L' L' Andreatta

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L. L. Andreatta AssociatesLivio L. Andreatta,
President

• Advanced Chartered Benefit Consultant
• State Public Relations Officer National Public
  Affairs Officer for the National Association of
  Alternative Benefits Consultants (NAABC)
• Special Consultant Corporate Benefit Consultants
• Certified Senior Advisor (CSA)
• Financial Consultant
• Over 35 years experience in Group and Individual
  insurance and corporate benefit plans.
• Member Chicago Southland Chamber of Commerce

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Of those covered by group health plans, 50
will spend less that 1,000 per year on their
health care.25 of those will spend NOTHING at
all!8 of those covered spend 70 of all the
dollars spent on health care.Employees pay for
only about 20 of their health care expenses.
BASIC FACTS
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20-30 of your premium is cost shifting and goes
to cover Medicare and Medicaid due to inadequate
government reimbursement.Another 5-7 of
premium cost shifting goes to cover the care of
the uninsured at hospital emergency rooms.
HIDDEN TAXES
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CONSUMER EDUCATIONIn a recent study...50 of
respondents were uncertain how much they paid for
their monthly health insurance premium.55 were
uncertain about their annual deductibles.77
reported that they were less than sure of what
the terminology used in their health insurance
policy actually means.80 do not know what PPO
stands for.
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Consumer Driven Health Plans Individual
Group
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• Can we keep funding Health Care the way we are
  doing it now?
• Six straight years of double-digit increases,
  with more projected.
• Vision is seeing the future now and acting upon
  it.

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KEY QUESTION?

• How do you slow down utilization without
  rationing health care?

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THREE PLAYERS IN THIS CONCEPT SALE

• INSURANCE COMPANIES
• EMPLOYER EDUCATION
• AGENCY/AGENT

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Consumer Driven Health Plans (CDHP's)

• KEY ELEMENT CDHPS have to have
  controlled by the employee with
  incentives/rewards to use these dollars more
  effectively. NO GIMMICKS!!!!!
• High deductible plans center piece.
• The human nature factor.

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Three Consumer Driven Health Plan Designs

• 1. The insurance company keeps the premium
• savings with the promise that they will
  reduce future
• renewal increases.
• 2. The premium savings are primarily directed
• to the employee and are put into a claims
  account
• they own and control. (HSAs)
• 3. The premium savings are primarily directed
• to the employer and are put into an account
  the
• employer owns, but that the employee
  controls and
• has incentive to use more wisely. (HRAs)

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True HSA Plan
Traditional Pre-paid Plan
Insurance Company
Co-pays
Insurance Company
Co-Insurance
Deductible
Deductible
Rx Co-pays
Office Co-pays
Variation 2
Variation 3
Co-paysRx
Insurance Company
Rx
Insurance Company
Deductible
Deductible
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American Community HSA Plan
Traditional Pre-paid Plan
Insurance Company
Co-pays
Insurance Company
Co-Insurance
Deductible
Deductible
Rx Co-pays
500 Preventive Care
Office Co-pays
Variation 2
Variation 3
Rx Co-pays
Insurance Company
Rx
Insurance Company
Deductible
Deductible
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American Community Common Family Plan
Traditional Pre-paid Plan
Insurance Company
Insurance Company Single 2,700
Insurance Company Family 5,450
Co-pays
Co-Insurance
Deductible
Deductible
Deductible
Rx Co-pays
Office Co-pays
American Community Embedded Family Plan
Insurance Company Single 2,700
Insurance Company Family 5,450
Deductible
Deductible
100
2,700
2,700
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KEY INTERNAL COST CONTROL FACTORS

• Discretionary medical costs vs.
• societal changes and attitudes.

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• Whereas once health care and health insurance
  were understood as activities related to acute
  injuries and illnesses, they have expanded to
  include preventive and mental health services,
  long-term care, complementary medicine, and the
  ability
• to maintain psychological, social, spiritual,
  and sexual performance far into the golden
  years.
• James C. Robinson, PhD

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Entitlement Factor in America

• Corporations are Bottomless Pits
• Unrestrained Desires
• Want-it-All Attitudes

Access to everything for a 10 co-pay
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Consumers are not paying the bills

• No Skin in the Game!!!

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What it Really Costs!!!!!

• Average Doctors Office Visit (w/tests) 250
• Average Co-Pay
  10-30

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Phase Industry is Now In

• Bringing consumers into the game
• as educated and informed purchasers

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Key To This Transition

• EDUCATION !!!!!!
• EDUCATION !!!!!!
• EDUCATION !!!!!!

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• As consumers, the idea of people
• learning how to save their own
• money is powerful

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KEY INTERNAL COST CONTROL FACTORS

• Discretionary medical costs vs. societal changes
  and attitudes.
• Reigning in Rx cost explosion.

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REIGNING IN Rx COSTS

• Rx costs have increased from 5 of total claims
  in 1990 to over 18.
• More money is spent on advertising Rxs than on
  research development.
• Market forces and education have to be brought
  into this Rx equation.

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• Can your company continue to
• take these projected increases
• without changing your strategy?

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Address Cost

• The Employers Options
• Drop Coverage
• Absorb the costs themselves
• Pass premium costs on to their employees
• Reduce benefits

or
Try a bold new approach that gives
employers more control over cost while
giving more choice to employees
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SOLUTION

• GETTING BACK TO
• RISKED BASED
• INSURANCE

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Milliman Robertson, Inc.
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THREE LITMUS TESTS FOR CDHPs

• How does your plan design treat employees with
  catastrophic or chronic conditions?

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THREE LITMUS TESTS FOR CDHPs

• How does your plan design treat employees with
  catastrophic or chronic conditions?
• How does it treat the 55 of employees who spend
  less than 1,000 per year?

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THREE LITMUS TESTS FOR CDHPs

• How does your plan design treat employees with
  catastrophic or chronic conditions?
• How does it treat the 55 of employees who spend
  less than 1,000 per year?
• How does it curb the abuser/user?

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HOW IT WORKS
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How does the HRA concept work?
PPO PREMIUM
PPO BENEFIT DESIGN 5 MILLION
100 PREMIUM
90 Rx, treatments, surgery Hospital, doctor,
lab tests 250 deductible Rx 10/20/35
co-pay ER 75 co-pay Office Visit 20 co-pay
1,000 Out-of-pocket
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R E D U C E D B Y 4 0
HRA REDUCED PREMIUM
HRA BENEFIT DESIGN 5 MILLION
100 Rx, treatments, surgery Hospital, doctor,
lab tests NO CO-PAYS 2,000/2,250/2,500
Deductible Fund actual claims under
deductible Rx, treatments, surgery Hospital,
doctor, lab tests
Use 60 of premium to pay for Catastrophic
Insurance
Unused premiums are retained in your checking
account
___________ Out-of-pocket
Owners choice when used
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Most Expensive of Health Care Designs are called
Prepaid Medical Plans

• 1. Deductible
• 2. Office Co-Pays
• 3. Co-Insurance
• 4. RX Cards
• 5. Typical Out of Pocket

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How does the HRA concept work?
Pre-Paid PPO Premium
PPO Benefit Design
Facts
100 PREMIUM Surgery
Hospitalization Office co-pays ER
co-pays Treatments X-rays Lab
Tests Specialists Rx co-pays
Large Claims Small Claims
90 Rx, treatments, surgery Hospital, doctor, lab
tests 10 out-of-pocket 250 deductible Rx
10/30/50 co-pay ER 75 co-pay Office Visit
20 co-pay
Why do we have health insurance? Most people
cant afford to write a check for 50,000 -
100,000 - 1,000,000 Those covered never see
the actual cost of their health care Most dont
care... as long as theyre covered
R E D U C E D B Y 4 0
INSURED NEVER SEES THE ACTUAL COSTS OF
TREATMENTS, OFFICE VISITS, AND PRESCRIPTION
DRUGS
HRA Reduced Premium
HRA
Use 60 of premium to pay for Catastrophic
Insurance
100 Rx, treatments, surgery Hospital, doctor,
lab tests NO CO-PAYS 2500/5,000
Deductible Fund actual claims under
deductible Rx, treatments, surgery hospital,
doctor, lab tests etc.
You only pay for what you use Remaining unused
HRA funds at the end of each year roll over and
are retained in your checking account.
Unused premiums are retained in your checking
account Owners choice when used
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Employer Can Decide Design. Pay same Claims, BUT
in a Different Manner

• Premium Savings
• Tax Savings
• Key Point Claims Paid when used.

BOTTOM LINE ON AVERAGE, COMPANY WILL SAVE
BETWEEN 1,000 TO 3,000 PER PERSON PER YEAR.
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CURRENT STARMARK PLAN 1,500 Deductible 90/10
Co-Insurance X 2 90 Co-Insurance Individual
OOP 2,000 Family OOP 4,000 Rx Card
10/25/40/30 20 OV MEDICAL RATES PER
MONTH 13 Employee Only 224.83 1
Employee/Spouse 1 Employee/Child 689.57 3
Family 975.29 Total Premium 6,538.23 Savi
ngs with HRA Plan 44 No Employer
Deposit to HRA Account Maximum OOP Exposure
w/deductible Individual 3,500
Co-pays Family 7,000
Co-pays TOTAL COST OF HRA Monthly Premium
3,672.56 HRA Contributions 3,319.17 HRA
Administration 119.00 Total Cost
7,110.73 AMERICAN COMMUNITY
HRA Deductible 2,700 Single 5,450 Family 100
Co-insurance 100 Co-Insurance Individual OOP
2,700 Family OOP 5,450 Rx
Discount Card MEDICAL RATES PER MONTH 13
Employee Only 141.25 0 Employee/Spouse 1
Employee/Child 353.14 3 Family
494.39 Total Premium 3,672.56 Monthly
Premium Savings 2,865.67 Annual Premium
Savings 34,388.04 Employer Deposits to
HRA Employee 1,890.00 Family
3,815.00 Maximum OOP Exposure Individual
810.00 Family 1,635.00 TOTAL SAVINGS OF
HRA Guaranteed Monthly Savings (
572.50) Guaranteed Annual Savings (6,869.96) Expe
cted Annual Savings 13,045.04
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G G MFG Renewal 11-01-2008

• Carrier AC Previous 141.25 353.14 277.19 494.
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• AC Renewal 151.14 377.86 302.28 529.00
• Aetna 240.00 457.00 404.00 662.00
• Blue Cross 296.14 666.32 666.32 799.58
• Humana Declined to quote rates not
  competitive
• PhysiciansCare 215.17 418.19 379.32 647.07
• Starmark 174.31 401.49 343.76 570.94
• Unicare 170.91 396.60 396.60 506.53
• With your Starmark traditional plan, you would
  have spent 78.458.76 on premiums for 2008
• With your American Community HRA, you have spent
  44,070.72 on premiums for 2008
• You have saved 34,388.04 on premium over the
  past 12 months
• Your employees utilized 13,000 in HRA
  reimbursements through your renewal date.
• That means you have kept over 21,000 in your
  checking account during your first year of your
  HRA
• Your 7 renewal increase amounts to 3,084.95.
  With your Starmark plan, this 7 increase would
  have amounted to 5,492.11.
• Your Starmark renewal premium would have been
  83.950.87
• Your American Community HRA plan renewal is
  47,155.67
• Thats an additional savings of 3,679.52

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SOME FUTURE ISSUES

• Cost Shifting by the Government!!!
• Reducing Rx Costs.
• Tort Reform.
• Flexibility on State Mandates.

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How Do You Start This Educational Process

• Contact
• Livio Andreatta, ACBC, CSA
• L. L. Andreatta Associates
• Illinois Office [phone]
• Michigan Office [phone]
• Cell [phone]
• e-mail livio3_at_sbcglobal.net