health care exchanges - horan 5-1… · exchanges . may 14, 2013 . 2 ... grab your spyglass . a...

Presented by: Cheryl Mueller, Account Manager, HORAN Leslie Miller, Vice President of Market Development, HORAN Rhonda Marcucci, CPA, Partner and Consultant, GruppoMarcucci Manny B. Menendez, Business Development Lead, Bloom Health

Health Care Exchanges

May 14, 2013

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Today we’ll cover…. 1. Health Care Exchanges OR ‘The Wild West” 2. What is an Exchange (Public or Private) 3. Understand the Current & Ever Changing Marketplace 4. Emerging Technology Trends 5. Multi-Carrier Exchanges vs. Sole Carrier Exchanges 6. Analyze the Value Proposition for HIX

Speakers

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Rhonda Marcucci Manny Menendez • Works with businesses in all employer

market segments from small group to Fortune 100

• Develops exchange strategies, participates in implementation and execution of exchange solutions with distribution partners

• Supports Bloom’s strategic health plan partners with their product strategy and go to market initiatives

• Marcucci works in the HR and Benefits Administration Technology and Outsourcing industry and focusing on consultation for the 25 – 20,000+ employee market

• Focuses on start-up ventures inherent on leveraging a corporation’s existing asset base

Health Insurance Exchanges (HIX) OVERVIEW

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Health Care Reform

The Wild West

Exchanges

Health Care Exchanges:

The Wild West

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What is a Health Insurance Exchange (HIX)

• A virtual marketplace of health insurance products. It is not an insurance company.

• Offered to individuals, small groups or large employers

• Driven by technology – Clicks not Bricks • Public or Private

Health Care Exchanges Private v. Public Shootout at the OK Corral

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Public (State) Exchanges • Will states be ready for January 2014 deadline? • Federal governmental is huge player; will control

many states

Private Exchanges • Ramping up quickly • Defined contribution will gain significant traction • Increased consumer choice means many will buy

lower cost plans

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Public Exchanges vs. Private Exchanges (Anticipated Health Care Reform Changes)

Public Exchange Private Exchange

Governance State / Federal / Partnership Private

Market Segments • Small groups 2 – 50* • Individual

• All Group Sizes • Individual

Product Offerings Medical & Dental Medical, Dental, Life, Wellness, all Ancillary and Worksite

Funding • Government subsidies • Individually paid post-tax

• Pre-tax payroll deductions

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• An exchange run by a private sector company or private nonprofit corporation, including: – Brokers/ Consultants – Carriers – Administrative Services Providers – Employers – Others

• Designed to help purchasers find best possible plan value, personalized to specific health conditions, doctor/hospital network, and risk tolerance

• Offer consumer-friendly ways to purchase insurance and non-insurance based products

What is a “Private” Insurance Exchange?

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State of the Private Exchange Market

• No complete solution exists today—market is rapidly evolving

• Some employers will explore exchanges as an option; brokers preparing to answer questions and advise on solutions

• Forces that drove defined contribution in retirement space are being accelerated by PPACA and the economy – shaping how medical benefits will be delivered in the future

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Wild West Marketplace Rapid

Expansion

Fighting over territory

Lots of players

Wide open new territory -- attracts

speculators

Not always a sheriff in town

Why Explosion of Exchange Development?

Recognitions: • Industry may eventually go defined contribution —

necessitates wide variety of choice

• Greater blend between core and voluntary—employees contribute to all lines of coverage

• Full service exchange platform solves admin inefficiencies for employer- sponsored plan (lower end market)

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Why Explosion of Exchange Development?

Responses: • Private sector: Assumes state exchanges are not

going to be very good

• Advisors: Embracing paradigm shift from employer as the buyer to employee/consumer as the buyer

• Media: Significant national coverage focusing on employers; industry is listening

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Private Exchange Components and Considerations

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Employer Contribution,

“Defined Contribution”

Consumer Shopping Experience

Products and Carriers “The Store”

Tech & Admin Support

Why Defined Contribution?

• Employers want a budget— defined contribution gets them there

• Lack of choice for employees created an over-insured situation

• A wide variety of choice with limited defined contribution (budget) lets employees choose appropriate coverage for their situation

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Consumer Shopping Experience

• Eligibility &Enrollment platform

• Spending account administration

• Payroll deduction calculations

• Billing & Payment services

• Administrative package

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Technology & Administration Support

Putting some “horse sense” to exchanges

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Who runs it? Exchange

Type Public (Ind & SHOP) Private Hybrid

What are the products in the

store?

Insurance Type

Store Offering

Providers

Individual

Medical Only

Open/Multi

Group

Health

Closed/Single

Medicare

All Benefits

Selective

What’s the shopping

experience?

Where’s the money

coming from?

Location

Tools

Support

Clicks Bricks

Decision Support

Administrative

Education

Billing

Year-round Portal Personal

Funding Personal

Paycheck

Defined Contribution

Subsidies

Recognized Wild West Hazards

• Lack of market definition

• Getting folks attention • Competitors

– Story v. reality

• Things don’t always work

• Flood of regulations – Technology

• The UNKNOWN!

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Grab your Spyglass A look at Private Exchanges from Wild West

Cast of Characters

• Trading Post: Vendors

• Fur Traders: Carriers

• The Sheriff: PPACA

• The Town Folk: Employers

• Wagon Trail Bosses: Advisors/Consultants

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With the PPACA Sheriff in town… • Employers making changes to current plans

• Employers expect higher cost as a result of PPACA

• Employers overwhelmed by compliance requirements; HR technology can’t support PPACA requirements

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• Defined Contributions (consumer driven approaches)

• Decision support tools become more important

Grab your Spyglass The Trading Post (Technology Vendor) View

• Many vendors; few have end-to-end solutions • Must consider all components:

– Defined contribution – Products – Decision Support Tools – Administration support – Risk adjustment

• Burrs under the Saddle (Challenges):

– Integration – Product placement (getting carriers to play)

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Grab your Spyglass The Trading Post (Technology Vendor) View

• Overwhelmed by requests (sound familiar?) – Most not fully developed

• Concerned about custom v. packaged • Many different approaches • Lacks a clear vision to build to

• Worried about managing wagon trail bosses (brokers)

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Grab your Spyglass The Fur Traders’ (Carrier) View

• Navigating new territory… – Individual v. group insurance – Expansion of plan choice – Underwriting is changing – Lots of requests from consultants

to participate

• Gun shy to participate in multi-carrier exchanges

• Portfolio expansion • Building brand with consumers • Brick & mortar strategy • New distribution channels

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What We’re Hearing from Carriers

• Very resource constrained • Overwhelmed with requests • Need projections on business

brokers/sponsors will drive to us • Building own exchange, why can’t you use ours? • Want pilots—cannot go national right now • If competition commits to a market; we will too • Not interested in a multi-carrier employee choice

marketplace

Benefit Admin vs. Private Marketplace

Defined Contribution

-Sometimes -Simple schemes -Not very budget driven

-Most of the time -Complex schemes -Very budget driven

Products & Carriers

-Limited selection of plans -One off per employer

-Wide selection of plans -Fixed menu plans that drive efficiencies

Consumer Experience

-Automation focus -Some decision support -Some engagement

-Automation is a given -High degree of decision support -High degree of engagement

Tech & Admin Support

-A la carte options -Fixed menu of options -Efficiency driven

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Benefit Administration

Private Marketplace

Taming the Wild West • Understand your role in the Wild West

• Understand the other players

• Get to know the sheriff

• Understand impact of your choices

Stake Your Claim!

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Health Care Reform Journey The Wild West

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How the West Was Tamed


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Health Care Reform Journey

The Exchange: Experience for Employers

and Employees

© 2013 Bloom Health. All Rights Reserved 31

Macroeconomic Environment

Legislative Environment

Preconditions Fulfilled Manage health & health care costs

Redefine Role: Move from plan

manager to facilitator

Marketplace Shift to a DC Model

Fixed employer subsidy Variable employer cost of health

care

Employer controls annual cost increases

Point of service decision making Decision making at point of

enrollment and point of service

Limited product options selected by employer

Increased product options selected by employee

Uncertain annual health care cost increases

Defined Benefit Defined Contribution

Value Delivered Through the Defined Contribution / Private Exchange Model


Employer Value Proposition

• Delivers greater control over total benefit costs and annual spending increases

• Offers solution for employers seeking to transition Retirees and/or Actives to defined contribution benefits

• Provides engaging, consumer-friendly channel

• Reduces administrative burden and costs

• Supports employer in promoting healthier, happier, more productive workforce

Consumer Value Proposition

• Expands consumer choice and control

• Optimizes plan selection based on employee needs, financial status and risk tolerance

• Promotes increased awareness of costs and cost variance

• Delivers familiar, online consumer-friendly retail experience

• Allows consumers to trade between benefit values which are more specific to their personal consumption

Core Components of an Effective DC Solution


More Design Choice

• More plan designs • Paradigm shift • Power of the purse

Improved Service Model • Support for the new

world of choice • Recommendations

for great matches • Call center • Flexible Platform

Fixed Subsidy

•Not dependent on medical trend

•Employer determines the right amount to spend on healthcare

Core Components of a Successful DC Solution

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Power of the purse

Fixed Subsidy

•Not dependent on medical trend

•Employer determines the right amount to spend on healthcare

© 2013 All Rights Reserved

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More Choice

• More plan designs • Paradigm shift • Power of the purse

Fixed Subsidy



Why Design Expansion Is Critical: Defined Benefit Constraints

• Employer is at risk for migration and adverse selection • Employee choice is limited, and employer subsidy is not transparent

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$7,000 $8,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

Low Plan High Plan

Status Quo DB PEPY

Employer Subsidy Member Contributions


Why Design Expansion Is Critical:

Defined Contribution Solutions • Employer fixes (reduced) Defined Contribution, eliminating migration risk • Employee choice spans a wider spectrum of plan value, and employees

are happier having the power of the purse

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$7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 Plan 10

Bloom DC PEPY

Employer DC Amount Member Contributions Exchange Fees


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More Design Choice

Improved Service Model • Support for the new

world of choice • Recommendations for

great matches • Call center • Flexible Platform

Fixed Subsidy



Decision Support

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A combination of online and live support that generates a custom list of recommended health products and related services that best match specific needs.


The Private Exchange Alternative

Employer

Anthem Health Marketplace

Medical

Employer funds employee’s account

Employee uses funds to purchase benefits

Online or via call center

Employee purchases Products / Services which align with needs

Generates tailored list of recommendations

Specialty

Pharmacy

Other Products / Services

Consultant / Broker • Product

Family decision

• Determine Contribution amounts

41 © 2013 All Rights Reserved

Anticipated Market Segmentation

Individual Small Group

(< 100)

Mid to Large Sized

Employers (100-1000)

Large/National Accounts

The exchange market is evolving. The type of coverage available, the scope of services provided, and the

opportunity to create customized solutions are likely to vary by employer size.

Public Exchange

Public, or Private Limited Options Insured model Single Carrier

(if Private)

Private Exchange Expanded Options

Insured or ASO Single Carrier

(If insured)

Private Exchange Customized Options

Insured or ASO Multi-Carrier

(If > 4,000)

How Can HORAN Help?

• Short Term • Mid Term • Never Term

Exchanges Are One of Many Solutions

How HORAN Can Help

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THE JOURNEY

Traditional Coverage

Traditional Defined Contribution

Traditional Coverage

Traditional Defined

Contribution

Individual Market

Exchange Defined

Contribution

Group Insurance Coverage

Defined Contribution Funding Strategy

Defined Contribution through a Private Exchange

No Group Insurance Coverage – possible employer subsidy for individual coverage, or salary adjustment

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HIX: Health Insurance Line Leader, Fast Follower or

None of the Above?

EXCHANGES

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• What are you currently doing? • How do you unwind it? • What does it cost? • Redundant or complimentary? • Transition timing? • Exit fees?

How Much Change?

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“Defined Contribution”

• Consulting regarding methodologies - How much? - For whom? - For what? - Funding vehicles-HRA, Section 125 • Which lines of coverage? - Medical only - All - Something in between • Voluntary opportunity

Employer Contribution

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The Town Folk (Employer) View • Why should I do this? • How will I determine the defined

contribution amount? • What will be the impact on my current HR and benefits

technology strategy? • How do I determine if this is real? • How will this help me be compliant with PPACA? • What’s the fall out if my employees pick the wrong plan(s)? • Can I customize the exchange? • How do I evaluate if my “trusted advisor” is the exchange

sponsor?

Grab Your Spyglass

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Employee Benefits Consulting Wealth Management Life & Disability Insurance

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Disclaimer

The information contained in this presentation is informational only and is not intended as, nor should be construed as, legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statue and regulation and their impact on you and your organization.

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Thank you!

health care exchanges - horan 5-1… · exchanges . may 14, 2013 . 2 ... grab your spyglass . a...

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