The Future of Health Reform: What’s Next? The future of private health insurance Patrick Cahill Vice President, Massachusetts Market March 27, 2019

Health Reform: Almost A Decade After Passage of the ACA is Constantly Evolving Uninsured levels are at historic lows; around 14% nationally Coverage for pre-existing conditions and dependents up to age 26 have become core tenants of the health care lexicon Risk stabilization, uniform rating rules, and essential health benefits have fundamentally altered and brought consistency to plan offerings 37 states have expanded Medicaid coverage to ACA limits

After Initial Growth Individual Market Enrollments Shrinking Nationally Subsidized market driving exchange enrollments Unsubsidized market shrinking nationally both on and off exchange

Employer Based Insurance Market Health Care Financing Disrupting the Risk Pool Small employers/ Individuals: Short-term limited duration plans Association health plans HRA rule Self-funding alternatives Large employers: Captives Purchasing coalitions Private exchanges Pharmacy carve-outs

Health Plan Focus On Improving Population Health Medical Management Initiatives Pharmacy Management Innovation in Provider & Pharmacy Contracting, concierge Medicine, etc.

Key 2019 trends Employers are playing an activist role Emotional health is moving to the forefront Very high new treatment costs, especially with specialty pharmacy Employers Playing Activist Role —Health care costs continue to put economic pressure on employers and employees. The pace of meaningful and sustained change is slower than needed. More employers are driving transformation in health care delivery by either directly contracting, partnering with their health plans, or working with other third parties to promote value-based care. Nearly half of the employers surveyed (49%) by NBGH are pursuing one or more of these strategies that focus on improving access and convenience in addition to better quality and lower cost. Meeting the Needs of Today’s “On Demand Consumer”—Employers are rethinking consumerism. Today’s consumer places a premium on simplicity, convenience, and personalization. Navigators, concierge services and virtual resources are expanding to help consumers take some of the complexity out of accessing care and to better anticipate and address their unique needs. For the first time, the NBBH survey shows a 9% decline in the number of employers offering only consumer-directed health plans and this percentage is expected to grow in future years reflecting a movement towards increased choice. Fast Approaching Tipping Point on Prescription Drugs—The push for more straightforward, simple, and streamlined supply-chain pricing and contracting models is reaching a tipping point. 2019 may well be the year the paradigm shifts. Over 90% of employers responding to the survey would welcome an alternative to the rebate-driven approach to managing drug costs. Emotional Health Moves to the Forefront - From stress and anxiety to addiction, depression and serious mental illness, the full continuum of emotional, behavioral and mental health is front and center. Employers are addressing the access challenge through onsite and virtual counseling, network expansion where feasible and the integration of EAP and mental health benefits. Successful approaches remove stigma and consider brain health on par with other medical conditions. Disruption Is the “New Normal”—Incumbents are evolving while new entrants will continue to make a splash and shake up the existing players. Artificial intelligence, wearables, voice recognition, genomics, blockchain, bioprinting and other advancements will play an increasingly larger role in disrupting health care delivery and access.  Consumers demanding the latest and greatest New entrants are driving competition and changing the landscape Medical trend continues it’s upward movement Ranging between 7-9% in New England 2018 Source: National Business Group on Health (NBGH) survey

Tracking disintermediation and new disruptors that could bring significant change Increase in insurers buying physician groups Vertical integrations could significantly change the industry landscape New disruptors are figuring out how to compete in this highly regulated industry UnitedHealth’s acquisition of DaVita’s physician network Humana acquiring Kindred Healthcare and Curo Health Anthem’s acquisition of Aspire Health CVS – Aetna Cigna – Express Scripts Walmart – Humana (rumored) Magellan – Senior Whole Health Horizontal integration Large horizontal mergers such as Anthem-Cigna and Aetna-Humana were blocked by regulators. Smaller ones have succeeded such as Centene-Health Net Vertical includes insurers buying physician groups, for example: UnitedHealth’s acquisition of DaVita’s physician network; Humana acquiring Kindred Healthcare and Curo Health (which will make Humana the largest hospice provider in the U.S.), Anthem’s acquisition of Aspire Health, a community palliative care provider. Examples of other vertical integrations include: CVS – Aetna Cigna – Express Scripts Walmart – Humana (rumored to be happening) Magellan – Senior Whole Health Payer Consolidation will impact New England