman actuariesdiscussed with Milliman actuaries
Reviewed surveys and focus Reviewed surveys and focus groups to identify benefit groups to identify benefit preferencespreferences
Steering Committee vettingSteering Committee vetting Plan prototypes presented to Plan prototypes presented to
employers and employees employers and employees throughout Houstonthroughout Houston
Plan FeaturesPlan Features
****Modified Community Rating*******Modified Community Rating***
Simplifies application and underwritingSimplifies application and underwriting Uses Age and Gender case characteristicsUses Age and Gender case characteristics No medical underwriting or screeningNo medical underwriting or screening No Group Size rating factorNo Group Size rating factor No Industry rating factorNo Industry rating factor
Benefit Plan DesignBenefit Plan Design
Two optionsTwo options: : Basic and Basic and
Preventive Preventive Care Care
Catastrophic Catastrophic CareCare
Average PMPMAverage PMPM
BasicBasic CatastrophCatastrophicic
AdultAdultss
$129$129 $156$156
ChildChild $50$50 $70$70
Plan Design Plan Design AssumptionsAssumptions
Loosely managed PPO network Loosely managed PPO network with very low out-of-network with very low out-of-network utilizationutilization
Aggressive provider discountsAggressive provider discounts
No load for adverse selectionNo load for adverse selection
85% loss ratio85% loss ratio
Other Plan Design Other Plan Design FeaturesFeatures
75% eligible employee participation 75% eligible employee participation requirementrequirement
50% employer premium 50% employer premium contribution contribution
12 month pre-existing condition 12 month pre-existing condition exclusionexclusion
Assumed they are previously Assumed they are previously uninsured in the last 12 monthsuninsured in the last 12 months
Other Plan ProvisionsOther Plan Provisions
Must be issued through a Must be issued through a cooperative to avoid small cooperative to avoid small group market restrictionsgroup market restrictions
Cannot restrict eligibility to Cannot restrict eligibility to uninsured groups onlyuninsured groups only
Alliance to form the Alliance to form the cooperativecooperative
Focus Group EmployersFocus Group Employers All but 3 employers (88%) said they All but 3 employers (88%) said they
would purchase the plan if it was would purchase the plan if it was availableavailable
Employers stressed importance of Employers stressed importance of offering both plan options to offering both plan options to maximize employee participationmaximize employee participation
Employers particularly supportive Employers particularly supportive of simplified “community rating” of simplified “community rating” and enrollment processand enrollment process
Focus Group EmployeesFocus Group Employees
Affordability is the deciding Affordability is the deciding factorfactor
Demand benefits Demand benefits theythey value value Low-cost office visitsLow-cost office visits Prescription drug coveragePrescription drug coverage Low deductiblesLow deductibles
Having a plan they don’t expect Having a plan they don’t expect to use is of no value to manyto use is of no value to many
Next StepsNext Steps
RFP to be issued in February RFP to be issued in February 20072007
Alliance will work with selected Alliance will work with selected carrier to create a purchasing carrier to create a purchasing cooperative for small employerscooperative for small employers
Targeted date for product Targeted date for product availability – Fall 2007availability – Fall 2007
Contact Information:Contact Information:
[email protected][email protected]
(713) 368-3285(713) 368-3285
