Purchasers MGMT E 5520 Brenna Baccaro Healthcare System Stakeholders Presentation

Who are They? Employers who buy health insurance Most large companies in the U.S. provide health insurance as an employee benefit.

Employer-Sponsored Insurance Fluctuations Parallel to Economic Conditions Percent of Workers Offered Employer-Sponsored Insurance, 1995, 2001, and 2005 Source: Kaiser Family Foundation calculations based on data from the Current Population Survey, 1995, 2001, 2005, conducted by the Bureau of Labor Statistics.

Purchaser Variation Provided in all industries, more prevalent in some. E.g. Compare Agriculture with Manufacturing : Percent of Workers Offered Employer-Sponsored Insurance, by Industry

Incentives for All Purchasers Win-Win Incentives for Employers – Attracts and retains workers – Keeps workers healthy= productivity ^ In general, bigger groups = lower rates, so health insurance is more affordable through employer Provides consumers with better “protections” from insurance industry = more likely to be covered.

Purchasers Seek Out PBMs Pharmacy Benefit Management – Provide prescription drug benefits Provide purchasers (and consumers) more affordable prices for prescription drugs – Retail pharmacies – Rebates from manufacturers – Mail service pharmacies – Approve biogeneric production (stop brand monopolies) consumeraff airs.com/ne ws04/2007/0 2/images/su pplements.jp g

PBMs Administer to ~ 200 million U.S. residents (68% of population) Almost all covered workers in employer- sponsored health plans receive prescription drug benefits. …Too good to be true? /news04/2007/02/images/supple ments.jpg

Purchasers Demand Transparency Do PBMs provide real value or just serve as middlemen? – Do they really save money? How do we know PBMs are acting in purchaser’s /consumer’s best interests? Will all necessary medications be available if costs are cut? – Many lawsuits Medco- switching / destroying prescriptions Caremark- reselling returned drugs in Florida

When It Doesn’t Work Low wage workers are least likely receive insurance offers Percent of Workers Offered Employer-Sponsored Insurance, by Worker Earnings, Compared Across Years Source: Kaiser Family Foundation 04/healthinsurance_h.jpg

Problems with Small Business

Purchasers & Tragedy of the Commons Even with attempts to problem-solve, health care still costs too much In general, we treat government-provided healthcare as “free”, and overuse it. = depleted funds

Purchasers & Tragedy of the Commons Employer-based insurance may not be a good thing – If market shifts further away from individuals – So then what happens if we lose our job? – employer-provided plans have a tax-free status Great, but often overly generous coverage. Depleting resources unnecessarily

Purchaser Problem-Solving Often keep costs down by shifting costs to employers (co-pays, deductibles) Reduce coverage overall – Good for purchasers, bad for consumers? Expand your pool of employees – join another group!

Changes in Government: Solutions Health reform law likely to affect purchasers – Mandates + subsidies for employers – Small businesses who offer health insurance can get tax benefits – State-based health insurance exchanges Hopes to help small business purchasers / individuals

Key Web Sources Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September Kaiser Family Foundation Employer Health Benefits 2010 Annual Survey Employer-Sponsored Health Insurance; Trends in Cost and Access Assessing the Value of Pharmacy Benefit Management Companies through Accreditation utions_com/consumer/about_us/press_release/ _assessing_the_value_of_pharmacy_be nefit_management_companies_through_accreditation.html utions_com/consumer/about_us/press_release/ _assessing_the_value_of_pharmacy_be nefit_management_companies_through_accreditation.html Health care is heading toward a tragedy of the commons. May 22, 2009 Health care is heading toward a tragedy of the commons - Business First of Louisville Health care is heading toward a tragedy of the commons - Business First of Louisville

+ MLA Bibliography Employer Health Benefits 2010 Annual Survey - Kaiser Family Foundation. Web. 14 Oct "Employer-Sponsored Health Insurance: Trends in Cost and Access." Agency for Healthcare Research and Quality (AHRQ) Home. Web. 14 Oct "Health Care Is Heading toward a Tragedy of the Commons - Business First of Louisville." Louisville News | Business First of Louisville. Web. 14 Oct Research, By Doing. "Buyers Guide to Health Insurance." Small Business Advice from the Champions of Small Business. Web. 14 Oct "Snapshots: Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September Kaiser Family Foundation." The Henry J. Kaiser Family Foundation - Health Policy, Media Resources, Public Health Education & South Africa - Kaiser Family Foundation. Web. 14 Oct "TPC Tax Topics | Health Insurance Tax Incentives." Tax Policy Center Home. Web. 14 Oct Web. 14 Oct