TRI-MET Health Care Plans DECEMBER 11, 2013 Kari Johnson, CEBS - - PowerPoint PPT Presentation

TRI-MET Health Care Plans

DECEMBER 11, 2013

Kari Johnson, CEBS Principal Portland, OR

MERCER

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March 17, 2014

The Value of Healthcare Plans

• Methodology:

– Actuarial Value: Member cost share as a percentage of total claims paid through deductibles, co-insurance, co-pays, out-of-pocket maximums – covered benefits within plan design. Ignores the employer/employee payroll contribution share. – Perceived Value: Member perception of provider/network choice and breadth, covered benefits, plan’s share of claims cost, amount of payroll contributions

• Type of plans:

– PPO (Preferred Provider Organization):

• Network of physicians, hospitals, labs, pharmacies
• Network providers agree to discounts, prior authorization arrangements, no

balance-billing of members

• Non-network providers are available, but members pay higher costs and may be

balance-billed by for costs not paid by the insurance provider/administrator – HMO (Health Maintenance Organization):

• Closed network of physicians, hospitals, labs, pharmacies
• Generally no coverage outside of these providers (except ER, ambulance, etc.)
• Members’ utilization more tightly managed by HMO compared to PPO

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March 17, 2014

The Value of Healthcare Plans

• TriMet’s plans

– Remain generous compared to plans in the market in several ways: employees pay lower deductibles, lower coinsurance, lower out-of-pocket maximums, lower pharmacy cost sharing, low or no payroll contribution – Compares favorably to other Public Employers:

• Deductibles range from $0 - $500 for a single employee, in-network:

TriMet union $150

• Coinsurance ranges from 10%-20%, in-network: TriMet union 10%
• Out-of-pocket maximums range from $1,000-$5,000: TriMet union

$1,500

• Contributions: All employers charge some level of contribution for their

richest plan, may offer a lower benefit level plan with no employee contribution: TriMet does not have any contribution for its full-time union plans at this time

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March 17, 2014

The Value of Healthcare Plans

• TriMet’s PPO plans compare favorably to other Transit Agencies:

Federal AV1

TriMet 2013 Union Plan 91.9% TriMet 2013 Non-Union Plan 86.0% Comparable Transit Agencies Dallas Area Rapid Transit 83.3% Denver Regional Transportation District 92.3% Eugene Lane Transit District 79.2% Oakland Alameda Contra Costa Transit District 92.3% Orange County Transportation Authority 91.0% Sacramento Regional Transit District 87.7% Salt Lake City Utah Transit Authority 82.3% San Diego Transit Center 86.5% San Francisco Municipal Transportation Agency 86.3% San Jose Santa Clara Valley Transit Authority 92.7% Seattle King County Metro Transit 87.4% Average of Comparable Transit Agencies above 87.4%

1Actuarial Value (AV) calculator developed by the federal government as part of the Affordable Care Act.

Ignores the employer/employee payroll contribution share.

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March 17, 2014

The Value of Healthcare Plans

• Impact of the Affordable Care Act in 2018

– Excise tax applied to the cost of coverage including medical, some dental plans, some vision plans, FSAs, HRAs, etc.

• 40% of the value of coverage over $10,200 single/$27,500 family in

2018 (tax continues into future years at indexed threshold amounts)

• Applies to both employer and employee portions of the premium

– 2014 Medical Premiums shown below: 2014 Plan Cost - Medical/Rx only

Union Non-Union

Regence PPO Kaiser HMO Regence PPO Regence HDHP Kaiser HMO Single $10,016 $7,929 $7,145 $5,559 $5,406 Family 28,045 23,787 20,003 15,565 16,218

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March 17, 2014

Cost Drivers for TriMet

• Demographics

Regence - Actives: Kaiser - Actives:

Union - TriMet NonUnion - TriMet Regence Benchmark Union - TriMet NonUnion - TriMet Kaiser Benchmark Avg Employee Age 51.6 50.5 45.4 Avg Employee Age 48.6 46.6 45.6 Avg Member Age 39.2 38.8 35.5 Avg Member Age 35.7 35.2 35.1 Avg Contract Size 2.33 2.4 2.04 Avg Contract Size 2.50 2.4 2.15 % Male/% Female 53%/47% 48%/52% 50%/50% % Male/% Female 52%/48% 51%/49% 48%/52%

Regence Active Med/Rx Union Claims cost: Sept 2012- Aug 2013

Average per Employee $7,826 Average per Spouse $8,168 Average per other Dependent $2,612

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Cost Drivers for TriMet (cont.)

• Rich plan design

– Plan pays more than most

• Union cost-sharing prior to the benefit change: 3.2% of covered charges
• Union cost-sharing post benefit change: 8.1% of covered charges
• Regence book of business cost-sharing in 2011: 12.4%
• Regence book of business cost-sharing in 2012: 12.3%

– Members not as aware of cost of healthcare services with low cost sharing, possible overutilization of services

• Occupation

– Potential impact, but transit worker is not defined as a high risk profession within the Affordable Care Act (law enforcement, fire, emergency medical outside the hospital, longshoremen, construction, mining, agriculture, forestry and fishing)

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March 17, 2014

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March 17, 2014

Cost Drivers for TriMet (cont.)

• Utilization pattern change since implementing the 90/10 plan in Sept 2012

Per Member per Month (PMPM) Claims Cost

Sept 2011- Aug 2012 Sept 2012- Aug 2013 % Change Regence Norm Sept 12-Aug 13 Diff from Regence Medical $549.52 $441.95

• 19.6%

$257.12 71.9% Pharmacy $125.98 $69.39

• 44.9%

$56.34 23.2%

Admits/Cases/Services per 1,000 members

Sept 2011- Aug 2012 Sept 2012- Aug 2013 % Change Regence Norm Sept 12-Aug 13 Diff from Regence InPatient 88.24 73.90

• 16.3%

60.92 21.3% OutPatient 477.39 443.17

• 7.2%

314.96 40.7% Professional 24,923.56 21,207.28

• 14.9%

12,276.78 72.7% Pharmacy 21,209.19 19,680.98

• 7.2%

12,822.53 53.5%

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March 17, 2014

Retiree Coverage

• Pre-65 retirees must be offered health insurance by Oregon public

employers, TriMet not required by law to pay for the cost of coverage, only make it available

• Most Oregon public employers make it available, but do not subsidize the

coverage, rare to cover the entire cost of the plans

• Coverage is generally offered to dependents of retirees at the time of

retirement, but no new dependents

• Coverage for surviving spouses in Oregon

– Surviving spouses over the age of 55 must be offered continued coverage to age 65, but the coverage does not have to be subsidized by the employer

• Post-65 retirees not required by law to provide coverage and/or pay for it –

most public employers terminate coverage at age 65; if continued, retiree pays the cost of coverage

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March 17, 2014

How to Impact Premiums

• Change utilization patterns

– Employees make different choices for care (emergency room vs. urgent care or doctor’s office, brand name vs. generic drugs)

• Impact the health of the population

– Encourage health lifestyles: No tobacco use, physical activity. Healthier population results in lower costs – Manage conditions once identified

• Competitive bidding

– Maintain pressure on insurance companies: offer competitive administrative fees, negotiate competitive rates with providers, manage chronic conditions, etc. However, claims are the driver of cost, so a savings in administrative cost while important has marginal overall impact – Potential pitfalls: provider disruption, potential one year impact, not all plans are the same behind the scenes, loss of provider discounts

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