3 Proven Methods to Mitigate Rising Health Care Costs NHSAA Best Practices Lisa J. Duquette Executive Director Joanne Trainor Group Relations Specialist September 24 & 25, 2012

2 Agenda State of Health Care Background/Observations Strategies and Action Items

3 What is the State of Health Care? 2012 was the 12th consecutive year of double-digit premium increases for managed care health plans Financial pressure on employers and employees Continued impact of health care reform 2013 medical trend for U.S. is expected to be 7.5% compared to 9.3% for New Hampshire

4 …the cumulative effect of historical trends is overwhelming

Average Annual Premiums and Contributions 2002 – 2012 (national survey) 5

6 Strategies to Mitigate Rising Costs 1.Short term – Negotiations 2.Mid term – Education 3.Long term – Wellness

7 I. Negotiations A. Cost – Employee/Employer Contribution 1.Coverage Type (i.e, single, 2-person, family) 85% for all? 90% Single, 80% 2-person and family? 2.Plan Driver (i.e, HMO, POS, etc.) 85% for all? 90% HMO, 80% POS, 70% Indemnity?

8 I. Negotiations (cont’d) B. Plan Design 1.Copays Office visit copay $10 to $20 = 1.5% savings Increase Rx deductible from $5/$15/$35 to $10/$30/$65 = 2.3% savings 2.Coinsurance % of cost ( 80% plan, 20% participant) Trend in new plan designs

9 I. Negotiations - ACTION  Prepare Financial Analysis  Examine Current Offerings  Determine Cost/Contribution/Plan Strategy Remember: This is a short-term (1 year) method of mitigating rising health care costs.

10 II. Education A.Health Care Committee 1.Joint labor/management 2.Develop culture of collaboration and shared learning B.Resources 1. NH Purchasers Group on Health NH Hospital Scorecard NH Health Cost (DOI) Health Insurance Purchasing Guide

11 II. Education (cont’d) C.Data Reporting and Recommendations 1.Mine data to identify cost drivers At least 2 years, preferably 3 years Prevalence of specific conditions Comparison to relevant benchmark 2.Target those cost drivers identified Recommendations are most important! –Education –Implement targeted programs

12 II. Education - ACTION  Establish Health Care Committee  Obtain Claim Experience Reports  Implement Recommendations Remember: This is a mid term method of mitigating rising health care costs, but must be on-going.

13 III. Wellness A. Promote, promote, promote 1.Joint message from leadership (mgmt & labor) 2.Solicit building level wellness coordinators B. Engage 1.Schedule onsite presentations 2.EAP seminars

14 III. Wellness (cont’d) C. Measuring participation 1.% of overall participation vs. population 2.% HRA/Biometrics D.Measuring Outcome 1.Population by risk level 2.ROI

Cost Savings… 15

16 III. Wellness - ACTION  Schedule presentations on wellness program  Health Risk Assessment / Biometrics  Make wellness part of district’s strategic plan

17 Employers and employees taking an active role in managing plan costs can improve the overall health of employees and reduce medical trend costs.

18 Questions? Thank you.