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1、Business Response to Upcoming Increased Healthcare Costs September 201330,000 Feet Overview for Our Presentation:Teach the Executive LanguageAcknowledge every company is dealing with cost issues associated with Healthcare,companies are not immune to the financial realities of rising healthcare costs
2、 and its impact upon the bottom lineThe Secret Executive LanguageDataMoneyALL ELSE IS IRRELEVANTData+Money=Executive DecisionWhat is the data on utilization in relation to my healthcare plan?+What is it costing me in utilization?=Executive Decision to Support or Not Support ProgramAsk an Executive w
3、hich Financial Portfolio Below is the Right Investment for the Long Term Financial Health of Your Company?Asset Allocation Portfolio 1Asset Allocation Portfolio 2StocksBondsCashStocks Bonds CashAsk an Executive Which Model They Focus on When It Comes to Decisions Regarding Healthcare Plans in the Or
4、ganizationHealth Plan ContractsHealth Plan ParticipantsEmployees SpouseChild(ren)EmployeeSpouseChild(ren)Todays Reality Surrounding HealthcareAll companies are dealing with cost issues.Companies are not immune to financial realities of rising healthcare costs and their impact on the bottom line.Rece
5、nt articles on UPS,Delta,and PSU to name a few have created national awareness to the issue.Increases in utilization,rising costs and the impact of the Affordable Health Care Act have forced companies to take an extra careful look at our health care benefit program.Why offer and pay?Whats the paybac
6、k?Facts About Current Healthcare SituationAffordable Healthcare Act has added an additional layer of taxation to corporations who offer healthcare plans to their employees and their significant others/dependents.The law changes employer healthcare plans across the Nation from tax advantaged to tax d
7、isadvantaged.Affordable Healthcare Act has made employer healthcare plans meet a minimum criteria in design coverage which did not exist prior to January 1,2014.This law ensures a level of care/coverage and prevents the variation in employer plan designs that were allowed to exist in previous years.
8、Trend rate medical plans renewals for the state of PA this year are a projected 37%increase for employers.If a Company is budgeted to pay$3.1 Million for healthcare plans in 2013Current projected renewal rate of 25%would mean a potential increase of$775,000 for 2014 for medical insurance alone to ou
9、r operating budget.If the trend rates continue in double digit over the next few years,the company will not be able to continue to provide the benefits it currently has today and remain profitable.An intervention is necessary to reduce the trend line and ensure companies can continue to afford to pr
10、ovide medical benefit compensation to its employeesTwo Traditional Ways to Control Health Care CostsCost ShiftingCompany decides to shift cost services to individual employee by plan design changes such as adding deductibles and changing%of coverage from 100%to 90%PRC.Theory is to change participant
11、 utilization behavior by applying individual financial pressure.Company shifts responsibility to other companies(incentive to not choose healthcare option)We will give you incentive to opt out and be on another companies policy.In future,many companies may opt to shift entire cost of healthcare to t
12、he exchanges rather than be faced with double digit premium increases on top of taxation of plans.Cost SharingCompany shares the cost of the monthly premiums with employee.Cost Sharing is determined by the employer.The Affordable Health Care Act mandates an employer cannot charge an employee more th
13、an 20%of their total compensation as a monthly premium for their individual coverage.Significant other and dependents are not included in law cap.Copays for medical and drug plansCost Shifting Taxation Impact Example:Why Companies Use Carve OutFEESImpactCost With 3692 MembersCost with Projected 692
14、Member Reduction(3000)Patient-CenteredOutcomesResearchInstitute(PCORI)$2 PMPY3692 Members X$2=$7,384.00$6000TransitionalReinsuranceProgram$6 PMPM3692 Members x$6x 12=$265,824$216,000Annual Fee onHealth InsuranceProviders2.5%X Premium2.5%X 30.1 M=$7525002.5%x21 M$525,000Healthcare is MathematicalIt i
15、s easy to forget that healthcare costs are mathematical.The next slide will illustrate the math behind the benefit by showing Utilization over the years.Minitab is partially self funded which means our utilization has a big impact on rates.Why Utilization Matters To Companies and the Burden of Obesi
16、ty on Plans Debt to PlanBuild Funds$338 per MemberUnderstanding Drug Cost Utilization and Cost ShareMinitab currently pays 90%of the prescription drug costCost SharingAmountWhat does it mean?Employee Cost Share$62,077.92Co-PaymentsMinitab Cost Share$541,633.23DifferenceTotal Payment$603,711.15Drug C
17、osts:90 day brand vs.genericBrand name mail inWhat Minitab pays for this medication:MinitabBrand name retailWhat Minitab pays for this medication:MinitabGeneric retailWhat Minitab pays for this medication:MinitabGeneric mail inWhat Minitab pays for this medication:MinitabHealthcare Rate Renewal Game
18、Current SituationCompany Utilization was driving factor in renewal ratesNo Standard Plan design required by law.Employer could pick cheapest option and still claim it offered benefits.Tax Laws favored Benefits to encourage employer participation in offering plans to employees and their significant o
19、thers/dependents.Benefit was seen as a strategic recruiting tool.Health and Wellness viewed very positively and credit was given for companies who offered plans.Side note:We were great at the game.Costs were managed and we were always or less of projected trend for the past 9 years at time of contra
20、ct renewal.January 1,2014 and beyondUtilization is still the biggest factor at renewalAffordable Healthcare Act requires Standard Designs of all Employer Plans taking away cheap plans with no real coverage.Taxes are based on participants and plan costs thus not being favorable to employers who allow
21、 significant others on plans who have coverage offered at their place of employment.Summary of“Levers”to Use When Controlling Healthcare CostsRedesign Plan to only reimburse 90%Primary Reasonable Charge(PRC)(Cost Shift)Medical Copay Amounts(Cost Share)Drug Copay Amounts(Cost Share)Drug Design to inc
22、lude Formulary(Cost Shift)Contribution Strategy(Cost Share)Deductibles in and out of network(Cost Shift)Employed Significant Other Carve Out(Cost Shift)Healthy Lifestyle Choices (Utilization)Vendor Awareness(Utilization)Ways to Help Company Utilization NumbersUse Mail In Drug Plan instead of Pharmac
23、y if possibleGo to MedExpress or similar outpatient clinics instead of emergency room if you need medical attention after hoursIf Doctor orders an Xray or MRI or Ultrasound consider using 611 MRI or other providers aside from hospitalContinue to take care of yourself and dependents through healthy l
24、ifestyle choicesUse in-network providers who have lower negotiated rates with our health plans“Levers”Being Used in 2014 to help companies in controlling medical plan renewal costsMedical Copay Amounts(Cost Shift)Copay will increase for office visits and emergency roomDrug Copay Amounts(Cost Shift)C
25、opay will increase for 30/90 day supplyContribution Strategy(Cost Share)Company will pay xx%of Individual CostCompany will pay xx%of the plan cost for employees electing Significant Other/Dependent TiersDeductibles in and out of network(Cost Share)Shift to High Deductible Plans.Employed Significant
26、Other Carve Out or Surcharge(Cost Shift)Company will continue to support Health and Wellness Initiatives to encourage healthy lifestyle choices as well as provide education on ways to lower cost through vendor choice selection that does not impact care(Utilization)Class ExercisePage 65 DQ 1 and 2Think about the psychological contract as you talk about benefits that may bring valueOriental Trading Example:WaterCompare to Minitab Water