David E. Edman LOOKING AHEAD: EMERGING TRENDS IN HEALTH BENEFITS Tuesday, May 20, 2008, 2:00 PM 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ Disease Management Colloquium

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RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ WHY DOES HEALTHCARE COST SO MUCH? Primarily because 25% to 30% of healthcare costs are wasted on: Unnecessary Care Inappropriate Care Poor Quality Care

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ Annual Cost of Poor-Quality: $2500 Per Employee (est.) MOST COSTLY QUALITY PROBLEMS 1.Drug misuse 2.Overuse of antibiotics 3.Overuse of inpatient care 4.Preventable hospital-acquired infections 5.Diabetes – direct and indirect costs 6.Depression – total economic burden 7.Inadequate care after heart attack 8.Underuse of influenza and pneumococcal vaccinations 9.Asthma – direct and indirect costs 10.Congestive heart failure – direct costs Source: Midwest Business Group on Health, in collaboration with Juran Institute, Inc. and The Severyn Group Inc., 2002.

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ “The Quality of Health Care Delivered to Adults in the United States” Medical Condition % Adherence To Quality Indicators Breast Cancer75.7 Low Back Pain68.5 Hypertension64.7 Congestive Heart Failure63.9 Depression57.7 Asthma53.5 Diabetes45.4 Headache45.2 Alcohol Dependence10.5 Source: RAND Corporation Study, published by New England Journal of Medicine, June 26, 2003

THE MYTH OF ‘BEST IN THE WORLD’ BY SHARON BEGLEY, NEWSWEEK, March 22, 2008 RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ How does the US infant mortality rank among industrialized countries? 28 th of 30 countries (7 deaths per 1000 live births) The five-year survival rate for cervical cancer? Worse than Italy, Ireland, Germany, and others. The survival rate for breast cancer? You would do better in Switzerland, Norway, Britain, and others. Asthma mortality? Twice the rate of Germany’s or Sweden’s. Source: Organization for Economic Cooperation and Development (OECD), 2007

THE SHAPE OF THINGS TO COME From Dec 11th 2003, The Economist print edition. RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ Main Entry: 1in·sur·ance Pronunciation: in-'shur-&n(t)s also 'in-" Function: noun 1 a : the business of insuring persons or property b : coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril c : the sum for which something is insured 2 : a means of guaranteeing protection or safety insuringinsured Insurance (definition)

HSA Concept Traditional Health Coverage Traditional Health Coverage Member Responsibility Health Savings Account (HSA) From: To: RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 100% For In-Network Preventive Care

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11 Prevention: Health Coaching & Wellness Programs On-line Portal: Patient Education, Information Gathering & Sharing 24 Hour Nurse: On-Line & Telephone Coaching Intermediate Care Programs Disease Management Programs Catastrophic Case Management Healthy Acute Illness Chronic IllnessCatastrophic Prevention: Health Coaching & Wellness Programs On-line Portal: Patient Education, Information Gathering & Sharing 24 Hour Nurse: On-Line & Telephone Coaching Intermediate Care Programs Disease Management Programs Catastrophic Case Management Transition of Care Source: RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work Population Management Segmented By Individual’s Level of Risk

HEALTH BENEFITS FROM PATERNALISM TO SHARED RESPONSIBILITY RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ PaternalismShared Responsibility Employer Pays The PremiumEmployer/Individual Buys A HDHP EE Pays Little or Nothing At Point of Care Patient Pays From HSA Up To High Deductible Doctor Knows Best Doctor Recommends, Patient Decides

BENEFITS OF SHARED RESPONSIBILITY RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ Greater Efficiencies From Appropriate Application of Insurance Principles Lower Costs and Great Value For Purchasers Employee Incentives: Healthy Lifestyles and Appropriate Utilization Greater Employer Control Over Future Healthcare Costs (Carrier Agnostic)

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ CRITICAL ROLE FOR PURCHASER DRIVEN ADVOCACY Focus on Consumerism Promote Enhanced Transparency Centers of Excellence/Certificate of Need (CON) Emphasize Primary Patient Care Offer Association (Like) Health Plans

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ SPARK THE REVOLUTION: Health Reform is Gaining Traction in the Marketplace “HSAs put individuals in charge of their own ‘cost containment’, rather than the government or HMOs. The latest news is that they have been proving their attractiveness in the marketplace more rapidly than supporters expected.” -- Wall Street Journal, December 27, 2005, A20

RISK MANAGEMENT PARTNERS LLC Healthcare Solutions That Work 175 Strafford Avenue ♦ Suite One ♦ Wayne, PA ♦ ♦ Will This Be déjà vu All Over Again?