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transcript
Insurope 24th General Meeting Stockholm 2004
Consumer Directed HealthcareConsumer Directed Healthcare
The Next
American
Revolution
The Next
American
Revolution
Insurope 24th General Meeting Stockholm 2004
Why are We Here?Why are We Here?
New Health Benefit Model in US
– impacts employers with US ops
–may impact PMI: UK & elsewhere
–may be model for future benefit developments in other nations
New Health Benefit Model in US
– impacts employers with US ops
–may impact PMI: UK & elsewhere
–may be model for future benefit developments in other nations
Insurope 24th General Meeting Stockholm 2004
Healthcare, US StyleHealthcare, US Style
Medicare (over 65 & disabled) Medicaid (low income) Employer Sponsored (workers)
–Employers pay c. 70% of cost
–Employer sets benefits
–Employer chooses carrier
Medicare (over 65 & disabled) Medicaid (low income) Employer Sponsored (workers)
–Employers pay c. 70% of cost
–Employer sets benefits
–Employer chooses carrier
Insurope 24th General Meeting Stockholm 2004
The History of US HealthcareThe History of US Healthcare
No Insurance (<1945) Indemnified Care (‘45 - ‘90)
–Doctors rule
Managed Care (‘70 - ‘00)– Insurers rule
Consumer Directed Care–Patients rule
No Insurance (<1945) Indemnified Care (‘45 - ‘90)
–Doctors rule
Managed Care (‘70 - ‘00)– Insurers rule
Consumer Directed Care–Patients rule
Insurope 24th General Meeting Stockholm 2004
Why the old models failed?Why the old models failed?
After 1945, the person purchasing the care was
no longer the person paying for the care!
After 1945, the person purchasing the care was
no longer the person paying for the care!
Insurope 24th General Meeting Stockholm 2004
Enter CDHCEnter CDHCUnleashing the power
of free market economics on the
health care delivery system
Unleashing the power of free market
economics on the health care delivery
system
Insurope 24th General Meeting Stockholm 2004
Why CDHC WorksWhy CDHC Works
Members share in the economic consequences
of their health and healthcare buying
decisions.
Members share in the economic consequences
of their health and healthcare buying
decisions.
Insurope 24th General Meeting Stockholm 2004
What is a CDHC Plan?What is a CDHC Plan?
ANY health plan, so far as it...–empowers patients
–shares economic consequences
– rewards good health
–promotes consumerism
–provides health/healthcare tools
– improves healthcare quality
ANY health plan, so far as it...–empowers patients
–shares economic consequences
– rewards good health
–promotes consumerism
–provides health/healthcare tools
– improves healthcare quality
Insurope 24th General Meeting Stockholm 2004
CDHC: The PremisesCDHC: The Premises
A free market can’t work unless the consumer is also the payer
Healthcare costs won’t moderate until patients shop for care like they would for a car or TV
The best way to cut healthcare costs is for people to get healthier
A free market can’t work unless the consumer is also the payer
Healthcare costs won’t moderate until patients shop for care like they would for a car or TV
The best way to cut healthcare costs is for people to get healthier
Insurope 24th General Meeting Stockholm 2004
Sample CDHC PlanSample CDHC Plan
Plan pays first $1,000 @ 100%– Health Reimbursement Account: HRA
Patient pays next $500 @ 100%– plus 20% of $2,500 thereafter–maximum patient cost = $1,000
Plan pays the balance in full– 100% of claims > $4,000
Plan pays first $1,000 @ 100%– Health Reimbursement Account: HRA
Patient pays next $500 @ 100%– plus 20% of $2,500 thereafter–maximum patient cost = $1,000
Plan pays the balance in full– 100% of claims > $4,000
Insurope 24th General Meeting Stockholm 2004
How HRA WorksHow HRA Works
Any HRA funds ($1,000) not spent by the patient in the first year automatically roll
over to the next year and are added to that year’s HRA
contirbution.
Any HRA funds ($1,000) not spent by the patient in the first year automatically roll
over to the next year and are added to that year’s HRA
contirbution.
Insurope 24th General Meeting Stockholm 2004
The ResultsThe Results
70% of patients get 100% coverage
–after office visit & Rx co-pays
– + they roll over funds to year 2
–average rollover = c. $500 20% of patients spend < $1,000 10% of patients spend $1,000
70% of patients get 100% coverage
–after office visit & Rx co-pays
– + they roll over funds to year 2
–average rollover = c. $500 20% of patients spend < $1,000 10% of patients spend $1,000
Insurope 24th General Meeting Stockholm 2004
3 “Plans” for 3 Populations3 “Plans” for 3 Populations
< $1,000 claims = “healthy”– wellness tools & incentives
$1,000 - $4,000 = “transitional”– claim cost sharing incentive
> $4,000 = “unhealthy”– disease management– quality of care initiatives
< $1,000 claims = “healthy”– wellness tools & incentives
$1,000 - $4,000 = “transitional”– claim cost sharing incentive
> $4,000 = “unhealthy”– disease management– quality of care initiatives
Insurope 24th General Meeting Stockholm 2004
Cost per Population GroupCost per Population Group
70% of members = 15% of claims
20% of members = 20% of claims
10% of members = 65% of claims
70% of members = 15% of claims
20% of members = 20% of claims
10% of members = 65% of claims
Insurope 24th General Meeting Stockholm 2004
Group #1: Prevention Group #1: Prevention
Keep 70% of members healthy Cover healthcare 100%
–build a “benefit bank” (HRA)
–subsidize fitness activities Online & onsite wellness programs
–seminars on stress management
–exercise programs
Keep 70% of members healthy Cover healthcare 100%
–build a “benefit bank” (HRA)
–subsidize fitness activities Online & onsite wellness programs
–seminars on stress management
–exercise programs
Insurope 24th General Meeting Stockholm 2004
Group #2: Cost SharingGroup #2: Cost Sharing
$500 “cold shower”
$2,500 cost sharing corridor
$1,000 member liability
$500 “cold shower”
$2,500 cost sharing corridor
$1,000 member liability
Insurope 24th General Meeting Stockholm 2004
Group #2: InterventionGroup #2: Intervention
Side-by-side Rx drug comparison Median cost of procedure by area Health libraries & data bases Personal Health Risk Assessment
– follow-up with opt-in, targeted e-mail
Weight loss/Smoking cessation
Side-by-side Rx drug comparison Median cost of procedure by area Health libraries & data bases Personal Health Risk Assessment
– follow-up with opt-in, targeted e-mail
Weight loss/Smoking cessation
Insurope 24th General Meeting Stockholm 2004
Group #3: ManagementGroup #3: Management
Personal Health Coach Disease Management Programs Absence Management
– focuses on return to work– cuts health costs 20%
Online Second Opinions (no cost)
Personal Health Coach Disease Management Programs Absence Management
– focuses on return to work– cuts health costs 20%
Online Second Opinions (no cost)
Insurope 24th General Meeting Stockholm 2004
Disease Management: AsthmaDisease Management: Asthma
1.5 million work days lost $14 billion of lost productivity
33% improvement in drug use 50% reduction in hospital visits
1.5 million work days lost $14 billion of lost productivity
33% improvement in drug use 50% reduction in hospital visits
Insurope 24th General Meeting Stockholm 2004
Online 2nd OpinionsOnline 2nd Opinions
Partners Telemedicine Specialists @ Harvard Medical
– Boston area teaching hospitals
No cost to patient Online registration Opinion delivered in 5 days
Partners Telemedicine Specialists @ Harvard Medical
– Boston area teaching hospitals
No cost to patient Online registration Opinion delivered in 5 days
Insurope 24th General Meeting Stockholm 2004
2nd Opinion: Results2nd Opinion: Results
5%: Diagnosis Reversed–Patient doesn’t have the disease
s/he’s being treated for
85%: Change Recommended–Specialist suggests a more
effective or less invasive approach
5%: Diagnosis Reversed–Patient doesn’t have the disease
s/he’s being treated for
85%: Change Recommended–Specialist suggests a more
effective or less invasive approach
Insurope 24th General Meeting Stockholm 2004
2nd Opinion: Cost Savings2nd Opinion: Cost Savings
10% of patients = 65% of claims
–5% of those don’t have disease
–Potential savings = 3% If 85% save 25%; savings = 14% Plus: claims cost only = 1/3rd of
the real cost of illness
– lost productivity
10% of patients = 65% of claims
–5% of those don’t have disease
–Potential savings = 3% If 85% save 25%; savings = 14% Plus: claims cost only = 1/3rd of
the real cost of illness
– lost productivity
Insurope 24th General Meeting Stockholm 2004
Old Economic ModelOld Economic Model
Highest quality = Highest cost–works for cars
–works for electronics
–works for consumer goods
–does NOT work for healthcare
Highest quality = Highest cost–works for cars
–works for electronics
–works for consumer goods
–does NOT work for healthcare
Insurope 24th General Meeting Stockholm 2004
New Economic ModelNew Economic Model
Highest Quality = Lowest Cost!– less unnecessary treatment
– fewer “do-overs”
– fewer unforced complications
–shorter disabilities/absences
–more complete recovery• return to greater productivity
Highest Quality = Lowest Cost!– less unnecessary treatment
– fewer “do-overs”
– fewer unforced complications
–shorter disabilities/absences
–more complete recovery• return to greater productivity
Insurope 24th General Meeting Stockholm 2004
Example: ChemotherapyExample: Chemotherapy
40% less effective each try Cost per positive outcome:–1st time: 1x
–2nd time: 3x
–3rd time: 10x
40% less effective each try Cost per positive outcome:–1st time: 1x
–2nd time: 3x
–3rd time: 10x
Insurope 24th General Meeting Stockholm 2004
CDHC Success To DateCDHC Success To Date
Still largely anecdotal 50% of employers plan to move
some or all of their employees to a CDHC plan by the end of 2005
High level of employee satisfaction
Employer reported savings:
4% to 11%
Still largely anecdotal 50% of employers plan to move
some or all of their employees to a CDHC plan by the end of 2005
High level of employee satisfaction
Employer reported savings:
4% to 11%
Insurope 24th General Meeting Stockholm 2004
Application #1: USApplication #1: US
Multi-national employers with operations in US
Need CDHC plan to compete
– recruiting employees
–employee productivity & morale
–cost control
Multi-national employers with operations in US
Need CDHC plan to compete
– recruiting employees
–employee productivity & morale
–cost control
Insurope 24th General Meeting Stockholm 2004
Application #2: UK (PMI)Application #2: UK (PMI)
Purchase contract with high excess
–can reduce premium up to 30% Allocate funds to HRAs Beware the tax!
–HRA payouts would be taxable
–cheaper to pay tax on premium?
–More incentive to build bank?
Purchase contract with high excess
–can reduce premium up to 30% Allocate funds to HRAs Beware the tax!
–HRA payouts would be taxable
–cheaper to pay tax on premium?
–More incentive to build bank?
Insurope 24th General Meeting Stockholm 2004
Application #3: WorldApplication #3: World
Model for health benefit reform New Economic Model
–control cost by raising quality
Politically acceptable cost shift
Model for health benefit reform New Economic Model
–control cost by raising quality
Politically acceptable cost shift
Insurope 24th General Meeting Stockholm 2004
THANK YOUTHANK YOU
David Cowles
Co-founder & Principal
Benemax
www.benemax.com
David Cowles
Co-founder & Principal
Benemax
www.benemax.com