1. Healthcare System Stakeholders Presentation Purchasers 10-14-2010 MGMT E 5520 Brenna Baccaro

2. Who are They? Employers who buy health insurance • Most large companies in the U.S. provide health insurance as an employee benefit.

3. Employer-Sponsored Insurance Fluctuations Percent of Workers Offered Employer-Sponsored Insurance, 1995, 2001, and 2005 • Parallel to Economic Conditions Source: Kaiser Family Foundation calculations based on data from the Current Population Survey, 1995, 2001, 2005, conducted by the Bureau of Labor Statistics.

4. Purchaser Variation • Provided in all industries, more prevalent in some. • E.g. Compare Agriculture with Manufacturing: Percent of Workers Offered Employer-Sponsored Insurance, by Industry

5. Incentives for All Purchasers Win-Win Incentives for Employers • Attracts and retains workers • Keeps workers healthy= productivity ^ In general, bigger groups = lower rates, so health insurance is more affordable through employer Provides consumers with better “protections” from insurance industry = more likely to be covered.

6. Purchasers Seek Out PBMs • Pharmacy Benefit Management • Provide prescription drug benefits • Provide purchasers (and consumers) more affordable prices for prescription drugs • Retail pharmacies • Rebates from manufacturers • Mail service pharmacies • Approve biogeneric production (stop brand monopolies) http://www.consumeraffairs.com/news04/2007/02/images/supplements.jpg

7. PBMs http://www.consumeraffairs.com/news04/2007/02/images/supplements.jpg • Administer to ~ 200 million U.S. residents (68% of population) • Almost all covered workers in employer-sponsored health plans receive prescription drug benefits. • …Too good to be true?

8. Purchasers Demand Transparency • Do PBMs provide real value or just serve as middlemen? • Do they really save money? • How do we know PBMs are acting in purchaser’s /consumer’s best interests? • Will all necessary medications be available if costs are cut? • Many lawsuits • Medco- switching / destroying prescriptions • Caremark- reselling returned drugs in Florida

9. When It Doesn’t Work • Low wage workers are least likely receive insurance offers http://healthyliving.ocregister.com/files/2009/04/healthinsurance_h.jpg Percent of Workers Offered Employer-Sponsored Insurance, by Worker Earnings, Compared Across Years Source: Kaiser Family Foundation

10. Problems with Small Business

11. Purchasers & Tragedy of the Commons • Even with attempts to problem-solve, health care still costs too much • In general, we treat government-provided healthcare as “free”, and overuse it. = depleted funds

12. Purchasers & Tragedy of the Commons • Employer-based insurance may not be a good thing • If market shifts further away from individuals • So then what happens if we lose our job? • employer-provided plans have a tax-free status • Great, but often overly generous coverage. • Depleting resources unnecessarily

13. Purchaser Problem-Solving • Often keep costs down by shifting costs to employers (co-pays, deductibles) • Reduce coverage overall • Good for purchasers, bad for consumers? • Expand your pool of employees • join another group!

14. Changes in Government: Solutions • Health reform law likely to affect purchasers • Mandates + subsidies for employers • Small businesses who offer health insurance can get tax benefits • State-based health insurance exchanges • Hopes to help small business purchasers / individuals

15. Key Web Sources • Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September 2010 • http://www.kff.org/insurance/snapshot/chcm091610oth.cfm • Kaiser Family Foundation Employer Health Benefits 2010 Annual Survey • http://ehbs.kff.org/ • Employer-Sponsored Health Insurance; Trends in Cost and Access • http://www.ahrq.gov/research/empspria/empspria.htm • Assessing the Value of Pharmacy Benefit Management Companies through Accreditation • https://www.prescriptionsolutions.com/RxSolWeb/mvc/staticContent.do?pageUrl=/rxsol/chp/rxsolutions_com/consumer/about_us/press_release/20071211_assessing_the_value_of_pharmacy_benefit_management_companies_through_accreditation.html • Health care is heading toward a tragedy of the commons. May 22, 2009Health care is heading toward a tragedy of the commons - Business First of Louisville

16. + MLA Bibliography • Employer Health Benefits 2010 Annual Survey - Kaiser Family Foundation. Web. 14 Oct. 2010. <http://ehbs.kff.org/>. • "Employer-Sponsored Health Insurance: Trends in Cost and Access." Agency for Healthcare Research and Quality (AHRQ) Home. Web. 14 Oct. 2010. <http://www.ahrq.gov/research/empspria/empspria.htm>. • "Health Care Is Heading toward a Tragedy of the Commons - Business First of Louisville." Louisville News | Business First of Louisville. Web. 14 Oct. 2010. <http://louisville.bizjournals.com/louisville/stories/2009/05/25/editorial3.html?page=2#ixzz12Koh89RI>. • Research, By Doing. "Buyers Guide to Health Insurance." Small Business Advice from the Champions of Small Business. Web. 14 Oct. 2010. <http://www.allbusiness.com/health-care/health-care-regulation-policy-health/11790912-1.html>. • "Snapshots: Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September 2010 - Kaiser Family Foundation." The Henry J. Kaiser Family Foundation - Health Policy, Media Resources, Public Health Education & South Africa - Kaiser Family Foundation. Web. 14 Oct. 2010. <http://www.kff.org/insurance/snapshot/chcm091610oth.cfm>. • "TPC Tax Topics | Health Insurance Tax Incentives." Tax Policy Center Home. Web. 14 Oct. 2010. <http://www.taxpolicycenter.org/taxtopics/healthinsurance.cfm>. • Web. 14 Oct. 2010. <https://www.prescriptionsolutions.com/RxSolWeb/mvc/staticContent.do?pageUrl=/rxsol/chp/rxsolutions_com/consumer/about_us/press_release/20071211_assessing_the_value_of_pharmacy_benefit_management_companies_through_accreditation.html>.