Joel Allumbaugh CEO, National Worksite Benefit Group President, Maine Association of Health Underwriters 207.623.1110 ext. 201 joel@nwbgroup.com
How Does Insurance Work? � Employee Perspective � Best case– have coverage, don’t use any health care and 13% remain healthy (net premiums cost only) � Worst case – have coverage, have catastrophic health 5% event (net premiums + maximum out of pocket) � Everyone in between 82% � Important Terms � Premium � Deductible � Maximum Out ‐ of ‐ Pocket
How Much Health Care Do People Actually Use? Adults age 18 ‐ 44 (privately insured all year in 13% 18% Northeast, 2005) • Median (half more/half 20% less) ‐ $626 33% • Average (mean) ‐ $2,178 16% Source: Medical Expenditure Panel $0 $1 ‐ $500 $501 ‐ $1,000 Survey, 2005, www.meps.ahrq.gov $1,001 ‐ $2,500 $2,501+
Once a High User, Always a High User? � For the top 10 of every 100 health care consumers (using more than $5,000 in 2005) in a given year (who consume 65% of all health care used) � only 4 will be in the top 10 the following year (41%). � However, those 50 with the lowest consumption (less than $800 per person in 2005, using 7% of all health care used) � 38 will be low users the following year (75%). Source: Agency for Healthcare Research and Quality, Nov 2007, Statistical Brief #191.
Patient ‐ Centered Plans – Majority of Patients Control All Their Spending At $2,500 deductible: $15,000 Health Care Used by Patient � 76% of patients control all health care $12,500 dollars used $10,000 � All patients collectively control 41% of $7,500 all health care dollars used $5,000 $2,500 $ ‐ 0 20 40 60 80 100 Percent of All Patients
If so many spend so little, why is insurance so expensive? � Pricing Insurance: Expense x Probability + Admin. Cost � $100,000 expense, 2% chance you will incur it, 15% admin � $100,000 x 2% = $2,000 + 15% admin = $2,300 cost to insure Common 100% Probability expenses in most insurance policies: Routine exams Maintenance medication There are many other high probability items in most insurance policies.
Family Chamber Blue Options $29,994 $30,000 $26,127 $22,372 $24,000 $21,551 Tax Consequence $17,747 $10,000 $18,000 $6,000 $17,000 Annual Individual $8,000 Max Out of Pocket $10,000 $12,000 Annual Family Premium $14,572 $13,127 $6,000 $11,151 $7,894 $7,747 $0 PPO $7k PPO $2k HSA - $10k HMO $2k HMO $1k ded. ded. ded. ded. ded.
Changing your approach… Employer Perspective Old Model New Patient ‐ Centered Model Premium Premium Health savings account (HSA) with optional employer contribution Health reimbursement account (HRA) employer promise to pay
$450 $405 $395 $400 $350 $96.25 $300 $83.00 $250 $405.00 $200 $150 $216.00 $100 $50 $0 HSA Contribution Premium Contribution Total Current Contributions Recommended Contributions
$6,000 $5,000 $5,000 $3,900 $4,000 $900.00 $3,850.00 $3,000 $2,000 $3,000.00 $154.00 $1,000 $996.00 $0 Current New Patient ‐ Centered ER funded HRA Maximum Out ‐ of ‐ Pocket (remaining) ER funded HSA Premium Contribution Total
5 ‐ Year Trend ‐ Employer 750 $750 $455 $442 500 $430 $418 $500 $406 $396 96 96 96 96 96 96 83 $652 83 83 83 $593 83 83 $539 250 $250 $490 $445 $405 $276 $263 $250 $238 $227 216 $ ‐ 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 HSA Premium HSA ‐ ER Contribution HMO Premium HRA ‐ ER Funding
Case Example ‐ Mobius, Inc. ‐ 2006 to Present Change from Old Plan to Patient ‐ Centered Plan in 2007 Employee ‐ Only Coverage $4,000 $1,400 $3,500 $1,200 Employee Max OOP (Worse Case) $3,000 Employee ‐ Only Premium $3,000 $3,000 $1,000 $2,500 $800 $2,000 $1,875 $600 $1,500 $1,300 $400 $793 $1,000 $721 $655 $596 $596 $535 $473 $473 $455 $457 $200 $700 $700 $500 $ ‐ $0 2005 2006 2006 2007 2008 2009 Year 1 At Renewal New Plan Add Patient ‐ Projected/ Projected/ Centered Plan Actual Actual National Worksite Benefits Group www.NWBGroup.com Old Plan Patient ‐ Centered Plan Max Employee OOP
Case Example ‐ Bar Harbor Biotechnology, Inc. ‐ 2007 to Present New Patient ‐ Centered Plan in 2007 Employee ‐ Only Coverage $4,000 $1,400 $3,000 $1,200 Employee Max OOP (Worse Case) $2,500 $2,500 Employee ‐ Only Premium $1,000 $2,000 $800 $1,100 $1,000 $600 $0 $400 $672 $611 ‐ $850 ‐ $850 $555 $555 ‐ $1,000 $456 $427 $428 $200 $270 $ ‐ ‐ $2,000 2006 2007 2007 2008 2009 Jackson Lab Estimated new plan New Patient ‐ Projected/ Projected/ cost CenteredPlan Actual Actual National Worksite Benefits Group www.NWBGroup.com Old Plan Patient ‐ Centered Plan Max Employee OOP
Keys to An Effective Patient ‐ Centered Benefit � Fostering a culture of health care consumerism among all employees, beginning with senior executives � Implementing a focused employee education campaign � Offering wellness programs and incentives for healthy behaviors, as well as 100 percent coverage for preventive care � Carefully constructing a benefits package that includes appropriate levels of employee financial responsibility
Key Findings of Patient ‐ Centered Employees – 1. Committed in Wellness The Blue Cross Blue Shield Association 2007 CDHP Member Experience Survey showed HSA plan members were more engaged in wellness and prevention: 20% Smoking cessation 6% 22% Stress management 8% 27% Nutrition/diet program 12% 29% Exercise program 12% 0% 5% 10% 15% 20% 25% 30% Patient ‐ Centered Traditional
Key Findings of Patient ‐ Centered Employees – 2. Focused on Cost & Quality The Blue Cross Blue Shield Association 2008 CDHP Member Experience Survey showed HSA plan members researched cost and quality of providers much more: 21% Search the Internet for a lower priced Rx 15% 43% Use mail order Rx 30% 52% Ask doctor about cost of treatments 33% 36% Choose lower cost treatment option 23% 0% 10% 20% 30% 40% 50% 60% Patient ‐ Centered Traditional
Key Findings of Patient ‐ Centered Employees – 3. Saved for the Future The Blue Cross Blue Shield Association 2008 CDHP Member Experience Survey showed HSA plan members planned for health expenses more thoroughly: 38% Discussed Health Expenses with Physician 27% 38% Estimated Future Health Care Expenses 22% 72% Tracked Health Care Expenses 40% 0% 10% 20% 30% 40% 50% 60% 70% 80% Patient ‐ Centered Traditional
Joel Allumbaugh President, Maine Association of Health Underwriters CEO, National Worksite Benefit Group 207.623.1110 ext. 201 joel@nwbgroup.com
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