1. State Health Plan Benefits COSTS AND STRATEGIES
Public Sector HealthCare Roundtable
November 8, 2018

2. Background
2017 Annual Study gathered data on all 50 states and the District of Columbia
State employee plans in-force on January 1, 2017
Medical and Pharmacy
Data collected
Plan type (PPO, HMO, CDH, etc.)
Plan Design (deductibles, copays, maximum out-of-pocket Limits, etc.)
Cost (total costs/premiums, employee/state share, coverage tier structure
2018 study focuses on health management and wellness program features

3. Key Findings
Most states provide their employees with a range of choices in medical plan types as well as multiple premium tiers
Employees’ premium contributions remain fairly consistent as a percentage of total costs, yet on a dollar basis those contributions are increasing as the cost of coverage rises
Employees’ out-of-pocket costs are also increasing as states increase deductibles, copayments and out-of-pocket limits. The annual out-of-pocket maximum for non-grandfathered plans under the Affordable Care Act has provided a new standard of comparison for many employers, including states
States continue to use plan design to manage prescription drug costs by influencing utilization towards more efficient delivery channels and more cost-effective medications

4. Percentage of States Offering
Plan Types
Almost all states offer PPOs/POS plans; many also offer HDHPs/CDHPs and HMOs/EPOs
# of
States
Large Employers (5,000 or More Workers)
Percentage of States Offering
PPOs/POS Plans 47
92%
82% PPO 12% POS
HDHPs/CDHPs 30
59%
69%
HMOs/EPOs 29
57%
31%
Indemnity Plans 4 8% 1%
Sources: Segal Consulting, 2017 State Employee Health Benefits Study and Kaiser Family Foundation/Health Research & Education Trust, 2017 Employer Health Benefits Survey

5.  Employee  Family  2016 – 2017 Change
Total Costs
PPO and CDH premiums increased by double digits from to 2017
 Employee  Family  2016 – 2017 Change
$1,833
$1,790
11% 6%
$1,460
16%
$780
$713
$563
Reasons for increases in CDH/HDHP premiums:
Increased enrollment, resulting in higher risk members in these plans
Members becoming more comfortable with utilizing HS/HRAs 8%
10%
14%
PPOs/POS Plans
HDHPs/CDHPs
HMOs/EPOs
Source: Segal Consulting, 2017 State Employee Health Benefits Study

6. Employee Cost Share
Overall, employee cost share increased for both single and family coverage
 Employee  Family
PPOs/POS Plans
HDHPs/CDHPs
HMOs/EPOs
16%
10%
13% 1 6
14% 1 6
11% 1 6
12% 2 2 2
States continue to incrementally shift costs to employees
States continue to provide incentives for Ees to choose CDH/HDHPs
25%
24%
22% 1 6
23%
22%
20% 1 6 1 6 2 2 2
Source: Segal Consulting, 2017 State Employee Health Benefits Study

7. Coverage Tier Structure
The majority of states utilize a 3- or 4-tier coverage premium structure 4
6+ Tiers 1
5 Tiers 23
4 Tiers
Increasingly, states continue to tailor tier structure to match family/contract size (“right-size”) 13
3 Tiers 10
2 Tiers
Source: Segal Consulting, 2017 State Employee Health Benefits Study

8.  Employee  Family  2016 – 2017 Change
Deductibles
Average deductibles vary by plan design, with the highest levels found in the CDH plans (by design). However, PPO and HMO plans had large increases from 2016 to 2017
 Employee  Family  2016 – 2017 Change
$4,047
-1%
$1,997
State maintain benefits in CDH/HDHPs, but continue to adjust benefit provisions in PPO/HMOs to manage trend/costs.
HMOs are increasingly including deductibles (large increase is due to several states moving from $0 to $ deductible)
-1%
$1,100
23%
$483
$453
$194
23%
53%
40%
PPOs/POS Plans
HDHPs/CDHPs
HMOs/EPOs
Source: Segal Consulting, 2017 State Employee Health Benefits Study

9. Deductible Levels Vary
There is a wide range of deductibles for employee-only coverage
PPOs/POS Plans
HDHPs/CDHPs
HMOs/EPOs
Low
High $0
$1,250
$6,450
$2,000
$1,300
$250
$400
$2,300
$1,5001
$02
$263
$125
Source: Segal Consulting 2017
1 The 25th and 50th percentiles are the same: $1,500. The 25th percentile equals the 50th percentile (median) when all of the lowest 25% of the data is the same as the median. That is the case here because $1,500 is a very common deductible for employee-only coverage in an HDHP/CDHP.
2 The low and the 25th percentile are the same: $0. Because HMOs usually have no deductible, it is not surprising that the 25th percentile equals the low here.

10. Deductible Levels Vary
The range of deductibles for family coverage is wider.
Low
High
PPOs/POS Plans $0
$4,000
$500
$950
$1,400
HDHPs/CDHPs
$2,500
$12,900
$3,0001
$5,000
HMOs/EPOs $0
$2,600
$02
$250
$638
Source: Segal Consulting 2017
1 The 25th and 50th percentiles are the same: $3,000, a very common deductible for family coverage in an HDHP/CDHP.
2 The low and the 25th percentile are the same: $0.

11. Maximum Out-of-Pocket Levels
Maximum out-of-pocket levels are increasing, but remain below the ACA limits
 Employee  Family  2016 – 2017 Change
$8,409
$8,122
$7,599
11%
<1% 3%
$4,092
$3,977
$3,586 9% 1% 4%
States have increased MOOPs in PPO/HMO, which has increased exposure for Ees. Note that deductible increases are higher than MOOP increases….States are more reluctant to shift costs to the higher users, who have the most $$$ in OOP costs
PPOs/POS Plans
HDHPs/CDHPs
HMOs/EPOs
Note that the Affordable Care Act’s maximum for individual coverage offered by non-grandfathered plans was $6,850 for 2016 and is $7,150 for The maximum for family coverage was $13,700 for 2016 and is $14,400 for Source: Segal Consulting, 2017 State Employee Health Benefits Study

12.  Commissioning State’s Plans  Plans Offered by Peer States
Benchmarking
Benchmarking actuarial value provides true measurement of overall plan value
This example indicates this state’s plans may not be as efficiently managed as the comparator states’ plans
Opportunities may exist to improve health management program performance and introduce measures to increase utilization of more efficient delivery and purchasing options
Data analytics and predictive modeling can be used to help understand true drivers of costs and uncover substantial savings
The subject’s premiums are much higher, relatively speaking, than their comparators’ are for similarly valued plans
A disconnect between costs and plan value leads to a plan/employer seeking ways to manage the employee health risk, introduce and promote efficiencies in the plan and increase member engagement in managing their own health risk and making decisions that result in more efficient utilization (value based benefits strategies)
Costs do not always track with plan value
 Commissioning State’s Plans  Plans Offered by Peer States

13. 2018 Study Focuses on Health Management and Wellness Strategies
Healthy Activities and Requirements
Risk assessments, biometric screenings, disease management participation
Tobacco Cessation
Incentives and Rewards
Premium reductions, enhanced benefits, HS/HRA deposits/credits
Telemedicine
Health Management and Wellness
Clinics
Staffing, hours of operation, scope of services, pharmacy
Centers of Excellence
Tiered Networks
Medical and pharmacy
Transparency Tools
Medical/Rx and rewards/incentives

14. Branded Wellness Programs
Most states have branded their wellness programs.
61%
Examples:
Branding is an indication of a long-term commitment to wellness.
BeWell
Commit to Health
HealthMatters
Life Points
Live Life Well
Smart Health
Source: Segal Consulting, 2018 State Employee Health Benefits Study

15. Comparative Private Sector Data Percentage of Large Employers
What Are States Doing?
Comparative Private Sector Data Percentage of Large Employers
62%
52%
72%
68%
Health risk assessments and biometric screening:
Educate members about their health
Yield data useful to the plan’s disease management programs
* For members who have an eligible chronic condition.
** Examples include blood pressure, cholesterol and/or BMI within targeted norms for age/gender.
Sources: Segal Consulting, 2018 State Employee Health Benefits Study and Kaiser Family Foundation/Health Research & Education Trust, 2017 Employer Health Benefits Survey

16. How Are State Promoting Wellness?
Comparative Private Sector Data Percentage of Large Employers
68%
19%
37%
Source: Segal Consulting, 2018 State Employee Health Benefits Study and Kaiser Family Foundation/Health Research & Education Trust, 2017 Employer Health Benefits Survey

17. Who Can Participate?
Source: Segal Consulting, 2018 State Employee Health Benefits Study

18. How Do States Promote Efficient Utilization?
Comparative Private Sector Data Percentage of Large Employers
63%
15%
* This includes any type of preferred network providers even a hospital network.
Source: Segal Consulting, 2018 State Employee Health Benefits Study and Kaiser Family Foundation/Health Research & Education Trust, 2017 Employer Health Benefits Survey

19. Do States Sponsor Wellness Clinics?
Source: Segal Consulting, 2018 State Employee Health Benefits Study

20. Thank you!
Richard Ward, FSA, FCA, MAAA Senior Vice President, National Public Sector Health Practice Leader
Kirsten Schatten, ASA, FCA, MAAA Vice President, Consulting Actuary