managing employee benefit costs in the health care reform era thom mangan
DESCRIPTION
Managing Employee Benefit Costs in the Health Care Reform Era Thom Mangan CEO United Benefit Advisors. About the UBA Health Plan Survey. Why We’re Here. Top Decision-makers’ Concern About the Cost of Health Care Benefits with Respect To :. 4. - PowerPoint PPT PresentationTRANSCRIPT
Copyright © 2013 United Benefit Advisors, LLC. All Rights Reserved.
Managing Employee Benefit Costs in the Health Care Reform EraThom ManganCEO United Benefit Advisors
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
About the UBA Health Plan Survey
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved. 3
Why We’re Here
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Top Decision-makers’ Concern About the Cost of Health Care Benefits with Respect To:
58.28%
35.50%
5.63%
0.31% 0.31%
44.64%42.60%
10.65%
1.64% 0.47%
Corporate Costs Impact on Employees
Critical Concern Significant Concern Some Concern Little Concern No Concern
4
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Increases in Health Insurance Premiums Compared with Other Indicators 1988 - 2012
1988 1989 1990 1993 1996 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
12.0%
18.0%
14.0%
8.5%
0.8%
5.3%
8.2%
10.9%
12.9%
13.9%
11.2%
9.2%
7.7%
6.1%7.3%
8.0% 8.2%
5.0%
Health Insurance Premiums Overall Inflation Workers' Earnings
5
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999-2007; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA): 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1988-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2011.
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Health Care Costs Per Employee Per Year
1969 1979 1995 2007 2010 2011 2012$0
$1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000
$10,000
$623
$3,821
$6,881 $8,211
$8,688 $8,960
$242 $398 $1,020 $1,377 $1,321 $1,369 $1,388
Health Care CPI
6
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
2014 and Beyond
7
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Health Care Costs Per Employee Per Year
1969 $242
1979 $623
1995 $3,821
2011 $8,9601969 1979 1995 2012
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000
$10,000 Chart Title
8
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
2012 Health Care Trend – Med + RX
Type of Plan 2012 Trend Preferred Provider Organization 9.9 % Health Maintenance Organization 9.5 % Point-of-Service Plan 9.8 % Consumer-Driven Health Plan 9.8 % Indemnity Plan 10.5 % Prescription Drugs Only 9.6 %
9
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• Cadillac Tax – 2018 – 40% excise
• Employee - $10,200• Dependent - $27,500• 1% CPI
• Avg. Public Employers Penalty in 2018 (Family)IL $2,442 2018
$9,802 2020
MA $5,732 2018 $19,699 2020
Why Should You Care
10
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
The Effects of Inflation on Medical Premiums @ 5% / 10%
0.05 0.1Year Single Family Single Family
2012 $5,472 $13,320 $5,472 $13,320
2015 $6,335 $15,420 $7,283 $17,729
2018 $7,333 $17,850 $9,694 $23,597
2021 $8,489 $20,664 $12,903 $31,408
2024 $9,827 $23,921 $17,173 $41,804
5.00% Per Year 10.00% Per Year
11
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Type of Plan Offered
PPO HMO POS CDHP EPO FFS0%
10%
20%
30%
40%
50%
60%
46.9%
19.1%
9.8%
22.5%
1.7%0.1%
12
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Medical Plan Cost per Employee by Plan Type
PPO HMO POS CDHP EPO FFS All Plans$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$9,308 $8,507
$9,372
$8,403 $9,227
$12,274
$8,960
13
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Annual Cost Per Employee – Total Cost
Northeast Southeast North Central Central West$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000 $10,259
$7,694
$9,451
$7,821
$8,763
14
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
More Granular is More Accurate
National$456
HMO$451
PPO$475
CDHP$409
Central$373
Southeast$380
Northeast$430
Georgia$429
North Carolina$405
South Carolina$372
15
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Health Plan Costs
16
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Costs will shift more to employees
A move to Individual coverage and HSAs
All cost and quality data will be directly accessible to employees in advance of
purchasing care
A return to more tightly controlled managed care plans
87.32%
58.96%
45.15%
41.35%
3.44%
12.08%
19.70%
25.94%
Disagree / Strongly Disagree Strongly Agree / Agree
What do you predict will happen to health plans in the next 5 years?
17
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• The average monthly premium was $456 single, $1,110 Family
• The 2012 average annual plan cost per employee was $8,960 vs. $ 8,688 in 2011
Health Plan Costs
18
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• The 2012 employee share for plans with employee contributions was up from $3,612 in 2011 to $3,776 in 2012 or 28.2% of the total employee premium.
• The employer share for plans with employee contributions decreased from 72.6% in 2011 to 71.8% in 2012.
19
Health Plan Costs
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Renewal Analysis
Initial Offer Final Rate
All Plans 10.2% 5.0%
5.0% - 15.0% 46.2% 41.2%
0.0% - 25.0% 82.5% 76.1%
< 0.0% 9.8% 21.8%
> 25.0% 7.8% 2.7%
20
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Percent Increase Last Plan Anniversary by Plan Type – PPO
2010 2011 20120.0%
2.0%
4.0%
6.0%
8.0%
10.0%7.8% 7.9%
4.9%
National
21
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Percent Increase Last Plan Anniversary by Plan Type – HMO
2010 2011 20120.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
8.8%
9.6%
5.6%
National
22
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Percent Increase Last Plan Anniversary by Plan Type – POS
2010 2011 20120.0%
2.0%
4.0%
6.0%
8.0%
10.0%9.1%
7.8%
6.3%
National
23
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Percent Increase Last Plan Anniversary by Plan Type – CDHP
2010 2011 20120.0%
2.0%
4.0%
6.0%
8.0%
10.0%
7.3%
7.6%
4.0%
National
24
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Cost per Employee – PPO
1 2 3$0
$2,000
$4,000
$6,000
$8,000
$10,000
41.0%
43.0%
45.0%
47.0%
49.0%
51.0%
53.0%
55.0%
$8,519$9,005
$9,308
National National ERs Offering
25
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Cost per Employee – HMO
2010 2011 2012$0
$4,000
$8,000
$12,000
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
$7,585$8,107 $8,960
National National ERs Offering
26
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Cost per Employee – POS
2010 2011 2012$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
8.0%
8.5%
9.0%
9.5%
10.0%
$8,991$9,303
$9,372
National National ERs Offering
27
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Cost per Employee – CDHP
2010 2011 2012$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
19.0%
20.0%
21.0%
22.0%
23.0%
$7,590 $8,161
$8,403
National National ERs Offering
28
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Plan Design Components
29
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• Median PPO Deductible = $1,000 / $2,250
• Median PPO Coinsurance = 80% / 60%
• Median PPO OOP Max. = $3,000 / $7,000
• Median PPO Office Visit Co-Pay = $25
PPO Plan Designs
30
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Copay - HMO
2010 2011 2012$0
$5
$10
$15
$20
$25
$30
$35
$20 $20
$25
$30 $30
$35
National PCP National SCP
31
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Single In-Network Out-Of-Pocket Maximums – HMO
2010 2011 2012$2,200
$2,300
$2,400
$2,500
$2,600
$2,700
$2,800
$2,436
$2,576
$2,798
National
32
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Coinsurance Percentage – HMO
2010 2011 20120%
10%20%30%40%50%60%70%80%90%
100%
100% 100% 100%
National
33
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
1. Multi-tiered drug formularies that promote generic utilization• 30 brand names came off patent last year• Generics are highly effective to treat 9 out of 10 patients
2. Narrowing pharmacy networks to leverage deeper discounts
3. Carving out pharmacy management to a PBM4. Specialty drug utilization management
• $11 billion - 2012• $19 billion - 2014
5. Value-based insurance plan – multi-tiers• Four-tier plans• 2004 – 4%• 2012 – 14%
Top 5 Pharmacy Benefit Management (PBM)
34
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Rx Retail Copays – 2-tier
2010 2011 2012$0
$5
$10
$15
$20
$25
$30
$35
$40
$10 $10 $10
$30 $30 $30
National Tier One National Tier Two
35
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Rx Retail Copays – 3-tier
2010 2011 2012$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$10 $10 $10
$30 $30 $30
$50 $50 $50
National Tier One National Tier Two National Tier Three
36
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Rx Retail Copays – 4-tier
2010 2011 2012$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$10 $10 $10
$30 $30 $30
$50 $50 $50
$75
$85$80
National Tier One National Tier Two National Tier Three National Tier Four
37
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Spotlight on CDHP Findings: Debunking the Savings Myths
38
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
% of Employees Enrolled by Plan Type by Region (CDHP)
Northeast Southeast North Central Central West0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%21.3%
15.0%
19.3%
15.3%
7.7%
39
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Real Average Annual Cost per EE with ER HRA/HSA Contribution – All Plans
PPO CDHP w/HRA CDHP w/HSA CDHP w/Both$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000$9,308
$10,403
$8,758
$9,435
40
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Median Single Average Single Median Family Average Family$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$300
$575
$360
$928
Annual HRA Funding Levels
41
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• 2012 UBA Health Plan Survey shows that CDHPs do not prove to generate higher savings for employers than other plan types with the same deductible.
• Unless…
Spotlight on CDHP Findings: Debunking the Savings Myths
42
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Average Annual Cost per EE by Deductible Level
None Under 1,000
1,000-1,499
1,500-1,999
2,000-2,499
2,500-2,999
3,000-3,499
3,500-3,999
4,000-4,499
4,500-4,999
5,000+$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
CDHP PPO
43
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Regardless of health plan design, health care costs are rising because employees are making uninformed health care consumer choicesLower health costs = informed consumer activity• Plan type doesn’t matter – what’s needed is
employee communication on how to make better health care consumer choices
• Plan Design Matters – HSAs provide much better outcomes than HRAs. Reason – Patient Responsible for the Deductible
•
Spotlight on CDHP Findings: Debunking the Savings Myths
44
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Other Findings: Wellness Programs
45
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Percent Offering Wellness by Employee Size
3 - 24 25 - 49 50 - 99 100 - 199 200 - 499 500 - 999 1000 +0%
10%
20%
30%
40%
50%
60%
70%
8.3% 9.8%
17.2%
23.1%
37.8%
47.7%
58.9%
46
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Health Risk Assessment
Seminars / Workshops
Physical Exam or Blood Draw
Coaching Incentives / Rewards
Web Portal Other0%
10%
20%
30%
40%
50%
60%
70%
80%
90% 81.0%
41.5%
62.4%
51.3%
65.4%
50.0%
15.0%
Wellness Programs and Components
47
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
Next Steps…
48
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• High Performance/Tiered Provider Networks• Patient-Centered Medical Homes• Transparency in Pricing• Transparency in Outcomes• Accountable Health Care Organizations – ACO• ASO Plans• Increase in Premiums – Cost Shifting •
Future National and Regional
49
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
• Benchmark your plan – “You can’t manage what you can’t measure”
• Determine your Goals and Objectives• High Level of Benefits – Attract and Retain• Mid-Level of Benefits – Competitive• Low Level of Benefits – Just the Minimum to Meet
PPACA • Manage Your Plan!
• Claims – 10% of your people are driving 80% of your costs
• Plan Design Drives Performance• Treat Wellness Like Workers’ Compensation•
What Should I Do Today?
50
Copyright © 2012 United Benefit Advisors, LLC. All Rights Reserved.
This program, ORG-PROGRAM-140095, has been approved for 1.25 (General) recertification credit hours toward PHR, SPHR and GPHR recertification through the HR Certification Institute. Please be sure to note the program ID number on your recertification application form. For more information about certification or recertification, please visit the HR Certification Institute website at www.hrci.org.