Joel Allumbaugh CEO, National Worksite Benefit Group President, Maine - - PowerPoint PPT Presentation

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

remain healthy (net premiums cost only)

Worst case – have coverage, have catastrophic health

event (net premiums + maximum out of pocket)

Everyone in between

Important Terms

Premium Deductible Maximum Out‐of‐Pocket

13% 5% 82%

How Much Health Care Do People Actually Use?

Adults age 18‐44 (privately insured all year in Northeast, 2005)

• Median (half more/half

less) ‐ $626

• Average (mean) ‐ $2,178

Source: Medical Expenditure Panel Survey, 2005, www.meps.ahrq.gov

13% 33% 16% 20% 18%

$0 $1‐$500 $501‐$1,000 $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)

• nly 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

$‐ $2,500 $5,000 $7,500 $10,000 $12,500 $15,000

20 40 60 80 100

Health Care Used by Patient Percent of All Patients

At $2,500 deductible:

76% of patients control all health care

dollars used

All patients collectively control 41% of

all health care dollars used

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

$7,894 $11,151 $7,747 $13,127 $14,572 $17,000 $8,000 $10,000 $10,000 $6,000

$29,994 $21,551 $17,747 $26,127 $22,372

$0 $6,000 $12,000 $18,000 $24,000 $30,000

PPO $7k ded. PPO $2k ded. HSA - $10k ded. HMO $2k ded. HMO $1k ded. Tax Consequence Annual Individual Max Out of Pocket Annual Family Premium

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

$405.00 $216.00 $83.00

$96.25

$405 $395

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450

Current Contributions Recommended Contributions

HSA Contribution Premium Contribution Total

$996.00 $3,000.00 $154.00 $3,850.00 $900.00

$3,900 $5,000

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

Current New Patient‐Centered

ER funded HRA Maximum Out‐of‐Pocket (remaining) ER funded HSA Premium Contribution Total

5‐Year Trend ‐ Employer

$405 $445 $490 $539 $593 $652

$‐ $250 $500 $750

2009 2010 2011 2012 2013 2014 HMO Premium 216 $227 $238 $250 $263 $276 83 83 83 83 83 83 96 96 96 96 96 96

$396 $406 $418 $430 $442 $455

250 500 750

2009 2010 2011 2012 2013 2014 HSA Premium HSA‐ER Contribution HRA‐ER Funding

$473 $596 $596 $655 $721 $793 $455 $457 $473 $535 $3,000 $3,000 $1,875 $1,300 $700 $700 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $‐ $200 $400 $600 $800 $1,000 $1,200 $1,400 2005 2006 2006 2007 2008 2009 Year 1 At Renewal New Plan Add Patient‐ Centered Plan Projected/ Actual Projected/ Actual Employee Max OOP (Worse Case) Employee ‐Only Premium

Case Example ‐ Mobius, Inc. ‐ 2006 to Present

Change from Old Plan to Patient‐Centered Plan in 2007 Employee‐Only Coverage

Old Plan Patient‐Centered Plan Max Employee OOP

National Worksite Benefits Group www.NWBGroup.com

$427 $555 $555 $611 $672 $270 $428 $456 $2,500 $2,500 $1,100 ‐$850 ‐$850 ‐$2,000 ‐$1,000 $0 $1,000 $2,000 $3,000 $4,000 $‐ $200 $400 $600 $800 $1,000 $1,200 $1,400 2006 2007 2007 2008 2009 Jackson Lab Estimated new plan cost New Patient‐ CenteredPlan Projected/ Actual Projected/ Actual Employee Max OOP (Worse Case) Employee ‐Only Premium

Case Example ‐ Bar Harbor Biotechnology, Inc. ‐ 2007 to Present

New Patient‐Centered Plan in 2007 Employee‐Only Coverage

Old Plan Patient‐Centered Plan Max Employee OOP

National Worksite Benefits Group www.NWBGroup.com

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:

12% 12% 8% 6% 29% 27% 22%

20%

0% 5% 10% 15% 20% 25% 30%

Exercise program Nutrition/diet program Stress management Smoking cessation Patient‐Centered Traditional

The Blue Cross Blue Shield Association 2008 CDHP Member Experience Survey showed HSA plan members researched cost and quality of providers much more:

Key Findings of Patient‐Centered Employees – 2. Focused on Cost & Quality

23% 33% 30% 15%

36% 52% 43% 21%

0% 10% 20% 30% 40% 50% 60%

Choose lower cost treatment option Ask doctor about cost of treatments Use mail order Rx Search the Internet for a lower priced Rx Patient‐Centered Traditional

The Blue Cross Blue Shield Association 2008 CDHP Member Experience Survey showed HSA plan members planned for health expenses more thoroughly:

Key Findings of Patient‐Centered Employees – 3. Saved for the Future

40% 22% 27%

72% 38% 38%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Tracked Health Care Expenses Estimated Future Health Care Expenses Discussed Health Expenses with Physician Patient‐Centered Traditional

Joel Allumbaugh

President, Maine Association of Health Underwriters CEO, National Worksite Benefit Group

207.623.1110 ext. 201 joel@nwbgroup.com