Healthcare 2014 and Beyond: A Look Ahead at Ways to Flatten the Trajectory of Healthcare Trends Bo...

Healthcare 2014 and Beyond: A Look Ahead at Ways to Flatten the Trajectory of Healthcare Trends

Bo Hartsfield, Vice PresidentDavid Greene, Marketing Director

2

always out frontWho Needs Reform?

Health insurance costs for employers and employees rose almost 400% faster than

wages over the previous decade

3


Medical expenses were the #1 reason for personal bankruptcy.

78% of these people had some form of health insurance.

4


Health insurance companies could charge higher rates, deny, or cancel coverage for people with significant medical conditions

5


Over 80% of adult males in America are overweight or obese according to the

World Health Organization

6


The United States spends more on healthcare than any other economically

developed country in the world

7


The United States is below average for an economically developed country in key

health measures including life expectancy and infant mortality

8


U.S. government-run health insurance programs cost more per capita and GDP

than Canada’s socialized system, and yet we cover only 28% of the population

through these programs

9

always out frontU.S. National Health Expenditures

If we duplicate the last decade, then healthcare cost will reach $14,472 per capita and account for 23.2% of

our economy©2013 ACAP Health Consulting Confidential-Not for Distribution

10

always out frontHidden Medicare “Employer Tax”

Those with insurance pay hospitals almost 70% more than Medicare for the exact same services.

Medicaid enrollment will grow by almost 50% in 2014 under PPACA

How long will corporations be willing to fund at this excess level?

©2013 ACAP Health Consulting Confidential-Not for Distribution

11

always out front

33

11

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.

89.4%

99.1% Medicare

80.1%

94.5%

Medicaid(1)

127.8%

115.7%

Private Payer

70%

80%

90%

100%

110%

120%

130%

140%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

133.5%

92.8%

The Government to Private Cost Shift

Medicare and Medicaid reimburse hospital systems at

less than the actual cost of

services

22

Private payers subsidize the government

programs through higher hospital

payments

PPACA reduces funding to

Medicare by $741 billion©2013 ACAP Health Consulting

Confidential-Not for Distribution

12

always out frontACA Expected Financial Impact


14

always out frontSolving the Healthcare Equation


15

always out frontChange in Network Discounts

While network discounts have increased steadily over the last 10 years, healthcare costs have skyrocketed

Current payment structure is not controlling inflation


16

always out frontWhy is Healthcare So Expensive?

55% Discount

43% Markup


17

always out frontIn-Network Contracted Rate Variance


18

always out frontPrice Variability Mobile, AL


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always out front

Concierge Level Service for Healthcare


The Health Pro assists your members with every step in the healthcare continuum—including price comparisons, bill review, prescription review and appointment scheduling.

20

always out frontSolving the Healthcare Equation


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always out front

What’s Next?Future Disease “Production”

Slowing the “production” of NEW disease is the ONLY sustainable way to flatten the trajectory of healthcare trends

3.5%7.0%

13.0%

30.0%

53.0%

1990 2000 2009 2030 Total 2030 Hispanic Women

U.S. Type II Diabetes Prevalence RatesSource: AP Report, Narayan, CDC, 2003


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always out front

Where We’ve Been: Are Traditional “Wellness” Programs Working?

Employer’s average weight has increased each of the past 4 yrs

The avg weight has increased from 178.2 to 194.6 since 2005

The average employee BMI is considered obese as defined by the Centers for Disease Control

35.5%

25.2%29.3%

33.6%35.2%

41.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2006 2007 2008 2009

GuideOne Body Mass Index Results

Rec'd Wt

Overweight

Obese

Average Body Mass Index

YearGuideOne Avg. BMI

2005 27.82006 28.62007 29.52008 29.72009 30.2


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always out front

Where We’ve Been: Are Traditional “Wellness” Programs Working?

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2005 2006 2007 2008 2009

31.5%

22.9%

28.7% 28.7%

31.3%

Tri Risk Score

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2005 2006 2007 2008 2009

10.5% 10.3%

21.2%

33.6%

38.2%

Glucose Risk Score

Elevated glucose risk is steadily increasing

This pattern was closely correlated to diabetes incidence & related claims


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always out front

Claims Cost

Claimants

How Do We Identify Who Is At Risk?

OPPORTUNITY

A small percentage of claimants drive the

majority of paid claims each plan year

A small percentage of claimants drive the

majority of paid claims each plan year

Majority of next year’s “Red” group will come from those with

no previous claim risks

Majority of next year’s “Red” group will come from those with

no previous claim risks


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always out front

Metabolic Syndrome

Clusters of Risk Can Create a Toxic Recipe

7x more likely to get

diabetes

3x more likely to get

heart disease

Highblood

pressure

Low HDL

(good)cholestero

l

Hightriglyceride

s

Highblood sugar

Highwaist

circumference

2x more likely to have a

stroke

4x higher medication spend

2x more lost work days


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always out frontAlzheimer’sAlzheimer’s

CataractsCataracts

Sleep ApneaSleep Apnea

Breast CancerBreast Cancer

Heart AttackHeart Attack

Gall Bladder DiseaseGall Bladder Disease

Nonalcoholic Fatty Nonalcoholic Fatty Liver DiseaseLiver Disease

PancreatitisPancreatitis

Pancreas CancerPancreas Cancer

DiabetesDiabetes

Kidney Kidney Disease/CancerDisease/Cancer

Ovarian CancerOvarian Cancer

Urinary Tract CancerUrinary Tract Cancer

PsoriasisPsoriasis

ArthritisArthritis

GoutGout

DepressionDepression

StrokeStroke

RetinopathyRetinopathy

Esophagus Esophagus CancerCancer

Cardiovascular Cardiovascular DiseaseDisease

Congestive Heart Congestive Heart FailureFailure

HypertensionHypertension

Pulmonary Pulmonary DiseaseDisease

Colorectal CancerColorectal Cancer

Erectile Erectile DysfunctionDysfunction

Gynecological Gynecological AbnormalitiesAbnormalities

Endometrial Endometrial CancerCancer

Non-Hodgkins Non-Hodgkins LymphomaLymphoma

LeukemiaLeukemia

Disease Risk Associated WithDisease Risk Associated WithMetabolic Syndrome ElementsMetabolic Syndrome Elements

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always out front

Metabolic Syndrome: Impact on Mortality

Mort

alit

y R

ate

(%

)

Without metabolic syndromeWith metabolic syndrome

Isomaa B et al. Diabetes Care. 2001;24:683-689.


28

always out frontWhat’s Up With Japan?

Japan’s overweight and obese pop…… 22.6% Compared to United States……………….. 74.1%

Concerns over “cost trajectory” led to mandatory national law:• April 2008, all adults 40+ screen for 5-MetS factors• Employers must demonstrate single digit reversal of MetS by

2012; slightly higher in 2015• OR, employer pays penalty to the government retirement

program (Social Security / Medicare)


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always out front

What results could an employer expect?Book Of Business Participants

100%

57.5%

-43%

% of Population with MetS

Pre

Post

Change

7630


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always out front

Impact on Diabetic RiskAll Participants

10%

-16%

-29%

Normal Glucose < 100

Prediabetic RiskGlucose 100 - 125

Diabetic RiskGlucose >126

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Perc

enta

ge o

f P

art

icip

ants

Change in Diabetic Risk Category

Change

N=15019


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always out front

Impact on Obesity RiskAll Participants

70%

12%

-14%-21%

NormalOverweight

Obese Morbidly Obese

-40%

-20%

0%

20%

40%

60%

80%

Perc

enta

ge o

f P

art

icip

ants

Change in Obesity Risk Category

Change

N=15019


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always out front

33%

23%

44% Stayed within 3 pounds

Gained more than 3 pounds

Lost more than an add'l 3 pounds

33%

23%

44% Stayed within 3 pounds

Gained more than 3 pounds

Lost more than an add'l 3 pounds

Long Term Weight Loss Survey Data (18 to 60 months post graduation)


77% of graduates stay within 3 lbs of their weight loss 18-60 months following

their graduation from the program!

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always out front

Summary of ScreeningsFall Screenings 2008 to 2012

YearTotal

Screened % MetsEmployees Screened % MetS

Spouses Screened % MetS

2008

2,701 26%

2,701 26% * *

2009

4,078 27%

2,834 21%

1,244 34%

2010

4,329 22%

3,000 19%

1,329 29%

2011

3,997 20%

2,737 19%

1,260 26%

2012

3,562 16%

2,449 15%

1,113 18%

*Spouses were not part of the program in 2008


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always out front

Scalable and Sustainable MetS Reversal –All Screened Spouses 3,300 Employee Company

Implemented Program Intervention with the entire at risk population beginning in 2008 – 2012

Spouses began the program in 2009

Year over year measurable improvement to the prevalence of Metabolic Syndrome

-47% Reversal of MetS -47% Reversal of MetS from 2009-2012!from 2009-2012!


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always out front3,300 Employee Client Case Study

3,300 Employee Company

Clinical Wellness and Accountability

Measurable clinical results

Flattened trend without plan design change or cost shifting


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always out frontHealth Care America 2020

ACOs Enter Risky BusinessACOs Enter Risky Business

Power to the PCPPower to the PCP

States Need Aid for MedicaidStates Need Aid for Medicaid

Employers Can’t Shake LooseEmployers Can’t Shake Loose

French Fries Are New TobaccoFrench Fries Are New Tobacco

Voters Reject Single PayerVoters Reject Single Payer

Balance Billing LegislationBalance Billing Legislation

HC System Capacity ShrinksHC System Capacity Shrinks

The The Crystal Crystal

BallBall

Inflation SubsidesInflation Subsides


Workers’ Compensation Cost Containment Challenges

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always out frontA Few Facts About Healthcare vs. WC

• 17.9% vs .24%

• 8.5% vs. 1.4%

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always out front

Combined ratio projected to be over 110% for the next several years

• Now – finished 2012 with a 109% CR

Some markets are pulling back their WC writings• Now – hearing words like “encouraging” and “opportunistic” from

carriers

The rising cost of medical is a major issue impacting WC• Now – medical inflation at 3% for 2012

Aging workforce and co-morbidity factors will negatively impact WC claim costs

• Now – this has not changed

Medical technologies are producing more costly medical treatment options

• Now – this has not changed

WC Results Expected to Be Challenging (February vs. September)

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always out front

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always out frontOne in 8 Global Workers Will Never Retire

Reasons: High levels of unemployment Aging populations Low wage growth Depressed savings rates

Source: CNNMoney Article – 9/18/2013

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always out frontCommercial Lines Pricing Trends

• Commercial Lines has seen 10 consecutive quarters of price increases (largest increase for Q2 2013 vs Q2 2012 was in WC and EPL)

• Commercial Lines rate increases were almost 7% in Q2 2013 and expected to continue

• WC Results – Encouraging • 2011 results were “the worst in 10 years” – 115% CR• 2012 results were “encouraging” – 109% CR

• Higher rates, lower frequency (-5% in 2012) and less medical inflation (+3% in 2012)

Source: Towers Watson Commercial Lines Insurance Pricing Survey, Department of Labor and NCCI

43

always out front2012 Industry Results

• 2012 CR of 98.6% vs. 103.4% for 2011

• Lower catastrophe losses in 2012

• ROE of 7.3% in 2012 and this is a 3 point improvement over 2011- the S&P 500 ROE was 15% for Q1 2013

• 25% of the companies reported an operating ROE of over 10%

• 33% of companies reported an accident year CR of less than 100

• Still positive momentum in rates – auto results need improvement

Source: FitchRatings – James Auden (Managing Director, Insurance Group)

44

always out frontWC Trends

• WC lost time claim frequency continues to decline in 2012 (5% decline) after an increase of 3.8% in 2010. There have only been 2 years since 1990 that WC claim frequency increased.

• Speculation about the unusual 2010 frequency increase were associated with: • workers fearful about losing their jobs “eventually” file WC

claims when theeconomy started to improve

• newly hired workers

• Indemnity costs increased by 1% in 2012 and medical costs increased by 3%

• From 2007 to 2011, the largest claim frequency declines occurred with employers with over $100MM in payroll

Source: NCCI

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always out frontWC Trends

• Per NICB, questionable WC claim filings are on the rise – up 28% from 2011 to 2012 with another increase expected in 2013.

• According to the Coalition Against Insurance Fraud, “The strongest predictor of fraud…is a chronically disgruntled workforce.”

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always out frontThe “Perfect Storm” For WC

Older Workers (aging workforce)

+

Less Healthy Workers (overweight/hypertension/diabetic)

=

Higher Payout

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always out front

Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2011 (Table 10), released November 8, 2012. Insurance Information Institute.

Median Days Away From Work

Median lost time of workers age 65+ is 2-3X that of workers age 25-34. These numbers are pretty stable—they haven’t changed much since 2008.

Older Workers Lose More Days from Work Due to Injury or Illness

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always out frontHealthy Strategies for Aging Workforce

• Design/Redesign workplaces to address:• Ergonomics• Slips, trips and falls• Return to work

Incorporate programs that help aging worker work longer• Wellness• Strength and Conditioning• Education and Training

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always out frontWhy Modify Workplaces

• Musculoskeletal disorders account for $1 out of every $3 spent on WC claims in the US. These are generally considered some of the most expensive and preventable injuries.

• Strength Changes• Peak muscle strength is achieved in men and women between

the ages of 25-35. Between the ages of 50-60, most people can only produce about 75-85% as much strength.

Flexibility • Estimated to be 18-20% less at retirement age vs. with young

adults Other physiological factors impacted by age:

• Balance, Reaction Time, Manual Dexterity, Respiratory Function and Fatigue.

Life expectancy: 1970 = 71 years 2010 = 79 years

Source: Center for Occupational and Environmental Medicine, Textbook of Occupational Ergomonics, Exercise Physiology, US Census Data

50

always out frontObesity Information

• In 2009, 33.8% of US population was obese vs. 15% for Germany and 3% for China.

• American Medical Association now classifies obesity as a disease - instead of a condition - unclear what impact this will have on WC treatment costs.

• Same 2011 news report said and estimated 50% of men would be obese by 2030.

• Per 2010 CDC Report, medical expenses for obese employees are 42% higher than that for a person with healthy weight.

• ABC New Study reports (8/25/2011 report) that workers who got paid (e.g., workplace incentives) were 4 times more likely to lose weight.

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always out frontWC Claim Costs Rise With Higher BMI

Source: NCCI – 2011 Annual Issues Symposium

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always out frontJoint Related Surgeries Increasing

Procedure 2004 2015 Percent Change

Knee Replacements

430,000 1,400,000 226%

Hip Replacements

225,000 600,000 166%

Average hospital and physician costs:Knee Replacement $25,637Hip Replacement $40,364

Source: International Federation of Health Plans

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always out frontHip/Joint Replacements

• Hip/knee replacement considered the most effective intervention for reducing pain and disability for severe osteoarthritis

• Top risk factors for osteoarthritis:1. Age2. Sex3. Obesity/Weight

The U.S. has the 2nd highest rate of knee replacements and is average in the number of hip replacements per 100,000 residents

Source: Organization for Economic Cooperation Development – 2009 Report and International Federation of Health Plans

54

always out frontQuestions to Consider

• How will changing demographics (older/heavier/less healthy) population affect my organization?

• How will we retain essential knowledge, skills and experience in our organization?

• Do we need to change the way we train/re-train our workforce?

• Do we need to re-evaluate the physical demands associated with our employees’ work?

55

always out frontWhat Could the Future Hold?

• Safety programs are good, but what if employers put as much effort/energy into having a healthy workforce as they have into having a safe work environment?

• Eventual merger between wellness and safety

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always out frontImportance of Safety

• From 2007-2011, employees who were with their company less than a year filed approximately 50% of all WC claims in ND. For the oil & gas industry, that was about 80%.

• 2012 workplace fatalities fell 7% per the DOL

Source: Associated Press article - 9/9/2013 Bismark Tribune

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Healthcare 2014 and Beyond: A Look Ahead at Ways to Flatten the Trajectory of Healthcare Trends Bo...

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