Labor

1
Labor Management No Secrets!

• Health Insurance
• History Terminology

2
Jim Valvanos Perspective

• Always know
• Where youve been
• Where you are
• Where you are going

3
Where Have We Been?

• Pre-paid medical plans created
• 1917 Pierce County Medical
• 1929 Blue Cross in Texas (6 per year)
• Kaisers pre-paid plan started at 0.05/day
• Costs increased through time
• Medical cost inflation
• Utilization
• Continually looking for lower costs

4
Where Have We Been?

• 1970s
• Preferred Provider Organizations (PPO)
• Doctors provided discounts in exchange for
  patient volume
• 1980s
• Growth in managed care plans (HMOs)
• Smaller network with deeper discounts
• Primary doctors managed care by referrals
• No out-of-network benefit for HMOs

5
Where Have We Been?

• 1990s
• Point of Service (POS) plans introduced
• National Health Care proposed
• Prescription drugs become fastest growing
  component of health insurance plans
• 2000s
• Managed care almost disappears
• Smaller network options
• Major cost increases 20 to 30 per year
• Cost shifting / sharing

6
Where Are We?

• Expensive health insurance
• Prescriptions are expensive and highly utilized
• Expensive new technology
• Continued increases in rates
• Still looking to control costs
• Continued cost shifting / sharing
• Inability to retire because of medical cost

7
Where Do We Go From Here?

• No more doctor discounts available
• Attack utilization and value
• Consumer Driven Health Plans (CDHP)
• Members become part of the purchasing process for
  medical services
• Success to be determined
• Retiree Health insurance
• Access
• Financial planning and saving

8
Consumer Driven Health Plans

• Premise members must have some skin in the
  game
• Spend health care dollars like its your money
• Need for tools to help make good decisions about
  purchasing medical care
• Costs for services
• Outcomes and efficiency
• Recent push for transparency
• Need for incentives to participate

9
Components of CDHPs

• Health insurance plan
• Purchased from insurance carrier
• Typically high deductible
• Provides doctor discounts
• Account for accumulated funds
• Used to pay for services not paid by insurance
  plan (deductibles, coinsurance, and other
  allowable medical expenses, etc.)
• Contributions are tax-advantaged
• First dollar spent for benefits is yours
• Unused funds continue to roll over

10
Health Savings Account (HSA)

• Must have qualified high deductible plan to make
  contributions
• Contributions can be made by employer of employee
• Defined maximum contribution
• Participant owns the account balances rollover
• Cant pay for premiums except COBRA or while
  receiving unemployment

11
Health Reimbursement Arrangement (HRA)

• Flexibility in plan design
• Contributions by employer only
• No defined contribution limit
• Balances roll over
• Portability allowed
• Can reimburse premiums

12
Flexible Spending Account (FSA)

• Pre-tax salary reduction for health care
  reimbursement
• No plan design requirements
• Employer at risk typically sets maximum
• Use it or lose it (15 months) balances belong
  to employer

13
Tools to Lower Costs and Maintain More Funds in
Your Account

• Wellness variety of venues
• Lose weight
• Manage stress
• Quit smoking
• Exercise more
• Also improves quality of life
• Oregon pilot study good example

14
Other Ways to Manage Costs

• Impact of large claims
• Disease Management
• Chronic conditions
• Passive and outreach models
• Prescription drug management
• Some already built into plans
• Participation is critical to success

15
Rewards for Your Efforts Success

• Others can offset your efforts
• Your success spread across other groups
• Others not motivated to participate
• Minimal net reward
• Structure of your plan and benefits
• Provide tools and incentives
• Plan management
• Reap rewards
• Not always possible

16
Cost Shifting Out of Your Control

• Uncompensated care
• Medicare
• Doctor reimbursements
• Network discounts CA vs. WA

17
Plan to Work Forever?

• 180K - 200K for retiree health care
• Financial ability to retire
• Costs continue to increase
• Decreasing number of retiree plans
• Need dollars AND access

18
Saving for Retirement

• Savings / investments
• 401(k) / 457 plan
• VEBA Voluntary Employee Beneficiary Association
• MERP Medical Expense Reimbursement Plan (WSCFF)

19
Medical Savings Trusts

• Tax advantaged no taxes!
• Contributions can be dollars and/or leave
  rollover
• Individual versus pooled accounts
• Reimburse premiums or expenses
• No individual choice new IRS guidance
• 100 participation by class
• Automated savings program

20
Continued Pressure

• Employers provide health care
• Cost shifting / sharing
• Consumer involvement
• Demographics increasing ratio of retirees to
  actives
• Decreasing ability to subsidize
• National Health Care???

21
No Secrets!

• Labor and Management Working Together
• Success is possible

22
More From Yogi

• I want to thank you for making this day
  necessary.
• Questions? If you ask me anything I dont
  know, Im not going to answer.