Employer Coverage & Benefit Design in a Post-ACA · PDF fileEmployer Coverage & Benefit Design in a Post-ACA ... Final Rule on Shared Responsibility for Employers Regarding Health

9/9/2014

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Employer Coverage & Benefit Design in a Post-ACA

Environment

Caroline Pearson September 16, 2014

avalerehealth.net

Agenda

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● Employer-Sponsored Insurance:

o Where Do We Stand?

o Where Are We Going?

● Potential Role for Private Exchanges

● Impact of Public Exchanges

● Looking Ahead: Issues to Watch

How will employer trends in medical coverage impact dental insurance?

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Employer-Sponsored Insurance: Where Do We Stand?

The Administration Further Delayed Implementation of the Employer Mandate for Some Businesses in February 2014

4

2014 2015 2016

Mandate goes into effect for employers with 100+ FTEs

Members of Congress, including Senator Warner, continue to call for further delays to the employer mandate. additional reforms to the employer mandate likely over time.

Mandate goes into effect for employers with 50 – 99 FTEs

Sources: Final Rule on Shared Responsibility for Employers Regarding Health Coverage. http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf, Letter from Sen. Warner to U.S. Secretary of Treasury Jack, July 23, 2014 https://www.politicopro.com/f/?f=28641&inb

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Rulemaking Gave Large Employers More Time to Transition to Full Compliance

5

2014 2015 2016E

mp

loye

r M

an

da

te

1-49 full-time employees

Mandate delayed to 2015 plan year

Does not apply Does not apply

50-99 full-time employees

Does not apply

Employers must offer coverage to 95% of full-time employees and dependents to age 26

100 or more full-time employees

Employer must offer coverage to 70% of full-time employees and dependents to age 26

Employer must offer coverage to 95% of full-time employees and dependents to age 26

Source: Final Rule on Shared Responsibility for Employers Regarding Health Coverage. http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf

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AC

A: A

s P

asse

d Buy ACA-compliant plan in small group market

Buy coverage through SHOP exchange

Drop coverage

Meanwhile, “Keep Your Plan” Guidance Allowed Small Employers to Also Delay ACA-Related Decision-Making

Source: Final Rule on Shared Responsibility for Employers Regarding Health Coverage. http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf

AC

A: A

s Im

plem

ente

d

Buy ACA-compliant plan in small group market

Drop coverage

Buy coverage through SHOP exchange (in select states)

Maintain non-ACA-compliant coverage

Small Business Health Insurance Choices 2014

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Employer-Sponsored Insurance: Where Are We Going?

What Should Stakeholders Expect from Future Enrollment and Benefit Designs?

8

Enrollment • How many employers offer coverage?• How many employees take up coverage?

Benefit Design

• How do employers use benefit design to control costs?

• What role do narrow networks / Centers of Excellence play in the future of employer-sponsored insurance?

• How do consumers react to new benefit offerings?

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Before ACA-Implementation, Large Employer Offer Rates Remained Steady, But Small Employer Offer Rates Declined

9

IN 2000, 68% OF SMALL EMPLOYERS OFFERED COVERAGE, COMPARED TO 57% IN 2013.

99% 98% 99%

68%60% 57%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2006 2013

Per

cen

t o

f F

irm

s

Large Firms

Small Firms

PERCENT OF FIRMS OFFERING HEALTH INSURANCE, 1999-2013

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013

Note: Small firm is 3-199 workers. Large firm is 200+.

Estimates of ACA’s Impact on ESI Varied Widely, But Most Predicted Minor Net Changes in Coverage

-30%

-21.5%

-3.8% -3.1% -2.5% -1.6%

2.7% 2.7%McKinsey BoozHoltz-Eakin CBO1

RAND

Lewin

Urban

Benefit consultants and other experts largely agree with the models that predict only small net

changes in coverage

Other policy analysts and politicians, such as

Capretta and Bredesenagree with McKinsey and

Holtz-Eakin

Estimates reflect different ACA phase-in periods from 2010 to 2016

Gruber2

1CBO and Joint Committee on Taxacion (JCT) estimate a decline of 3 – 5 M people with ESI (graphic above uses 4 million for display purposes). CBO and JCT modeled 4 scenarios and results ranged from -20 M to + 3 million people with ESI.

2For percent change calculation, Avalere assumed that Gruber used the current/projected CBO ESI baseline for his estimates

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California Data Suggests Previously Uninsured Enrolled in Employer-Sponsored Insurance More Often than Exchanges

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Remaining Eligible Uninsured

39%

Remaining Undocumented

Uninsured18%Somewhere

Else/Unknown8%

Employer-Sponsored Insurance

16%

Other Non-Group7%

Covered California

12%

SOURCE OF COVERAGE AMONG CALIFORNIA’S PREVIOUSLY UNINSURED

Source: Where Are California’s Uninsured Now? Wave 2 of the Kaiser Family Foundation California Longitudinal Panel Survey (April 1 – June 15, 2014)

However, Fourteen Percent of People Purchasing Exchange Plans Nationally Had Coverage Previously Through Their Employer

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Uninsured57%

Covered by a Different Non-Group

Plan16%

Other/Don't Know/Refused

4%

Covered by Medicaid/Other Public Program

9%

Covered by an Employer/COBRA

14%

Source: Kaiser Family Foundation Survey of Non-Group Health Enrollees (conducted April 3 – May 11, 2014)

PREVIOUS SOURCE OF COVERAGE AMONG EXCHANGE ENROLLEES

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Other Estimates Show a Decline in Employer Coverage Could Offset Gains in Individual Coverage in 2014

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PRIVATE HEALTH INSURANCE ENROLLMENT FROM OCTOBER 1, 2013 TO MARCH 31, 2014

0.5m

-1.7m

2.2m

Net Total

Employer Market

Individual Market The individual market grew by 2.2 million…

…but the employer market declined by 1.7

million…

…leaving a net increase in the total private market

of just over 500,000

Source: Edmund Haislmaier and Drew Gonshorowski, “New Obamacare Enrollment Data: Employer-Based Coverage Declines.” Heritage Foundation. July 28, 2014. http://www.heritage.org/research/reports/2014/07/new-obamacare-enrollment-data-employer-based-coverage-declines

Avalere Projects Employer Coverage Will Continue Growing, But at a Slower Rate Due to ACA

14Source: Avalere Enrollment Model, September 2014,

146

148

150

152

154

156

158

2012 2014 2016 2018 2020 2022 2024

EXPECTED EMPLOYER COVERAGE (IN MILLIONS)

• Individual Mandate (take-up)• Employer Mandate (offer rates)• Population Growth

• Exchanges & Subsidies• Medicaid Expansion• Employer Dumping

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Some Employer Coverage Will Shift to Medicaid in 2014 and Subsidized Exchange Coverage in 2015-16

15Source: Avalere Enrollment Model, September 2014,

(7.0)

(6.0)

(5.0)

(4.0)

(3.0)

(2.0)

(1.0)

-

1.0

2.0

3.02014 2015 2016

CHANGES IN EMPLOYER COVERAGE (IN MILLIONS)

Uninsured to ESI

Emp.To PremiumAssistance

Emp. To Medicaid

Emp. to UnsubsidizedExchanges

Emp. To SubsidizedExchanges

94% of employers think it is likely they will be offering coverage 5 years from now

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Most common

reasons for continuing

coverage for employees

Maintain or increase

loyalty and satisfaction

Attract future talent

Retain current

employees

Source: International Foundation of Employee Benefits Plans, 2014 Employer-Sponsored Healthcare: ACA’s Impact http://www.ifebp.org/pdf/research/ACASurvey_2014.PDF

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However, Some Fortune 500 Companies Have Already Begun Dropping ESI for Part-Time Employees, Citing Steep Costs

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FORTUNE 500 COMPANIES THAT HAVE STARTED DROPPING EMPLOYER-SPONSORED COVERAGE FOR PART-TIME WORKERS IN 2014

Target Home Depot

Trader Joe’s

Sources: Talking Health Care with EVP of Human Resources Jodee Kozlak, Target Press Release. January 2014 http://www.abullseyeview.com/2014/01/talking-health-care-with-evp-of-human-resources-jodee-kozlak/; Trader Joe's To Drop Health Coverage For Part-Time Workers Under Obamacare: Memo, Huffington Post, September 2013 http://www.huffingtonpost.com/2013/09/11/trader-joes-obamacare_n_3902341.html; UPDATE 2-Home Depot to tap health insurance exchanges for part-timers, Reuters, September 2013 http://www.reuters.com/article/2013/09/20/healthcare-exchanges-homedepot-idUSL2N0HF22H20130920

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Source: PBGH, Health Insurance Exchanges Overview: The Employer Perspective (2013) http://www.ehcca.com/presentations/hixsummitwest/kramer_pc1.pdf; Small Business Majority http://www.smallbusinessmajority.org/small-business-research/downloads/050912_Small_Business_Healthcare_Tax_Credit.pdf

In Particular, Small Employers Continue to Face Unique Challenges Offering Health Insurance Coverage

High Cost of Insurance

• Since 2000, small employer premiums have gone up 239%.

• Small businesses pay on average 18% more than larger businesses for health insurance.

Low-Income Workforce Demographics

• 71% of small businesses with fewer than 25 workers have an average annual wage of less than $50,000.

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Low Wage Workers Benefit Financially by Purchasing Through the Exchange

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THIS FINANCIAL INCENTIVE MIGHT EVENTUALLY IMPACT THE SMALL BUSINESS MARKET

200% FPL 300% FPL 399% FPL 500% FPL

Difference between cost of exchange coverage vs. employer coverage

-$11,300 -$3,000 $700 $6,300

Percent difference between cost of exchange coverage vs. employer coverage

-65% -18% 5% 41%

Source: Congressional Budget Office, March 2012Note: Represents expected costs for a family of four with two adults and two children in 2016. Analysis includes simplifying assumptions. Marginal state income tax calculated as an average across all states.

WellPoint Recently Noted Concern About Small Group Volatility

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“Small group has now shed 218,000 members year-to-date and stands at 1.63 million members.”

“With respect to our small group business, we continue to be mindful of the potential for employer coverage changes in light of the exchanges.”

“In our commercial business, [our] small group [remains] under enrollment pressure.”

Source: WellPoint Conference Call: Report on Second Quarter 2014 Results, July 30, 2014 http://ir.wellpoint.com/phoenix.zhtml?c=130104&p=irol-newsArticle&ID=1952795&highlight=

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Employers of All Sizes Continue to Focus on Ways to Control Costs

21

Increased Cost-Sharing

Narrow Networks / Centers of Excellence

Consumerism

Private exchanges are one tool for employers to implement these approaches.

22

$4,565

$4,316

$4,129

$3,997*

$3,515

$3,354

$3,281*

$2,973*

$2,713

$2,661*

$2,412*

$2,137*

$1,787*

$1,619

$1,543

$11,786

$11,429*

$10,944*

$9,773

$9,860*

$9,325*

$8,824

$8,508*

$8,167*

$7,289*

$6,657*

$5,866*

$5,274*

$4,819*

$4,247

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Worker Contribution

Employer Contribution

* Estimate is statistically different from estimate for the previous year shown (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013.

AVERAGE ANNUAL WORKER AND EMPLOYER CONTRIBUTIONS TO PREMIUMS AND TOTAL PREMIUMS FOR FAMILY COVERAGE, 1999-2013

Employee Contribution to Employer-Sponsored Insurance Still Increases Even as Employer Costs Rise

Employees contribute 18% on avg. to individual

coverage, 29% for family.

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23

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2015

PROJECTED GROWTH IN EMPLOYER HEALTH COSTS, 2015

NBGH-ProjectedBenefit CostswithoutChangesEmployer-ProjectedBenefit Costswith Changes

2014 National Business Group on Health Annual Survey, NBGH, https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=234

Employers Believe They Can Limit Health Care Cost Growth By Altering Their Benefit Offerings

Healthcare costs for large employers are projected to increase

6.5% in 2015 …

…but employers expect to keep increases to 5%next year after making changes to their plans.

Employers Continue to Focus on Increased Cost Sharing to Control Costs

24

PERCENT OF EMPLOYERS UTILIZING VAROIUS COST CONTAINMENT TOOLS,

2013 vs. 2014

14%

18%

15%

13%

10%

12%

32%

30% 30%

24%

21%

19%

0%

5%

10%

15%

20%

25%

30%

35%

Increased OOP limits Increased cost sharingfor premiums

Increased in-networkdeductibles

Increased cost sharingfor primary care

Increased deductibles fordependents

Increased drug costsharing

2013

2014

Source: International Foundation of Employee Benefits Plans, 2014 Employer-Sponsored Healthcare: ACA’s Impact http://www.ifebp.org/pdf/research/ACASurvey_2014.PDF

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The Percentage of Workers with Significant Deductibles Continues to Rise

25

PERCENTAGE OF COVERED WORKERS ENROLLED IN A PLAN WITH A GENERAL ANNUAL DEDUCTIBLE OF $1,000 OR MORE FOR SINGLE COVERAGE, BY FIRM SIZE, 2006-2013

16%

21%

35%

40%

46%

50%49%

58%

10%12%

18%

22%

27%

31%

34%

38%

6%8%

9%

13%

17%

22%

26%

28%

0%

10%

20%

30%

40%

50%

60%

2006 2007 2008 2009 2010 2011 2012 2013

All Small Firms (3-199 Workers)

All Large Firms (200 or MoreWorkers)All Firms

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2013 http://kff.org/report-section/ehbs-2013-section-1/

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Narrow Networks

Quality Cost

1 in 4 employers include a narrow network among their choice of

plans.

13% who offer a narrow network

incentivize employees to

use it.

In addition to increasing use of narrow networks in exchanges and Medicare Advantage…

Employers Look Increasingly to Narrow Networks and Centers of Excellence to Control Costs and Improve Quality

…employers are turning to restrictive networks as a way to control cost and drive value-based care.

2014 National Business Group on Health Annual Survey, NBGH, https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=234

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Most Workers Are Satisfied With Their Health Insurance, but Increasingly Workers Would Like Higher Wages Rather than Benefits

27

70%

20%

11%

60%

29%

11%

74%

15%

10%

74%

12%14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

You are satisfied with the healthbenefits you receive now

You would rather have morehealth benefits and lower wages

You would rather have fewerhealth benefits and higher wages

ATTITUDES TOWARD CURRENT EMPLOYER-BASED COVERAGE, SELECT YEARS, 2001-2013

2001

2004

2012

2013

Source: Employee Benefit Research Institute and Greenwald & Associates, 2001‒2012 Health Confidence Surveys, and 2013 Health and Voluntary Workplace Benefits Survey.

Choice of Health Plans Remains Important to Employees, and Employers are Providing Decision Support Tools to Help Them Make Informed Choices

28

34%

46%

16%

3%1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Extremely Important Very Important Somewhat Important Not Too Important Not At All Important

IMPORTANCE TO EMPLOYEE THAT EMPLOYER OFFERS A CHOICE OF HEALTH PLAN, 2013

Source: Employee Benefit Research Institute and Greenwald & Associates, 2013 Health and Voluntary Workplace Benefits Survey. 2014 National Business Group on Health Annual Survey, NBGH, https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=234

3 in 4 employers are adding or

expanding tools to encourage

employees to be better health care

consumers.

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In Summary, Most Employers Are Interested in Controlling Healthcare Costs and Promoting Employee Choice

29

HOW DO EMPLOYERS RATE THE FOLLOWING BENEFIT CONSIDERATIONS?

88%

77%

35%

31%

6%

7%

15%

44%

48%

78%

6%

8%

21%

21%

16%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Interested in controlling costs and budgetary stability

Promoting employee choice, engagement andconsumerism

Consideration of an administrative platform toprovide administrative support

Considering a transition to a defined contributionmodel

Interested in moving away from benefit engagementwith employees

Likely Unlikely Not Applicable

Source: 2014 Willis Health Care Reform Survey Report http://www.willis.com/documents/publications/Services/Employee_Benefits/20140606_Willis_Health_Care_Reform_Survey_Report_2014.pdf

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As a Result, the Nature of Employer Sponsored Insurance Will Likely Change Considerably Over Time

Sources: Based on “Performance in an Era of Uncertainty”, 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care , March 2012. AHPI: http://www.americanhealthpolicy.org/Content/documents/resources/What%20CHROs%20Think%20About%20Health%20Care.pdf. Aon Hewitt: http://ir.aon.com/phoenix.zhtml?c=105697&p=irol-newsArticle&ID=1901130&highlight=. EBRI, Views on Employment-Based Health Benefits (January 2014): http://www.ebri.org/pdf/notespdf/EBRI_Notes_12_Dec-13_WBS_DB-DC1.pdf. International Foundation of Employee Benefits Plans, 2014 Employer-Sponsored Healthcare: ACA’s Impact http://www.ifebp.org/pdf/research/ACASurvey_2014.PDF

Continue to Offer

Coverage

Restructure Contributions

Drop Coverage and Gross-up Wages

Drop Coverage with No Wage

Gross-up

• 95% of employers plan to continue offering coverage for the next 3-5years

• 30% of employers are increasing employee cost sharing

• 36% of employers anticipate implementing a defined contribution strategy

• 11% of employers are somewhat likely to drop coverage and direct employees to the public health insurance exchanges with a financial subsidy

• 16% of employers anticipate not continuing to offer coverage over the long term

PRIVATE EXCHANGES

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Potential Role for Private Exchanges

32

Employer Interest in Private Exchanges is Highly Variable

Sources: AIS Webinar, “Private Exchanges: What Their Product Design and Results Foreshadow for New ACA Marketplaces,” May 2013; Kaiser Family Foundation/HRET, Employer Health Benefits 2013 Survey, August 2013, http://kaiserfamilyfoundation.files.wordpress.com/2013/08/8465-employer-health-benefits-20131.pdf; Towers Watson: http://www.towerswatson.com/DownloadMedia.aspx?media={3ECBC33E-F9CD-4906-B9E3-29FBD1BA7AED, Accenture: http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Growing-Pains-for-Health-Insurance-Exchange-v2.pdf, Aon Hewitt: http://ir.aon.com/phoenix.zhtml?c=105697&p=irol-newsArticle&ID=1901130&highlight=AHPI: http://www.americanhealthpolicy.org/Content/documents/resources/What%20CHROs%20Think%20About%20Health%20Care.pdf

Oliver Wyman:80% of employers

are willing to choose a private exchange model in the future

80%

Kaiser: Just 9% of all employers with 200 employees or more

are considering private exchanges

9% 46%

AHPI: 46% of employers have

already moved or are considering moving post-65

retirees to private exchanges

Aon Hewitt: 33% of employers plan

to move active employees to

private exchanges over

the next 3-5 years

33%

Accenture estimates 3 million people are enrolled in private exchanges in 2014, with private exchange volume approaching enrollment in public exchanges by 2017.

Low Interest High Interest

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Private Exchanges Offer Differing Value Propositions to Employers and Employees

33

Defined / decreased healthcare costs

Defined / decreased healthcare costs

Opportunity to decrease costs through more choice

of plans

Opportunity to decrease costs through more choice

of plans

Upfront administrative burden

Upfront administrative burden

Increased exposure to OOP costs / healthcare

cost growth

Increased exposure to OOP costs / healthcare

cost growth

PROS

CONS

EMPLOYERS EMPLOYEES

Ability to deliver more choice to employees / implement alternative

benefit strategies

Ability to deliver more choice to employees / implement alternative

benefit strategies

Potential for portabilityPotential for portability

The ultimate success of private exchanges, likely hinges on the ability to reduce costs for employers over time.

Private Exchange are Particularly Attractive for Retiree Populations

34

Retiree Value Proposition

Decreasing Costs

Offloading Administrative Responsibility

Streamlining Retiree

Management

• Defined contribution to a Health Reimbursement Account (HRA)

• One-time exit in administration of retiree benefits

• Potential for single source for management of retirees and actives

Source: Aon Hewitt. AIS Conference, “Making Private Exchanges Work for Insurers: A Guide to Designing and Executing New Market Strategies.” February 25, 2014

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When Purchasing on a Private Exchange, Employees are Choosing Leaner Benefit Options

35

70%

47%

18%

14%

12%

39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 (on-private exchange)

PPO HMO Consumer-Directed High Deductible Plan


42% of employees opted for a leaner plan

25% of employees opted for a richer plan

EMPLOYEE HEALTH PLAN CHOICES, DARDEN AND SEARS

Three-Quarters of Private Exchange Participants are Choosing a Dental Plan

36

PARTICIPATION IN VARIOUS INSURANCE PRODUCTS, LIAZON 2014,

ACCORDING TO PRIVATE EXCHANGE EVALUATION COLLABORATIVE

Participation Product

80% Buy different health insurance, vast majority of which buy down

75% Dental

70% Disability

65% Buy HDHP, with 80% opening HSAs

45% Vision

40% Life

30% Supplemental health

Source: 2014 Private Exchange Employer Survey Findings, Private Exchange Evaluation Collaborative (PEEC) http://machc.org/documents/Session3-PrivateExchanges-FINAL.pdf

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Looking Ahead: Key Factors to Growth in Private Exchange Market

37

• Cost savings• Ease of administration

Sustained Employer Value

• User-friendly• Simple-to-use

Accessibility

• Health plans continue participation in exchanges • Wide plan variation persistsAdequate Choice

• Ease of compliance with current regulatory framework (ACA, HIPAA, ERISA, COBRA)Regulatory Feasibility


38

Exchanges – Both Public and Private – Will Influence Employers’ Approach to Insurance

Source: Kaiser Family Foundation Employer Health Benefits, 2013. Available here: http://kaiserfamilyfoundation.files.wordpress.com/2013/08/8466-employer-health-benefits-2013_summary-of-findings1.pdfHDHP = High Deductible Health Plan

Private ExchangeEmployee – not employer – in

direct purchasing role

High-value networks, consumer-

directed plan design

Defined contribution

Lower employer costs

• Private exchanges will make employees / employers more comfortable with exchange model.

• Public exchanges are likely to impact employer demand for innovative benefit design.

Public Exchange

Traditional Employer

Sponsored Insurance

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Impact of Public Exchanges on Employer-Sponsored Insurance

The Regulatory Framework Created by the ACA has Likely Accelerated Several Existing Trends in the Employer Market

Essential Health Benefits

Out of Pocket Limits

Guarantee Issue & Rating Rules

Actuarial Value

These parameters constrain plan flexibility…

40

…With Pressure to Keep Premiums Low, Plans Are Focused on Select Levers

• Network Design: Despite requirements that they must offer “adequate networks,” plans are designing high-value, narrow networks

• Formulary Design: Tier placement and utilization management will help plans manage drug use while still meeting EHB drug coverage requirements

• Cost-Sharing Requirements: Cost-sharing is generally higher under exchange plans than the traditional employer market

EHB: Essential Health Benefits

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Issuers Designed Narrow Provider Networks to Lower Premium Costs

2,3163,009

3,855

4,9465,705

6,559

8,839

0100020003000400050006000700080009000

10000

There are 28,181 licensed physicians in Los Angeles County.

Figure 10. Case Study: Number of Providers in Los Angeles County Participating In The

Exchange

There are 28,181 licensed physicians in Los Angeles County. Source: Avalere PlanScape, Updated November 18, 2013 and Avalere analysis of information available on http://pnhp.org/blog/2013/09/16/exchange-plans-have-sharply-limited-networks/.Milliman. “2014 Individual Exchange Policies in Four States: An Early Look for Patients with Blood Cancer.” January 9 ,2014

Leading Cancer Centers Excluded From Most Exchange Networks

77% of TX plans surveyed

exclude M.D. Anderson

81% of NY plans

surveyed exclude Memorial Sloan-

Kettering

100% of WA plans exclude Fred Hutchinson

41

Specialty Tiers Are Much More Common in Exchanges Compared to Employer Plans

42

19%9%

59%91%

23%

Exchange (2014) Employer (2013)*

Two or Fewer Tiers Three Tiers Four or More Tiers

DISTRIBUTION OF FORMULARIES BY NUMBER OF TIERS,BY MARKET SEGMENT

PE

RC

EN

T O

F P

LA

NS

*Employer data represented distribution of covered workers whereas exchange and Part D data represent distribution of plans.Source for Exchange Data: Avalere PlanScape, Updated November 2013. Avalere collected plan information from both federally-facilitated and state-based exchanges and captured a sample of over 600 plans for the analysis. Source for Employer Data: Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits 2013 Annual Survey. Source for Part D Data: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features, Updated October 2013.

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22

Exchange Plan Deductibles are High, Especially in Bronze and Silver Plans

43

$4,959

$3,132

$1,713

$1,000

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

BronzeN=175

SilverN=207

GoldN=160

PlatinumN=61

ME

DIC

AL

DE

DU

CT

IBLE

AVERAGE MEDICAL DEDUCTIBLES BY METAL LEVEL

*Average deductible for individual coverage ESI = Employer –Sponsored InsuranceSource: Kaiser Family Foundation/ HRET 2013 Employer Health Benefits Survey; Source: Avalere PlanScape, Updated January 28, 2014. Avalere analysis HHS data file of all exchange plans in FFM states.

Employer: $1,135*

Looking Ahead: ACA Issues Impacting Employers

44

• 100 + businesses in 2015• 50 – 99 businesses in 2016

Employer Mandate

• Will public exchanges become more attractive to workers / employers over time?

• Public exchange benefits likely to impact employer offeringsExchanges

• FF-SHOP goes live in 2015• Eligibility expands in 2016 and then again in 2017

SHOP Exchanges

• Balance of power in Congress / White House at stake in next two elections

2014 / 2016 Elections

• 2018 is coming soon!• Employers already making changes to avoid taxCadillac Tax

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23

Key Questions for the Dental Insurance Market

45

● How would ongoing delays (administrative or legislative) to the employer

mandate affect offer rates for medical and dental insurance?

● How will small-group coverage threats impact dental plans?

● Does rising employer healthcare costs put pressure on dental offer rates?

● How do private exchanges impact dental products, take-up and benefit

design?

● Will medical benefit trends of (1) higher employee OOP costs (2) narrower

networks spillover into the dental market?

http://nadpconverge.org/evaluations