3 Proven Methods to Mitigate Rising Health Care Costs

NHSAA Best Practices

Lisa J. DuquetteExecutive Director

Joanne TrainorGroup Relations Specialist

September 24 & 25, 2012

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Agenda

• State of Health Care• Background/Observations• Strategies and Action Items

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What is the State of Health Care?

• 2012 was the 12th consecutive year of double-digit premium increases for managed care health plans

• Financial pressure on employers and employees

• Continued impact of health care reform

• 2013 medical trend for U.S. is expected to be 7.5% compared to 9.3% for New Hampshire

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…the cumulative effect of historical trends is overwhelming

Average Annual Premiums and Contributions 2002 – 2012 (national survey)

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Strategies to Mitigate Rising Costs

1. Short term – Negotiations

2. Mid term – Education

3. Long term – Wellness

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I. Negotiations

A. Cost – Employee/Employer Contribution

1. Coverage Type (i.e, single, 2-person, family)• 85% for all?• 90% Single, 80% 2-person and family?

2. Plan Driver (i.e, HMO, POS, etc.)• 85% for all?• 90% HMO, 80% POS, 70% Indemnity?

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I. Negotiations (cont’d)

B. Plan Design

1. Copays• Office visit copay $10 to $20 = 1.5%

savings• Increase Rx deductible from $5/$15/$35

to $10/$30/$65 = 2.3% savings

2. Coinsurance• % of cost ( 80% plan, 20% participant)• Trend in new plan designs

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I. Negotiations - ACTION

Prepare Financial Analysis

Examine Current Offerings

Determine Cost/Contribution/Plan Strategy

Remember: This is a short-term (1 year) method of mitigating rising health care costs.

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II. EducationA. Health Care Committee

1. Joint labor/management

2. Develop culture of collaboration and shared learning

B. Resources

1. NH Purchasers Group on Health www.nhpgh.org• NH Hospital Scorecard• NH Health Cost (DOI)• Health Insurance Purchasing Guide

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II. Education (cont’d)

C. Data Reporting and Recommendations

1. Mine data to identify cost drivers• At least 2 years, preferably 3 years• Prevalence of specific conditions• Comparison to relevant benchmark

2. Target those cost drivers identified• Recommendations are most important!

– Education

– Implement targeted programs

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II. Education - ACTION

Establish Health Care Committee

Obtain Claim Experience Reports

Implement Recommendations

Remember: This is a mid term method of mitigating rising health care costs, but must be on-going.

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III. WellnessA. Promote, promote, promote

1. Joint message from leadership (mgmt & labor)

2. Solicit building level wellness coordinators

B. Engage

1. Schedule onsite presentations

2. EAP seminars

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III. Wellness (cont’d)

C. Measuring participation

1. % of overall participation vs. population

2. % HRA/Biometrics

D. Measuring Outcome

1. Population by risk level

2. ROI

Cost Savings…

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III. Wellness - ACTION

Schedule presentations on wellness program

Health Risk Assessment / Biometrics

Make wellness part of district’s strategic plan

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Employers and employees taking an

active role in managing plan costs can

improve the overall health of employees

and reduce medical trend costs.

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Questions?

Thank you.