Health Care Reform? Health Care Costs/Total Compensation Insurance System Progression Understanding G.U.’s Medical Insurance Programs Super Size It! Costs of Lifestyle Choices What Can We Do?
What’s Happening With Benefits Costs And My Total Compensation?
In the 1950’s, health insurance was designed to cover catastrophic events... Catastrophic Care Preventive Care Lifestyle Enhancements By the 1990’s, we were using “health insurance” to finance “health care.”
Personal Health Care Expenditures by Source of Funds: Selected Years 1960-2000 Over the last several decades, the public sector share of health spending has increased, while the share from out-of-pocket spending has declined. Dollars in Billions $63.1 $214.5 $23.3 $1,130.4 $609.3 17.2% 22.5% 27.1% 39.7% 5.0% 5.0% 55.2% 4.3% 2.8% 34.6% 33.4% 28.3% 22.3% 2.0% 7.3% 11.9% 10.0% 21.4% 15.7% 19.2% 16.9% 17.6% 11.5% 21.4% 16.8% 11.5% 11.4% 8.0% Other Public Medicare Total Medicaid, SCHIP expansion and SCHIP Out-of-Pocket Other Private Private Health Insurance Total Public Total Private Source: CMS, Office of the Actuary, National Health Statistics Group.
Insurance Models • Indemnity/Traditional • Managed Care • PPO • HMO • Consumer Directed/Focused Healthcare -21st century
Consumer Directed PlanHRAModel Health Employer providescoverage above the gap Coverage takes effect when expenses exceed employer’s Health Savings Account contribution plus the employee-funded gap Plan Coverage $5,000 Ded Preventive Care Employee isresponsible for gap Gap $2,000 FSA $500 Used by employees for routine care; unused amounts roll over year-to-year Health Employer deposits money into an employee’s account Account $2,500
Medical/Insurance Costs • Experience/Utilization vs. Premiums Premera – Self-Funded Group Health – Fully-Insured • Administration Costs • Trend Factors
Medical Insurance Plans Choice between 2 companies: • Premera Blue Cross – PPO • Group Health Cooperative – High Option (copay plan) or Low Option (deductible plan)
Insurance Plan Definitions • Deductible – amount of eligible expenses you pay in a calendar year before plan pays. • Co-insurance – percent of allowable charges you pay once deductible is met. • Copayment – set dollar amount you pay for services no matter the total cost. • Stop Loss – maximum amount you will pay out of pocket for allowable charges before plan covers expenses in full (in addition to deductible and prescription copays).
Premera Blue Cross Preferred Provider Plan (PPO) – See PPO provider for maximum benefits: • $200 deductible per person, per cal. year; $600 family • 80%/20% • prescription co-payments (30 day supply) are: $10 generic drugs; $20 preferred name brand; $40 non-preferred name brand Home Delivery/Mail order – 1 copay for 90 days supply • maximum out-of-pocket expense $1,000 (plus ded.)
Group Health Cooperative High Option (Copayments) $20 per office visit prescriptions - $15 generic; $30 name brand drugs • hospital admission – $400 per day to a maximum of 5 days Low Option (Deductible) $200 ded. per person, PCY $600 family 80%/20% prescription - $15 generic; $30 name brand wellness exams covered in full maximum out-of-pocket expense $2,000 (plus ded.)
Premera Experience Funding Level (100%) $3,243,091 Administration $314,966 Stop Loss Expense $161,102 Net Paid Claims $2,604,721 Total Expenses $3,080,818 Expense Loss Ratio 95%
Wise Healthcare Consumer • How the healthcare system works. • The total costs associated with your healthcare decisions. • How those costs impact your families, Gonzaga, and the community. • How the costs of healthcare and qualify care are related – or not related. • What health coverage or other insurance you need or tax-advantaged savings vehicles you can use to save for healthcare costs. • How to use the tools available to you now so you can make healthcare decisions that result in the best outcomes for the best cost.
Wise Healthcare ConsumerPrescription Drugs Cost-Saving Tips • Ask your practitioner to prescribe a generic drug when appropriate. All generic drugs are covered and the lowest copay • If a generic drug is not appropriate, ask your practitioner to prescribe a preferred brand name drug on the Preferred Drug List (PDL). These drugs have the 2-tier copay. • Ask your pharmacist to fill your prescriptions with a generic drug when allowed.
Lifestyle ChoicesImpact on Disease “The concept that Western diseases are lifestyle related, and therefore are potentially preventable and reversible, is the most important medical discovery of the 20th century.” —Denis Burkitt, MD
Super-Size It! How much larger is the average soda in the U.S. compared to France? 1. 5% 2. 18% 3. 52% 4. 74% yogurt 82% ↑; candy bars 41% ↑; hot dog 63% ↑
Health Care Spending Per Capita by OECD Country, 1960-1999 U.S. spending is significantly higher than other OECD countries. Median: $64 $146 $591 $1,270 $1,798 *Expenditures in U.S. dollars using purchasing power parity rates. **For some years, no data was available. ***1998 data was used because 1999 was not available. Note: The data is arrayed by expenditure levels for 1999. The medians include all OECD countries. Source: OECD Health Data 2002.
“Americans always do what is right, but only after trying everything else.” Winston Churchill
Lifestyle Choices G.U. Total Medical Costs – $4.1 Million Behavior Medical Costs = 60% of Total $2,460,000 SAVINGS OPPORTUNITY
Cost Drivers Chronic diseases greatly influenced by lifestyle choices: • Heart Disease • Cancer • Diabetes • Depression/Anxiety 80/20 Rule
Premium/Costs Increases • 5 year increase in G.U. Premiums (’99-’04) • PPO – 73% ↑ • Family Monthly Premium • 1999 - $98.97 (30% of premium) • 2004 - $249.59 (GU $530.51/Total $780.10) • Expected to double in 5 years
The Obvious • “When you • come to a fork • in the road, • take it!” • Yogi Berra
Chronic Illness: Estimated Per Capita Health Expenditures, by Age and Sex, 1995
FITNESS FACTS • Most fit age group • 40 to 49 year olds • Age group that joins health clubs and actually uses them • 55+ • Upcoming obese population – how to manage costs and diseases?
WHAT CAN WE DO?Change the Paradigm • Behaviorial shift towards “consumerism” “Nobody spends someone else’s money as carefully as they spend their own.” – Milton Friedman • Proactively manage health vs. passive reactor • Stages of Change
WHAT CAN WE DO?Change the Paradigm • Serious changes in the way that we approach health • Solution for the future → build a healthier future → healthier lifestyles now for healthier retirement not a sprint, but a marathon • Create resources and tools – Get Connected – people out there are dying to know
Stages of Change Stage 1. Precontemplation Nope…Not interested in changing now. Stage 2. Contemplation Hmm…I’m giving change serious consideration. Stage 3. Preparation Yep…I’m getting ready to change…soon. Stage 4. Action Let’s go…I’m taking action. Stage 5. Maintenance Old news…I’ve been doing this for a long time.
Employee Assistance Program(EAP) • Through MetLife – Life Insurance/Long Term Disability Carrier • MHN, the nation’s 2nd largest provider of EAP services • Face-to-face and telephone EAP counseling • Up to 3 counseling sessions per incident PCY • Call 800# to arrange EAP services • No cost to you • EAP can help you resolve a broad range of issues including: • Relationship/marriage problems • Family issues • Life changes • Stress/Emotional Issues • Alcohol & Drug dependency
The Gonzaga Health Care System Reform • Get ZAGFIT - rewarded for making healthy lifestyle choices • There’s no better place to start than here. • There’s no better time to start than now.