Health Insurance Update November, 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

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

Employees on health insurance coverage About 880 lives Project to spend about $2.4 million on doctors and facilities and drugs 14% 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 /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 family 2006: $18 sgl / $34 family 2007: $28 sgl /$63 family 2008: $15 sgl/ $45 family 2009: $37 sgl/ $74 family 2010: $43 sgl/ $78 family Deductibles 2005: $0 2006: $250/$ : $350/$ : $500/$1, : $500/$1, : $500/$1,000

David SchmiesingChair Janine StasiulewiczSecretary Sue DukichRobert Filby Kevin HarrisCatherine Heck John HerrmannPatrick Lee Mary Lynn LewisAdam Mitchell Brenan PergiAdam Scurti Mary SalterPatti Scheel Dave Skiviat Committee Membership