Health Insurance Update November, 2009. Goals of Franciscan University’s Health Insurance Program Protect University employees and their families from.

Health Insurance UpdateNovember, 2009

Goals of Franciscan University’s Health Insurance Program

• Protect University employees and their families from the financial consequences of catastrophic health care claims

• Provide reasonable access for routine family health care

• Provide health care services that are compatible with Catholic moral teaching

• Encourage employees to participate as good stewards of their own health care

Franciscan University’s health insurance program should balance the following objectives with the

overall goals:

• Manage health care costs and cost increases

• Provide employees with a quality health care provider network

• Encourage employees to participate in the control of health care costs

• Recognize and support the health care needs of large families

• Recognize and support the health care needs of individuals on the lower end of the pay scale

Benchmarking• Milliman (MMMS)

– 2009 plan designs– 3,563 companies– 1.8 million employees

• Milliman Industry (Higher Ed Services)– 2009 plan designs– 51 organizations– 97,506 employees

• Peer Comparison– 2008 plan designs– 7 schools

In-Network Deductible

$-$100$200$300$400$500$600

FUS 2009 2009MMMSMedian

2009IndustryMedian

2008Peers

Employer Co-Insurance

0%20%40%60%80%

100%120%

FUS Core2009

FUSBuyup2009

2009MMMSMedian

2009IndustryMedian

2008Peer

Median

In-network Out-of Pocket Maximums

$-

$500

$1,000

$1,500

$2,000

$2,500

FUSCore

FUSBuyup

2009MMMSMedian

2009IndustryMedian

2008Peer

Median

Primary Care Office Copays

$-$5

$10$15$20$25

FUSCore

FUSBuyup

2009MMMSMedian

2009IndustryMedian

2008Peer

Median

Rx Copays

$-$10$20$30$40$50$60

Gener

ic

Formulary

Non-For

mula

ry

FUS

2009 MMMSMedian

2009 IndustryMedian

2008 Peer Median

Employee Premium Contributions

$74

$277

$78

$330$298

$43

$316

$37

$109$90

$-$50

$100$150$200$250$300$350

Single Family

FUS Core 2009

FUS Buyup 2009

2009 MMMS Median

2009 Industry Median

2008 Peer Median

Self-funded Health Insurance

• Fully insured vs. self-insured– University responsible for all claims

• Pay Third Party Administrator (TPA) to pay claims and use network

• Pay for stop-loss insurance (high deductible)• Assumes risk for claims• Admin fees + stop loss insurance + claims

=TOTAL COST

2009• 269 Employees on health insurance coverage• About 880 lives• Project to spend about $2.4 million on doctors and

facilities and drugs14% increase from 2008(following 22% increase last year)

• At least one large claim• Administrative fees will increase 8%• Stop loss insurance will increase 12%

(66% cumulative increase in 2007 and 2008)• Overall 2009 rates projected to increase 8.5%

Prescriptions

• Prescription costs increasing rapidly (45% from 2006 – 2008)

• Large dollar amounts (over $400,000 in 2008)• $8/$20/$40 design has not changed for many years,

and is now falling behind medians• Generic/brand gap is not adequate to encourage

preferred behavior• No financial incentive to consider different formulary

brand options

Prescription Change 2010

• 80/20 Coinsurance with floors and ceiling

• $5 generic floor• $25 brand formulary floor• $50 brand non-formulary floor• $100 ceiling• Reduces projected premium increase

by a little more than 1%

Prescription Change 2010

• Example: Generic costs $21– Employee pays: $5

• Example: Generic costs $3– Employee pays: $3

• Example: Formulary costs $80– Employee pays: $25

• Example: Formulary costs $300– Employee pays: $60

• Example: Formulary costs $1,000– Employee pays: $100

2010• NO INCREASE in BC/BS deductibles, copays,

out-of-pocket maximums, and co-insurance levels for medical on either plan

• PPO access to BC/BS network (Pittsburgh & nationwide) continues for both plans

• HRA maintained at same funding schedule for both plans

• Maintain vision benefit for employees on both plans; option for dependent vision coverage will require additional contribution of $17

Projected 2010 Monthly Employee Contributions

• PPO Core Single: $52/month Increase of $15/month

• PPO Core Family: $119/month Increase of $45/month

• Dependent vision coverage may be added for a contribution of $17/month

Some Good News!

• Private College and University Consortium• 7 private schools in western PA• Highmark BC/BS• Greater leverage in negotiating admin fees

and stop loss insurance (1700 members)• $5 million lifetime maximum• Level out self-insured risks• Maintain control over plan design

2010 Monthly Employee Contributions

• Consortium: PPO Core Single: $43/month Increase of $6/month

• Consortium: PPO Core Family: $78/month Increase of $4/month

• Dependent vision coverage may be added for a contribution of $17/month

2010 Monthly Employee Contributions

• Higher benefit level for PPO Buyup• PPO Buyup Single: $115/month• PPO Buyup Family: $281/month

– Dependent vision coverage may be added for a contribution of $17/month

• Employee contributions will be pre-tax payroll deductions

6 Year Comparisons• Core Monthly Contributions

2005: $24 sgl / $46 family2006: $18 sgl / $34 family2007: $28 sgl /$63 family2008: $15 sgl/ $45 family2009: $37 sgl/ $74 family2010: $43 sgl/ $78 family

• Deductibles2005: $02006: $250/$5002007: $350/$7002008: $500/$1,0002009: $500/$1,0002010: $500/$1,000

David Schmiesing ChairJanine Stasiulewicz Secretary

Sue Dukich Robert Filby Kevin Harris Catherine HeckJohn Herrmann Patrick LeeMary Lynn Lewis Adam MitchellBrenan Pergi Adam ScurtiMary Salter Patti ScheelDave Skiviat

Committee Membership