The Insurance Dollar Breaking Down The Costs: Copays Deductibles Coinsurance Penn-Ohio Regional Health Care Alliance.

The Insurance Dollar

Breaking Down The Costs:Copays

DeductiblesCoinsurance

Penn-Ohio Regional Health Care Alliance

The Insurance DollarCost Sharing Methods

Copay - Designed to offer reimbursement on high frequency/low severity costs.

Deductible - Designed to offer reimbursement on high severity/low frequency costs.

Coinsurance - Designed to maintain insured's "engagement" in costs.

Penn-Ohio RegionalHealth Care Alliance

Inflation 5% Price Changes for Medical ProviderCost Shifting 2% Shifts in costs from gov't payors and uninsured.Utilization 6% Changes in Patient Utilization and Medical Uses

"Trend" 13%

Change in Cost ("Trend")

The Insurance Dollar

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Office Visit Copay

2009Chg in Cost 2010

OV Charge $100 13% $113Copay $20Insurance $80

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Office Visit Copay Cost Impacts

2009Chg in Cost 2010 2010 2009

Chg in Cost

OV Charge $100 13% $113 $113Copay $20 $20 / $20 = 0%Insurance $80 $93 / $80 = 16%

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Deductible

2009Chg in Cost 2010

Annual Med Cost $3,600 13% $4,068Deductible $1,000Insurance $2,600

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Deductible Cost Impacts

2009Chg in Cost 2010 2010 2009

Chg in Cost

Annual Med Cost $3,600 13% $4,068 $4,068Deductible $1,000 $1,000 / $1,000 = 0%Insurance $2,600 $3,068 / $2,600 = 18%

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

20% Coinsurance

2009Chg in Cost 2010

OV Charge $100 13% $11320% Coinsurance $20Insurance $80

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

20% Coinsurance Cost Impacts

2009Chg in Cost 2010 2010 2009

Chg in Cost

OV Charge $100 13% $113 $11320% Coinsurance $20 $23 / $20 = 13%Insurance $80 $90 / $80 = 13%

Penn-Ohio RegionalHealth Care Alliance

Inflation 5% Price Changes for Medical ProviderCost Shifting 2% Shifts in costs from gov't payors and uninsured.Utilization 6% Changes in Patient Utilization and Medical Uses

"Trend" 13%

Change in Cost ("Trend")

The Insurance Dollar

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Managing "Trend" Through Utilization

2009Chg in Cost 2010

Annual Med Cost $3,600 11% $3,996Deductible $1,000Insurance $2,600

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Managing "Trend" Through Utilization

2009Chg in Cost 2010 2010 2009

Chg in Cost

Annual Med Cost $3,600 11% $3,996 $3,996Deductible $1,000 $1,000 / $1,000 = 0%Insurance $2,600 $2,996 / $2,600 = 15%

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Managing "Trend" Through Cost Sharing

2009Chg in Cost 2010

Annual Med Cost $3,600 11% $3,996Deductible $1,000Insurance $2,600

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Managing "Trend" Through Cost Sharing

2009Chg in Cost 2010 2010 2009

Chg in Cost

Annual Med Cost $3,600 11% $3,996 $3,996Deductible $1,000 $1,100 / $1,000 = 10%Insurance $2,600 $2,896 / $2,600 = 11%

Penn-Ohio RegionalHealth Care Alliance

The Insurance DollarThe Health Reimbursement Account

HRA Plan with $500 Funding of $1,000 Deductible

Health Care Cost Levels

$11,001 +

$1,001 - $11,000

90% Plan Coverage

10% Employee

Liability

$501 - $1,000

$1 - $500* First Year HRA Balance.

Catastrophic Insurance (100% Plan Coverage)

Employee Liability (Under Deductible Amount)

HRA Account Balance

Plan Description

The Insurance DollarThe Health Reimbursement Account - Who Pays

Health Care Cost LevelsHRA Fund Liability Plan Coverage

Employee Responsibility

$11,001 + 0% 100% 0%

$1,001 - $11,000 $0 $9,000 $1,000

$501 - $1,000 $0 $0 $500

$1 - $500 $500 $0 $0* First Year HRA Balance.

The Insurance Dollar

Integrating Employee Engagement Through HRA's

Employer offers "High" Deductible Plan with no employer funding of deductible.

What Happens?

Employer sees immediate cost savings.

Employee see the actual costs of healthcare (becomes a gatekeeper)

Employee bears the "first dollar" costs up to the deductible.

With Coinsurance, "out of pocket" maximum is also important.

Depending on market environment, may or may not be a competitive benefit package.

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Integrating Employee Engagement Through HRA's

Employer “funds” a portion of the deductible.

What Happens?

Employee sees the actual costs of healthcare (becomes a gatekeeper)

Employee Rollovers have a “savings” effect on some employees (No “use it or lose” effect).

Employer is in the insurance business (Takes Risk/Reward)

Opportunity to build common goals.

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Integrating Employee Engagement Through HRA's

Employer “funds” a portion of the deductible.

What Happens?

Employee sees the actual costs of healthcare (becomes a gatekeeper)

Employee Rollovers have a “savings” effect on some employees (No “use it or lose” effect).

Employer is in the insurance business (Takes Risk/Reward)

Opportunity to build common goals.

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Integrating Employee Engagement Through HRA's

Employer HRA funding affects more than the HRA Balance.

90/10 ER/EE Split – Does this put enough of the employee’s skin in the game to affect behavior?

50/50 ER/EE Split –

10/90 ER/EE Split – Does this offer enough of the Y/Y savings opportunity to affect behavior?

Penn-Ohio RegionalHealth Care Alliance

The Insurance Dollar

Open Dialogue

Penn-Ohio RegionalHealth Care Alliance