1、Mercer Human Resource ConsultingRich Bailey FSA,MAAA,FCARichmond,VAIs it Time for Employers to Move Away From the Traditional Ways of Providing Employee Benefits?November 3,美国保险业协会绝密HR分析报告第1页Mercer Human Resource ConsultingAgendanThe EnvironmentnThe Catch-22nPaths Away from Traditional Delivery:Two
2、CampsnOpportunities Along Path 2nThe AnswernAdditional Topics2美国保险业协会绝密HR分析报告第2页Mercer Human Resource ConsultingAgendanThe EnvironmentMedical TrendsLegislationMarketplace ChangesPopulation DemographicsEmployer OutlooknThe Catch-22nPaths Away from Traditional Delivery:Two CampsnOpportunities Along Pa
3、th 2nThe AnswernAdditional Topics3美国保险业协会绝密HR分析报告第3页Mercer Human Resource ConsultingDouble-Digit Increase for Second Year in a RowPer employee costs in excess of$5,600 per year-2.9%+6.2%+7.3%+8.1%+11.2%+14.7%Source:Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans4美国保险业协会绝密HR分
4、析报告第4页Mercer Human Resource ConsultingAnnual CPI Trend U.S.health care costs rise,despite continuing economic recessionThe gap between CPI-U and medical care component is increasing5美国保险业协会绝密HR分析报告第5页Mercer Human Resource ConsultingComparison of Overall Growth Cumulative medical care CPI 89%greater
5、than overall CPI since 1967Data based on January 1 CPI values6美国保险业协会绝密HR分析报告第6页Mercer Human Resource ConsultingEmployers Cost Increases Out-Pace Other Indicators Largest increase since 1990(all employers)Includes medical,dental and pharmacySource:Mercer/Foster Higgins National Survey of Employer-sp
6、onsored Health PlansResults for Employers with 500 or more lives6.9%18.6%16.7%17.1%12.1%10.1%8.0%-1.1%0.2%6.1%7.3%8.1%11.2%14.7%2.1%2.5%-2.00%0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%16.00%18.00%20.00%1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999EmployersCPI-MedicalCPI-All Items
7、7美国保险业协会绝密HR分析报告第7页Mercer Human Resource ConsultingAggregate Health Care Spending(1980 )Government portion of payments increasing;total projected to be over$2 trillion by Source:CMS8美国保险业协会绝密HR分析报告第8页Mercer Human Resource ConsultingMedical TrendsnPop QuiznHow many years will it take gross medical co
8、sts to double,assuming no specific employer interventions or national health care?10 or more98765 or fewer9美国保险业协会绝密HR分析报告第9页Mercer Human Resource ConsultingMedical TrendsResponses from a group of 25 actuaries who had time to get their calculators10美国保险业协会绝密HR分析报告第10页Mercer Human Resource Consulting
9、LegislationnMedicare Prescription DrugsIf made into law,will have major impact on retiree benefits and strategiesInitial confusion aside,should have positive impact on retiree plansExpect cost shifting to negatively impact active plansnEEOC Proposed changes in ADEA regulationsCline vs.General Dynami
10、csnWells Fargo caseAppears to allow pre-funding(and tax-deductibility)of entire retiree liabilityoan ILP approachowont be exactly same number as FAS liabilityofunding in years 2+would be limited to service costIRS weighing its options11美国保险业协会绝密HR分析报告第11页Mercer Human Resource ConsultingProposals to
11、Increase Coverage Among Early RetireesFew government programs except for financially indigentnCOBRA extensions and/or Medicare buy-insnProhibitions on post-retirement benefit reductionsnExpanded pre-funding for retiree medicalStill few viable products for pre-65 in individual market that overcome ac
12、cess and affordability issues.12美国保险业协会绝密HR分析报告第12页Mercer Human Resource ConsultingADEA IssuesImpact on retiree medical coveragenAge Discrimination in Employment Act(ADEA)prohibits discrimination against persons age 40 or older in terms and conditions of employmentnAge-based distinctions in employee
13、 benefit plans are permissible only if:A specific statutory exception applies,orEqual benefit/equal cost test is satisfiedoPlan must provide equal benefits for older and younger workers,oroPlan must incur equal costs for older and younger workersnThird and Sixth Circuit Courts reach different conclu
14、sionsnEEOC reviewing ADEA regulations13美国保险业协会绝密HR分析报告第13页Mercer Human Resource ConsultingMarketplace ChangesConsolidation of Major Health Care Carriers Employer options are greatly reduced,carriers have more cloutUnited HealthcareHealthSourceProvidentCIGNAEquicorMetrahealthUS HealthcareAetnaTakeCar
15、eFHPPacifiCareHealthSourceCIGNAAetna US HealthcareNYLCarePrudential HealthCareFHPPacifiCareProvidentTransamericaEquitableHCAMetropolitanPartnersAetnaGSDHPLincoln National HPsTakeCarePacifiCareHealth Plan of AmericaWellPoint/Blue Cross of CaliforniaHancockMass MutualTravelersUnited HealthcareAetnaPac
16、ifiCare Health SystemsWellPoint/BlueCross of CaliforniaCIGNABCBS of GeorgiaMultiple BCBS PlansFewerMajor BCBS14美国保险业协会绝密HR分析报告第14页Mercer Human Resource ConsultingMarketplace Changes PBM consolidation continues;three major national PBMs remainCPIAPICPNRxNetValue RxDiagnostekPerformHCSHPIDiagnostekVal
17、ue RxRxNetColumbiaValue RxExpress ScriptsExpress ScriptsNPADPSExpress ScriptsPAIDMEDCOAdvanced ParadigmAdvanceMedcoIntegrated Prescription Solutions(IPS)PCSFoundationMerck-MedcoMerck-MedcoProadvantageSystemedParadigmMerck-MedcoMedcoAdvance PCSMajor InsurersMajorInsurersMPSPCSClinical Pharmacy Advant
18、age15美国保险业协会绝密HR分析报告第15页Mercer Human Resource ConsultingPopulation TrendsAging baby boomers will increase the elderly and near elderly populationsData Source:U.S.Census Bureau State Population ProjectionsBaby Boomers Year of Birth 1946 to 1964Source:U.S.Census Bureau as of January U.S.Population,Pro
19、jected PopulationMillions16美国保险业协会绝密HR分析报告第16页Mercer Human Resource ConsultingNegative Tidal Wave of Available Talent Pool of“prime workers”will be decreasing Source:DRI,World at Work Journal,fourth quarter Percent Change in Population by Age Group,-10-20%-10%0%10%20%30%40%50%60%5-9 10-14 15-19 20-2
20、4 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79The“Echo boom”ages 15-29Shrinking Pool of“Prime workers”ages 30-44Aging“Baby boomers”ages 45-6917美国保险业协会绝密HR分析报告第17页Mercer Human Resource ConsultingImpact of Demographics on Health Care Cost Cost increases with age0.000.501.001.502.0
21、02.503.0020-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-6465+AgeRelative Cost by AgeMaleFemaleAverage employer cost=1.0Relative Costs By Age and Gender18美国保险业协会绝密HR分析报告第18页Mercer Human Resource ConsultingHealth Deterioration A cause and a consequence nWe eat too much-64.5%of adults overweightnPo
22、pulation with diabetes increased over 50%in last decade*Overweight is roughly 10 to 30 pounds over an ideal weight.Obesity is roughly 30 pounds over an ideal weightSource:National Health and Nutrition Examination Survey45.0%47.0%47.0%56.0%64.5%19美国保险业协会绝密HR分析报告第19页Mercer Human Resource ConsultingIss
23、ues Facing Businesses The perfect storm nLow ambient inflation;high medical inflationnAdvances in medical technology likely to lead to higher costs,difficult decisionsnLegislative uncertaintynConsolidating medical delivery and financing systemnAn aging workforcenIncreased longevitynSlowing economynD
24、isappearing over-funded pension plansnFew,if any,obvious and easy alternatives to managing health care costs20美国保险业协会绝密HR分析报告第20页Mercer Human Resource ConsultingEmployer OutlooknEnvironmental outlook spurring employer actionEmployers acutely aware of trendsnHeightened interest in cost saving strateg
25、ies(active and retiree)nGreater emphasis on longer term cost projections and on the“bottom line”nProjection results have induced“fight or flight”responses21美国保险业协会绝密HR分析报告第21页Mercer Human Resource ConsultingRetiree Medical Coverage Employers continue to drop retiree medical coveragePercentage of Emp
26、loyersOffering Coverage to Future RetireesBased on employers of 500 or more lives responding to the Mercer/Foster Higgins Survey of Employer-Sponsored Health PlansnWhen coverage is offered,retiree premiums and out-of-pocket costs often increase22美国保险业协会绝密HR分析报告第22页Mercer Human Resource ConsultingAge
27、ndanThe EnvironmentnThe Catch-22nPaths Away from Traditional Delivery:Two CampsnOpportunities Along Path 2nThe AnswernAdditional Topics23美国保险业协会绝密HR分析报告第23页Mercer Human Resource ConsultingThe Catch-22nReducing employer cost typically implies increasing employee/retiree costnEventually runs against e
28、mployers sensibilities regarding fairness,paternalism(if present),and the concept of benefits generallynExample(FAS 106):“Lower my liabilities significantly but dont do anything harsh to our retireesthey wont accept it”To the extent that retirees represent the bulk of the liability,this is a very di
29、fficult propositionOpportunities exist to change eligibility,design,etc.for future retireesnIf we dont take cost out of the system,either the employer or the employees/retirees will pay the increases24美国保险业协会绝密HR分析报告第24页Mercer Human Resource ConsultingAgendanThe EnvironmentnThe Catch-22nPaths Away f
30、rom Traditional Delivery:Two CampsnOpportunities Along Path 2nThe AnswernAdditional Topics25美国保险业协会绝密HR分析报告第25页Mercer Human Resource ConsultingPaths Away from Traditional Delivery:Two CampsnEmployers that become more involved inChanging employee behaviorChanging provider behaviorChanging providers t
31、hat they work withChanging the lawsnEmployers that reduce their involvement byIncreasing employee responsibilityLimiting employer costLimiting employer risk26美国保险业协会绝密HR分析报告第26页Mercer Human Resource ConsultingEmployers Becoming More InvolvednCollective PurchasingnHigh Performance NetworksnDirect Con
32、tractingnConsumer AccountabilitynLeap FrognLobbyingnDisease Management/Preventive CarenWhat these approaches share is an eye toward reducing cost from the employers system,and in some cases,the entire health care system.27美国保险业协会绝密HR分析报告第27页Mercer Human Resource ConsultingCollective PurchasingUse em
33、ployer and plan manager clout to negotiate favorable payment arrangementsnBackgroundTraditional network negotiations are volume drivennApproaches to achieve lower costs includeAggregated purchasing to improve negotiating strengthoCoalitionsoFormal alliancesoInformal alliancesDirecting care to most c
34、ost-effective source of quality careReviewing effectiveness,efficiency and“fit”of current vendor relationships;changing as appropriate28美国保险业协会绝密HR分析报告第28页Mercer Human Resource ConsultingWhat is a HPN?High Performance Network:A health plan performance improvement method that steers care to providers
35、 that meet specific efficiency and quality criteria29美国保险业协会绝密HR分析报告第29页Mercer Human Resource ConsultingRationale for HPNs nNew management approaches are needed in this era of cost accelerationnPatients and physicians are the key drivers of health care costsBut they have limited or no incentive to c
36、are about costsnThe heart of the High Performance Network concept is to change the provider selection behavior of patients and/or physicians30美国保险业协会绝密HR分析报告第30页Mercer Human Resource ConsultingHigh Performance Networks Network modelsnLimited NetworkA subset of an existing provider network comprised
37、of high performing providersnTiered NetworkEmployee copay/coinsurance differentials to encourage use of high performing providersnPhysician PartneringAn arrangement with(typically)primary care physicians to enhance efficiencynConsumer DrivenDeployment of performance information to consumers to impro
38、ve provider selection31美国保险业协会绝密HR分析报告第31页Mercer Human Resource ConsultingDirect Contracting nLarge employers with significant market presencenMay be able to achieve significant savings by contracting directly with health care providersnMay need group of regional employers to achieve critical mass32
39、美国保险业协会绝密HR分析报告第32页Mercer Human Resource ConsultingPromote Consumer AccountabilityHelp patients be better consumers of health carenBackgroundIf half of cost is due to lifestyle and half of chronic patients do not follow treatment plan,what can we do?oGet members attention make them aware of conseque
40、ncesnApproaches to encourage consumer involvement includeCoordinated health promotion,disease prevention and educational programsTying employee cost increase to trend“Defined contribution”health plansConsumer directed health careRe-introduction of coinsurance33美国保险业协会绝密HR分析报告第33页Mercer Human Resourc
41、e ConsultingEfforts to Improve Quality of Care in Hospitals Leapfrog initiative nThe Leapfrog Group:BackgroundFormed in response to Institute of Medicine study of errors in health careGoal:Major gains in patient safety,customer service and health care affordabilitySponsored by Business RoundtableEmp
42、loyers in Leapfrog Group use purchasing power to encourage health care providers to adopt patient safety standardsnLeapfrog standards include:Computerized systems in hospitals to improve the accuracy of physicians prescriptions and minimize medication errorsStaffing of intensive care units by physic
43、ians trained in critical care medicineReferral of patients requiring certain complex procedures to hospitals offering the best results34美国保险业协会绝密HR分析报告第34页Mercer Human Resource ConsultingLobbying nSome employers making presence felt on Capitol HillnMany have been active for years and are recognized
44、as important voicesnSome large associations have similar goals and represent large voting populations35美国保险业协会绝密HR分析报告第35页Mercer Human Resource ConsultingPreventive Care and Disease Management Across theHealth Care Continuum Programs should be tailored to the needsPreventionScreeningsHealth Risk Ass
45、essmentTargeted Risk Reduction ProgramsRisk ModelingNurse Advice LineWeb ToolsConsumer DirectedHealth PlanDiseaseManagementIncentive DesignSelf ManagementTrainingCase ManagementDecision SupportPredictive ModelingWellNo DiseaseAt RiskObesityHigh CholesterolAcute Illness/Discretionary CareDoctor Visit
46、sEmergency VisitsChronic Illness DiabetesCoronary Heart DiseaseCatastrophicHead InjuryCancer85%members=15%cost15%members=85%cost36美国保险业协会绝密HR分析报告第36页Mercer Human Resource ConsultingEmployers Becoming More Involved SummarynTypically the larger employersn“Fighting”to change the way health care deliver
47、ed to own employeesGoal is to produce better outcomesAnd lower cost37美国保险业协会绝密HR分析报告第37页Mercer Human Resource ConsultingEmployers Becoming Less Involved(Camp 2)nEmployers desire to“know their cost”nDollar-based plans(often account-based)nReimbursement plansnAccess Only plansn“Capped Plans”typically
48、retiree medicalnWhat these approaches share is an eye toward reducing employer cost at the expense of employees/retirees38美国保险业协会绝密HR分析报告第38页Mercer Human Resource ConsultingAccount-Based ApproachesnDefines employers commitment as a defined dollar contribution instead of a defined medical benefitnCom
49、mitment can be monthly,annual,aggregatenCommitment can be based on retiree-only or recognize dependentsnAmounts available for health care only;employer contributions are tax-free to the retiree and deductible for employer under Sections 105,106 and 162 of IRCnCan be funded or unfundednFor Medicare-e
50、ligible,Medicare+Choice,Medigap and traditional Medicare available;HIPAA may eventually make this a viable option for pre-Medicare retirees39美国保险业协会绝密HR分析报告第39页Mercer Human Resource ConsultingAccount-Based ApproachesExamplesnMonthly/annual promiseRetirees receive monthly(or annual)credits of a speci
