Health Care: Employer Issues to Address in 2005 John F. O’Connell, Jr. CEBS, CLU C.M. Smith Agency, Inc. 100 Western Blvd. Glastonbury, CT (860) January 12, 2005 S:/Users/John/Jan HealthCare-Employer Issues to Address in 2005

Medicare Part D Health Savings Accounts (“Account Based” Health Care) Progressive Care Management Programs

 Effective 1/06  Provides prescription drug coverage to Medicare enrollees  Employers currently offering Medicare Supplement Plans with drug coverage must choose:  Terminate the existing plan  Continue the existing plan and accept federal subsidies  Redesign the existing plan to coordinate with Medicare  Information can be found at: Medicare Part D

 HSA’s were part of 2003 Medicare Modernization Act  Require use of a high deductible health plan  Various surveys suggest 25-35% of large employers will offer by 1/06  Dramatic growth in “Account Based Health Plans” – topped 3.1 mm by the end of 2004  Include HSA’s in broader discussion of account-based health care, including FSA’s, HRA’s, Retiree Health Accounts, etc.  Does the concept fit employer health care strategy? Health Savings Accounts (“Account Based” Health Care)

A Shift in Focus? A Trend?  The ownership society?  Will employers see “Account Based” Health Care as a step to a new future?  Is this a move from “Employer Sponsored” to an “Employer Subsidy”?  Will employees (claimants) figure out the new deal?  Will the provider community expand efforts regarding cost transparency and quality reporting?

Progressive Care Management Programs Predictive Modeling – find the patients who need additional health care resources # Claimants% of Total Annual Claims 2% 36% 24% 42% 74% 22%100%

Progressive Care Management Programs (contd.) “Now offer or will Programimplement in 2005” 24 hour nurse line82% Disease/demand management interventions75% Wellness Programs60% Centers of Excellence54% Offer health risk assessment50% Offer a health portal35% Source: Towers Perrin 2005 Health Care Cost Survey

2005 Objectives  Examine your strategy, especially regarding Account-Based Health Care  Demand top performance from your vendors – or find new ones  Figure out Medicare Part D  Expand your care management portfolio

Thank You and Best Wishes for a Happy New Year