www.mercer.com guiding you through us health reform: charting a new course 21 january 2010 linda...

www.mercer.com

Guiding you through US Health Reform:Charting a new course

21 January 2010

Linda Havlin, Chicago

Geoff Manville, Washington

Kelly Traw, Washington

George Wagoner, Richmond

2Mercer

Today’s speakers

Linda HavlinChicago+1 312 917 [email protected]

Geoff ManvilleWashington+1 202 263 [email protected]

Kelly TrawWashington+1 202 263 [email protected]

George WagonerRichmond+1 804 344 3740 [email protected]

3Mercer

Agenda

■ Legislative state of play

■ Key elements that impact employer-sponsored plans

■ Case studies

■ Looking ahead

Legislative state of play

5Mercer

Health reform hangs in the balance after Democrats’ Senate setback

■ Republican Scott Brown’s win in Massachusetts dramatically alters outlook

■ Democratic leaders now weighing legislative/procedural options

■ Option 1 – try to move comprehensive reform largely as drafted– Rush a merged House/Senate bill through before Brown is seated

Appears to be off the table– Move major elements of current bills though Senate by budget

“reconciliation” process that requires just 51-vote majority Political, procedural problems abound

■ Option 2 – move scaled-back health reform “light” with bipartisan support– Could include Medicare doctors payment fix and quality incentives, scaled-

down insurance reforms, no employer mandates

■ Option 3 – drop reform effort altogether– Blame Republicans and pivot to jobs and the economy

6Mercer

Meanwhile, leaders say talks on final bill to continue

■ House bill (HR 3962) approved on November 7, panned by employers

■ Senate bill (HR 3590) approved December 24 less objectionable– Employer-friendly changes in Senate-passed bill

Public plan option dropped Maximum 30-day enrollment period extended to 60 days ‘Full-time’ employee threshold raised to 30 hours per week New incentives, programs for value-based purchasing

- Controlled release of Medicare claims data– New and retained provisions opposed by employers

Employer “vouchers” to help workers buy coverage in Exchanges Adverse tax changes related to employers’ Part D retiree drug

subsidies

7Mercer

Democratic negotiators had been making substantial progress

■ Tentative deal on excise tax on “high cost” plans – Coverage thresholds raised to $8,900 individual/$24,000 families– Collectively-bargained, state and local government plans exempt until 2018– For all plans, value of dental, vision coverage excluded beginning in 2015– Not changed: indexing of thresholds at CPI+1%

■ But lawmakers, President must find more revenue– Raising fees, cutting reimbursements to certain industries– Applying Medicare tax to unearned income

■ Changes in coverage provisions may also be in the mix – Subsidies for individuals– Medicare Advantage, Medicaid provisions in flux– National vs. state insurance Exchanges

8Mercer

Employers pressing for host of changes in any merged bill

■ Many open issues, so time remains to affect final outcome

■ Employer to-do list includes – Keep Senate’s modified “free rider” penalties– Drop Senate’s employer voucher proposal– Keep Senate’s grandfathering for self-insured plans– Drop House’s curbs on changing retiree health benefit– Drop House and Senate provisions to tax employers Part D subsidies– Drop House’s expanded COBRA rights– Keep Senate’s expanded incentives for employer wellness plans– Increase $2,500 caps on FSA, index to medical inflation– Keep House’s extension of tax-free benefits to domestic partners

■ Employer involvement, perspective important to Congress, White House

■ But employers, other groups ready to oppose final bill if changes aren’t made

9Mercer

Several steps ahead even if Democrats push ahead with reform

Possible action on broad or scaled-down

bill later this year

Action could last well into 2010 under either a budget “reconciliation” strategy or an effort to move a scaled-

back bill.

Lawmakers, public given at least 3 days to review final

bill, CBO report

As promised by Democratic leaders. Additional potential

procedural hurdles could delay final House, Senate votes.

Scott Brown (R-MA) is formally seated in Senate

Strength of Brown’s victory likely to result in his taking office with little/no

delay.

Assume deal is reached on final bill, which heads to CBO

Congressional Budget Office and Joint Committee on

Taxation would likely need at least a week to assess

the proposal’s budget impact.

January

February

No deal yet on merging House, Senate bills

Democratic leaders and the president have yet to strike a

deal on merging House-, Senate-passed bills. Several contentious issues remain in

play.

March

Key elements for employer-sponsored health benefit programs

11Mercer

Senate bill (unless noted): General effective date timelineExcluding group health plan mandates

Employer W-2 reporting of employee health coverage

Cap on health FSA contributions

Bar OTC drug reimbursement

Tax change related to Medicare Part D RDS payments

Industry fees

Employer mandate

Free choice vouchers

Auto-enrollment

HIPAA wellness incentive limit increase

Individual coverage mandate

Health insurance exchanges

Medicaid expansion

201420132011

40% excise tax

Comparative effectiveness research fee

Medicare tax increase for high-income individuals

Temporary early retiree reinsurance program

(Retiree anti-cutback rule-House bill)

2010

(2012 is an election year)

12Mercer

Top tier issues for employer-sponsored plansCurrent House and Senate bills

IssueHouse: HR 3692

Affordable Health Care for America ActSenate: HR 3590

Patient Protection and Affordable Care Act

Employer mandate

■ Play-or-pay provisions apply to employers with annual payroll higher than $500,000

■ Contribute 72.5% for single coverage and 65% for family coverage (pro-rated for part-time employees)

■ Employers that do not offer qualifying coverage pay 8% of payroll, capped at the minimum contribution levels

■ Employers offering coverage must pay 8% of payroll, capped at the minimum contribution levels, for employees opting out and enrolled in Exchange-based coverage

2013

■ Shared responsibility provision apply to employers with more than 50 employees

■ Employers not offering coverage $750 annually for every full-time employee (i.e.,

working at least 30 hours a week, determined on a monthly basis) if at least one FTE receives income-based premium assistance to buy coverage through new health insurance Exchanges

■ Employers offering coverage that is unaffordable (i.e., contribution constitutes more than 9.8% of household income) or does not meet minimum standards (i.e., 60% minimum actuarial value)

$3,000 annually for each FTE receiving income-based assistance for health insurance Exchange coverage

Penalties capped at $750 times total number of FTEs

■ No penalties for employees receiving free-choice vouchers

2014

13Mercer

Issue House Senate

Free choice vouchers

■ No provision ■ Offer vouchers to employees with household incomes at or below 400% of the federal poverty level (FPL) if their contribution for employer-sponsored coverage would be 8%* to 9.8% of household income

Voucher amount equal to highest (percentage) employer contribution to any of its own plans

■ Vouchers to be used for purchasing Exchange-based coverage

■ Employees could keep any excess amounts2014

* Individual coverage mandate penalties do not apply if over 8%


14Mercer

Issue House Senate

Excise tax on high cost coverage

■ No provision ■ 40% excise tax on “high cost” coverage, including medical, dental, vision, health FSA contributions, onsite medical clinics, and employer contributions to HSAs

■ Initial cap set at $8,500/single and $23,000/family■ Higher thresholds for retirees and individuals

in high risk professions - $9,850/single and $26,000/family

■ Temporary higher thresholds for people in highest cost states

■ Indexed to CPI + 1%2013

Top tier issues for employer-sponsored plans Current House and Senate bills

15Mercer

Proposed: 17 states would have delayed excise tax Three are below the average cost per active employee: $8,945

SOURCE: 2009 Mercer National Survey Of Employer-sponsored Health Plans

$8,500 – 8,712

17 highest cost states

>$11,000

$10,000 – 10,999

$9,000 – 9,999

$8,736 – 8,999

Next 3 states:

16Mercer


Issue House Senate

Excise tax on high cost coverage

■ No provision Possible agreement - same as previous slide, except:

■ Initial cap set at $8,900/single and $24,000/family

■ Exemption until 1/1/2018 for■ collectively bargained plans■ state and local plans■ VEBAs

■ Higher thresholds if plan’s gender and/or age demographics are greater than “average”

■ Exclude dental and vision coverage as of 2015

17Mercer

Estimated percentage of employers with medical plans that will trigger excise tax if no changes are made to current plan design

Source: 2009 Mercer Survey of Employer Sponsored Health Plans; medical premium trended at 6%, excise tax threshold trended at 4% (CPI + 1%). Based on employers’ largest medical plan (highest enrollment) of any type.

19% 19%21%

24%25%

16%16%16%15%14%

2013 2014 2015 2016 2017

$8,900 indiv./$24,000 fam.

$8,500 indiv./$23,000 fam.

Tax threshold:

18Mercer

Issue House Senate

Health plan standards

Including■ Cover essential benefits■ No aggregate lifetime limits■ No cost-sharing for preventive

services and other cost-sharing restrictions

■ No pre-existing condition exclusions ■ Dependent child coverage to age 27■ Mandated coverage of diagnosis and

treatment of congenital or developmental deformity, disease or injury for children up at age 21

5-year grace period would affect applicability date of some provisions (2013-2018)

Including■ No annual or lifetime dollar limits■ No cost-sharing for preventive services■ No pre-existing condition exclusions ■ Limits annual cost sharing to high-

deductible plan limit■ No waiting periods over 90 days (60-90

days subject to a penalty) ■ Dependent child coverage to age 26

Grandfathering could affect applicability date


19Mercer

Senate bill: Effective dates without grandfathering protectionGroup health plan standards only

Ban:

■ annual and lifetime limits

■ emergency services preauthorization

■ OB-GYN preauthorization or referral

Mandatory coverage:

■ unmarried dependent children up to age 26

■ preventive services with no cost sharing

Mandatory internal, external appeals process

Enrollee choice of primary care provider/pediatrician

Insured plans only: ban on rescissions

Ban on:

■ preexisting condition exclusion ban (earlier for kids under age 19)

■ waiting periods over 90 days

Mandatory coverage:

■ clinical trial participation

Health status nondiscrimination

Guaranteed issue and renewal

Plan years beginning six months after date of enactment (Subtitle A)

Plan years beginning on or after Jan. 1, 2014 (Subtitle B)

Plan years beginning on or after date of enactment

Insured plans only: minimum medical loss ratio of 85%

For calendar

year plans:

201420132011

+ MLR But…

20Mercer

Senate bill: Grandfathering provisionsGroup health plan standards only

■ In general: Subtitle A and Subtitle C shall not apply to a group health plan or health insurance coverage in which an individual was enrolled on the date of enactment (certain exceptions, including medical loss ratio for insured plans)

– Family members permitted to enroll– New employees (and family members) permitted to enroll

■ How long would grandfathering protection last?– Other employees permitted to enroll?– Benefit and cost-sharing changes to conform to new requirements?– Other benefit or cost-sharing changes?– Complete pass for self-insured group health plans?

■ Collectively bargained plans: Subtitle A and Subtitle C shall not apply to plans maintained pursuant to a collective bargaining agreement ratified before date of enactment until the date on which the last of the CBAs relating to the coverage terminates

– Any coverage amendment made pursuant to a CBA solely to conform to Subtitle A and Subtitle C shall not be treated as terminating the CBA

21Mercer

Issue House Senate

Auto-enrollment

■ Employer must auto-enroll an employee into employer’s lowest premium plan if employee fails to opt-out or elect different plan, with 30 day advance opt-out period and notice

2013

■ Employers with more than 200 FTEs must auto-enroll new FTEs and current employees in a health plan offered by the employer, with adequate notice and opportunity to opt out after auto-enrollment

2014

Employer reporting of employee health coverage

■ Yes ■ Yes

Additional tax changes

■ Annual FSA contribution capped at $2,500 (indexed)

■ Bars reimbursement of over the counter medications

■ Tax-free benefits for any covered person■ Higher penalty for non-qualified HSA

distributions2013

■ Annual FSA contribution capped at $2,500 (indexed)

■ Bars reimbursement of over the counter medications

■ Higher penalty for non-qualified HSA distributions2011


22Mercer

Issue House Senate

COBRA ■ Extend COBRA beyond 18/36 months until individual is eligible for other employer or Exchange-based coverage

2010

■ No provision

HIPAA wellness incentives

■ No provision ■ Increases financial incentives available to employees from 20% to 30% of premium

2014

Group health plan fees

■ Fees assessed on plan sponsors of private insurance for Comparative Effectiveness Research Trust Fund

■ Generally, $2 per covered life2013

■ Fees assessed on plan sponsors of private insurance for Comparative Effectiveness Research Trust Fund

■ Generally, $2 per covered life2013

Industry fees ■ 2.5% excise tax on sale of every medical device for use in US

2013

■ Fees on health insurers, pharmaceutical manufacturers and medical device manufacturers

2013


23Mercer

Issue House Senate

Changes to Part D retiree drug subsidy taxation

■ Changes retiree drug expense tax deduction for employers receiving Part D retiree subsidy payments

2013

■ Same

2011

Retiree medical anti-cutback rule

■ Bar employers from reducing retirees’ health benefits unless reductions also apply to active employee participants

■ Allows “reductions” where individual’s share of total premium (or costs of coverage) increases by less than 5%, or changes in cost sharing result in a decrease in the benefit package’s actuarial value of less than 5%

■ Does not ban cap on total aggregate retiree medical costs■ Hardship waivers could be available 2010

■ No provision

Reinsurance for early retiree plans

■ Temporary reinsurance program to reimburse cost of providing coverage to retirees between ages 55-64

■ Participating plans to submit reimbursement claims, and receive 80% reimbursement of costs between $15,000 and $90,000 for a covered individual; reimbursements can only be used to reduce plan and retiree direct costs

■ Program capped at $10 billion2010

■ Same, except:- requires programs and procedures

to general cost-savings for individuals with chronic and high-cost conditions, and

- program capped at $5 billion 2010


24Mercer

Issue House Senate

Individual income tax changes

■ Tax surcharge of 5.4% on adjusted gross income more than $500,000 for individuals, more than $1million for couples

2011

■ Medicare payroll tax increases from 1.45% to 2.35% on workers earning more than $200,000 and couples earning more than $250,000 per year

2013

Individual coverage mandate

■ Individuals must obtain acceptable health insurance coverage

■ Certain exceptions (e.g., “de minimis” coverage lapse, ‘hardship’)

■ Penalty of up to 2.5% tax on modified adjusted gross income

2013

■ Individuals must obtain minimum essential coverage

■ Certain exceptions (e.g., lowest cost plan exceeds 8% household adjusted gross income, no coverage for less than 3 months)

■ Maximum penalty: Greater of $50 per adult or $95 per child (family maximum of $2,250) or 2% of income

2014

Income-based assistance for Exchange coverage

■ Federal premium subsidies for individuals or families with incomes below 400% of federal poverty level

2013

■ Federal premium subsidies for individuals or families with incomes below 400% of federal poverty level

2014


25Mercer

Issue House Senate

Exchanges ■ Creates national health insurance Exchange within a new Health Choices Administration to facilitate purchase of health insurance by individuals and small employers

■ States may operate a state-based Exchange in lieu of national Exchange

■ States can form interstate compacts to facilitate purchasing coverage

■ Income-based assistance for individuals or families with incomes below 400% of federal poverty level

2013

■ States to create health insurance Exchanges to facilitate purchase of insurance by individuals and small groups

■ States may form regional Exchanges and subsidiary Exchanges within a state

■ HHS to establish Exchange if State does not■ Must be governmental agency or non-profit entity■ Income-based assistance for individuals or families

with incomes below 400% of federal poverty level2014

Public option ■ Creates a public option to be offered through the Exchange with federally negotiated provider rates

■ Must be self-sustaining after initial $2 billion in funding

2013

■ No, multistate private plans to be overseen by the federal Office of Personnel Management

2014


26Mercer

Issue House Senate

Medicaid ■ Extend Medicaid eligibility to people with incomes at or below 150% of federal poverty level

■ States receive full funding for costs of expanded populations in 2013 and 2014; afterwards, states pay 9% and federal pays 91%

■ Medicaid maintenance of effort requirements

2013

■ Extend Medicaid eligibility to people with incomes at or below 133% of federal poverty level

■ Maintenance of effort required until Exchange available in that state

■ states receive full funding for costs of expanded populations from 2014 – 2016; afterwards, funding is shared based on formula

2014


Case studies

28Mercer

Employer case studies

■ Case studies– Hospitality employer– Financial services employer

■ Scope of modeling– Determine current cost and coverage– Determine expected cost using the Senate bill provisions– Identify “Red Flags” – characteristics that could increase cost, create penalties– Identify potential solutions to reduce cost and/or administrative impact

■ Financial impact is presented for two out of many possible scenarios– Scenario 1 – maintain current employer program

Change/improve benefits and contributions only as necessary– Scenario 2 – offer minimum qualifying coverage

Reduce all medical benefits/contributions to prescribed minimums– For both scenarios, we assume those currently enrolled maintain coverage and

that 50% of employees who currently opt-out will join the employer plan or Exchange. We also assume employers do not choose to use grandfathering provisions

29Mercer

Case Study 1: Hospitality employer

■ Employer Characteristics– 18,582 full time employees– 6,841 covered (37%)– Average salary: $27,000

Aggregate Annual Health Care Cost for Richest Plans

Coverage Single Family

Highest Value Medical Plan $7,368 $22,664

Dental + Vision $302 $1,072

Sub-total without FSA $7,670 $23,736

Total with $2,500 FSA $10,170 $26,236

Observations

■ All plans have high actuarial value - 83% to 89%; exceeds 60% Senate minimum

■ Significant opportunity to reduce plan value

■ 7,000 part-time employees not covered, but Senate bill does not require coverage for part-timers

Red Flags

■ Low full-time participation– Adding more FTEs will increase total cost – Excluding FTEs will create penalties

■ Large number of low paid FTEs and high employee contributions– Shared Responsibility and Free Choice Voucher risk

■ High cost medical plan combined with FSA– Excise Tax risk

Lowest Value Medical Plan: Actuarial Value 83%

Contributions Single Family

Employer $294 $790

Employee $160 $480

Total $454 $1,270

30Mercer

Case Study 1: Impact of HCR on employer cost for full-time coverage

■ Scenario 1: Maintain current program; minimal change

■ Almost 2,000 employees newly eligible for Medicaid have no employer cost

■ Low income employees become eligible for vouchers and move to Exchange

– Over 40% of employees are in the exchange

Coverage CurrentAfter HCR

Employer Plan 6,841 4,478

Exchange with Subsidy 5,511

Exchange with Voucher 2,480

Opt-outs 11,781 3,905

Estimated Cost in 2014 $

(Millions)

Current coverage, projected $35.6

Cost of employer coverage under HCR $24.1

Shared Responsibility Surcharge $21.4

Free Choice Vouchers $15.3

Excise Tax <$0.1

Total cost with HCR $60.9

Change in total cost +71%

Impact on Enrollment Impact of HCR on Cost

31Mercer


■ Scenario 2: Offer minimum qualifying coverage

Note: Cost in penalties for dropping coverage is $13.9 million (61% reduction)



Exchange with Subsidy 1,016

Exchange with Voucher 3,417

Opt-outs 11,781 3,436

■ Employer reduces coverage to minimum reducing cost of coverage for employer and employees

■ However, high contributions + low salaries still make coverage unaffordable for many

Estimated Cost in 2014 $

(Millions)



Shared Responsibility Surcharge $4.7

Free Choice Vouchers $14.2

Excise Tax $0



Impact of HCR on Enrollment Impact of HCR on Cost

32Mercer

Potential solutions: Hospitality industry employer

■ Avoid Shared Responsibility Surcharge/Free Choice Voucher– For one plan, reduce contribution to make coverage affordable for

low income employees ($96/month for single, $129/month family) to avoid cost and administrative expense for both

■ Avoid Excise Tax– More aggressively manage cost of medical plan– Reduce or drop FSA– Reduce or drop dental/vision, or move to voluntary individual

coverage– Reduce or drop medical plan

33Mercer

Case Study 2: Financial services employer

Aggregate Annual Health Care Cost for Richest Plans

Coverage Single Family

Highest Value Medical Plan $5,112 $19,440

Dental + Vision $400 $1,300

Sub-total without FSA $5,512 $20,740

Medical plan with $2,500 FSA $8,012 $23,240

Observations

■ Actuarial value range from 60% to 80%; all plans qualify

■ Single contribution is low– No risk of Shared Responsibility/Free Choice Voucher

■ Family contribution could produce Shared Responsibility/ Free Choice Voucher expense but it should be minimal due to high salaries

■ Large percentage of employees electing high cost plan and FSA

Red Flags

■ Newly eligible employees– Increased cost for coverage or penalties

■ High enrollment and FSA election– Excise Tax risk

Lowest Value Medical Plan: Actuarial Value 60%

Contributions Single Family

Employer $294 $912

Employee $43 $164

Total $337 $1,076

■ Employer Characteristics– 25,254 full time employees– 21,415 covered (85%)– Average salary: $64,700

34Mercer

Case Study 2: Impact of HCR on Employer Cost for Full Time Coverage

■ Scenario 1: Maintain current program; minimal change

■ Because of high income, no employees eligible for Medicaid

■ Because of low premium compared to income, no employees eligible for Exchange with Shared Responsibility Surcharge or Free Choice Voucher

■ Individual Mandate causes more employees to enroll



Exchange with Subsidy - -

Exchange with Voucher - -

Opt-outs 3,839 1,919

Estimated Cost in 2014$

(Millions)



Shared Responsibility Surcharge $0

Free Choice Vouchers $0

Excise tax $5.0



Impact of HCR on Enrollment Impact of HCR on Cost

35Mercer


■ Scenario 2: Offer minimum qualifying coverage

■ As with Scenario 1, no employees were eligible for Medicaid, Shared Responsibility Surcharge or Free Choice Voucher

■ Additional enrollees assumed due to individual Mandate



Exchange with Subsidy - -

Exchange with Voucher - -

Opt-outs 3,839 1,919

Estimated Cost in 2014$

(Millions)


Cost of employer cover under HCR $175.5

Shared Responsibility Surcharge $0

Free Choice Vouchers $0

Excise tax $0


Change in total cost -18%

Impact of HCR on Enrollment

Note: Cost in penalties for dropping coverage is $18.9 million (91% reduction)

Impact of HCR on Cost

36Mercer

Potential solutions: Financial services employer

■ Excise tax– More aggressively manage cost of medical plan– Reduce or drop FSA– Reduce or drop dental/vision, or move to voluntary individual

coverage – Reduce or drop medical plan

37Mercer

Impact of Senate tax credit on individual premium

■ Medicaid and Government subsidy in Exchange reduces premium if income is 400% of Federal Poverty Level ($43,344 for single) or less

■ Government subsidy– Tax credits which produce premium cost ranging from 2.8% of income at

Federal Poverty Level (FPL) to 9.8% of income from 300% to 400% FPL

Individual Premium as Percentage of Income after Tax Credit

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$0 $10 $20 $30 $40 $50 $60 $70

Income Level (in thousands)

Per

cen

tag

e o

f In

com

e

Individual Premium

FPL$10.8

3 FPL$32.5

4 FPL$43.3

2 FPL$21.7

38Mercer

Impact of Senate tax credit on individual premium

■ Tax credits for individuals with income <400% FPL ($43,344 for a single) will reduce premiums to specified percent of income

– Subsidized premiums range from $25/month (at FPL) to $354/month (at 400% FPL)

– For individuals >400% FPL, there are no tax credits; individual seeking coverage in exchange pay full premium

Individual Premium after Tax Credit

$0

$100

$200

$300

$400

$500

$600

$700

$0 $10 $20 $30 $40 $50 $60 $70


Ind

ivid

ua

l P

rem

ium

Exchange Plan Financial Services ER Hospitality ER

FPL$10.8

2 FPL$21.7

3 FPL$32.5

4 FPL$43.3

39Mercer

Impact of tax credit on premium for family of four

■ The level of subsidized premium in an Exchange varies based on income and the number of members in the family (which affects the FPL)

■ Subsidized premium for family of four ranges from $51/month (FPL) to $720 (400% FPL)

Level of affordability and Medicaid eligibility cutoff

Example for Family of Four

Family SizeFederal

Poverty Level

Senate Medicaid Threshold (1.33 FPL)

4x FPL (eligible for Exchange)

Single $10,836 $14,412 43,344$ Family of 2 $14,580 $19,391 58,320$ Family of 3 $18,312 $24,355 73,248$ Family of 4 $22,056 $29,334 88,224$ Family of 5 $25,800 $34,314 103,200$ Family of 6 $29,532 $39,278 118,128$ Family of 7 $33,276 $44,257 133,104$ Family of 8 $37,020 $49,237 148,080$

Family Premium as Percentage of Income after Tax Credit

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140


Per

cen

tag

e o

f In

com

e

Family Premium

FPL$22.1

3 FPL$66.2

4 FPL$88.2

2 FPL$44.1

Family Premium after Tax Credit

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$0 $20 $40 $60 $80 $100 $120 $140Income Level (in thousands)

Ind

ivid

ua

l P

rem

ium

Family Premium Exchange Plan

Financial Services ER Hospitality ER

FPL$22.1

2 FPL$44.1

3 FPL$66.2

4 FPL$88.2

Looking ahead

41Mercer

16%17%3%3%51-53% 7-10%

Medicaid / CHIPMedicare Other

GovtEmployer

PlansIndividual / Non Group

Exchange2019

Uninsured

Potential redistribution of lives

Medicaid / CHIP 43

million

Medicare Other Govt 54 million

Employer Plans 176

million

Individual / Non-Group 27 million

Uninsured 46 million

16%12%13%8%51%Cu

rren

t

Source: Mercer estimates; CBO estimate of Medicaid growth

Re-distribution of health plan lives and uninsured

42Mercer

Impact on employers

■ Employers will continue to feel cost pressures constraining how much they can contribute to all benefit plans– 2010 renewal rates were high for insured plans– New industry fees are likely to be passed on as cost to employers– Increased enrollment in government plans will add new cost

pressure on provider payment Although uncompensated care is likely to be reduced

– Mandates and excise tax concerns

■ Total benefit cost will reinforce employers shifting to voluntary benefits

■ Benchmarking prospective changes will have increased value

■ Employees will have heightened awareness of the new minimum for benefit value and contributions; and cost for Exchange coverage– May create new sources of employee relations concerns for

employers who are not providing the minimum

43Mercer

Taking action

February MarchJanuary Ongoing

Bill passes & is signed

■ Evaluate impact – immediate changes, cost to bring plans into compliance or penalties for non-compliance, cost savings opportunities

■ Evaluate impact on employee relations, attraction and retention

■ Monitor what direction that competitors and industries are taking for future plans

■ Determine services that will be provided by health plans

■ Maintain ongoing education – webcasts, GRIST, Alerts, Updates, Perspectives

■ Sequence of communication as reform is being finalized

■ High level webcast followed by a more detailed webcast upon passage

■ Local market meetings

Now When reform passes Ongoing actions

44Mercer

QuestionsPlease type your questions in the Q&A section of the toolbar and we will do our best to answer as many questions as we have time for.

To submit a question while in full screen mode, use the Q&A button on the bottom right-hand side of your screen.

To submit a question while in half screen mode, use the Q&A panel on the bottom right-hand side of your screen.

Questions and contacts

CLICK HERE TO ASK A QUESTION TO “ALL PANELISTS”

mercer.com/webcastsView past recordings and sign up for upcoming webcasts

FeedbackPlease take the time to fill out the feedback form at the end of this webcast so we can continue to improve. The form will pop-up in a new window when the session ends.

Linda HavlinChicago+1 312 917 [email protected]

Geoff ManvilleWashington+1 202 263 [email protected]

Kelly TrawWashington+1 202 263 [email protected]

George WagonerRichmond+1 804 344 3740 [email protected]

www.mercer.com

www.mercer.com guiding you through us health reform: charting a new course 21 january 2010 linda...

Documents