What s Next: Looking beyond Today s Spending Account Options to the Next Big Thing

Transcription

1 What s Next: Looking beyond Today s Spending Account Options to the Next Big Thing Jeff Hancock, VP of Product and Marketing, TSYS Jeff Bakke, Chief Strategy Officer, Evolution1 Ralph Bernstein, SVP, U.S. Bank Healthcare Payment Solutions September 26, 2011

2 Objectives of this session: Review the current healthcare environment and how it affects your organization Discover new benefit options and strategies that make sense for employees Prepare for trends that will shape your forward-thinking, cost-effective benefits package over the next five years 2

3 Agenda The Next Big Things Current State Personal Health Investment Spending Accounts Consumerism and Exchanges 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 3 3

4 The Next Big Things Personal Health Investment Jeff Hancock, VP of Product and Marketing, TSYS

5 The State of the Marketplace What s happening in the typical workplace? Half of all Americans are living with one or more chronic conditions Diabetes, asthma, hypertension, high cholesterol COPD, CAD, cancer Approximately 75% of all medical costs are a result of lifestyle choices 75% of today s healthcare costs stem from preventable illnesses (Source: DHHS) 67% of employers report that employees poor health habits are a top challenge in maintaining affordable benefit coverage (#1 reason) 73% of larger employers will offer a consumer driven healthcare plan in 2012 (Source: NBGH Survey June 2011) 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 5 5

6 The State of the Marketplace Are employees investing in their own health? The days of tweaking this or that are over Employers are beginning to focus on healthcare strategies for the next 3-5 years not just the year ahead Being driven by reform Increases in employee accountability for purchasing decisions and health status Decreases in employers retaining grandfathered status for existing plans Much greater emphasis on Personal Health Investment Outcomes in wellness, prevention and disease management programs Projected at 35 percent of employers in 2012.a 6x increase! Participation in consumer driven health care 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 6 6

7 There s No Silver Bullet 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 7 7

8 Challenges That Limit Accelerated Personal Health Investment Lack of understanding about how healthcare really works Lack of personal motivation Lack of personal tools and resources Passive preconditioning of consumers as patients who are treated and not as patients who are invested in their personal health The Result: Individual consumers don t fully realize the significance of their role in healthcare. They lack the insight, information, tools and motivation to manage their health, and employers are paying the price. 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 8 8

9 Emerging Areas of Innovation in Incentives Personal Health Investment Driving participation in health and wellness for all employees ( carrots and sticks ) Access to personal healthcare information Improving employees ability to find and access information Consumer Tools Arming employees with the tools to begin taking responsibility for their health physically and financially 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 9 9

10 Incentives and Employee Participation Employee participation in health and wellness programs is generally weak. Large employers are adopting incentives to attempt to improve participation, especially around the health risk assessment. Small employers adoption of incentives is at a considerably lower level. 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

11 Assessment Employers Offering Programs Employers Offering Incentives Employee Participation With Incentives Employee Participation Without Incentives Health Risk Assessment 78% 61% 48% 31% Biometric Screening 75% 32% 34% 18% Programs Disease Mgt./Coaching 72% 26% 24% 16% Wellness/Prevention Smoking Weight Mgt./Nutrition Large Employer Program Availability and Participation 50% 42% 38% 38% 32% 28% 13% 16% 14% 7% 8% 7% 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

12 The Use of Incentives Is Evolving Rewards Activities Incent Activities Incent Achievement $10-25 $ $ Soft incentives Awards Recognition Prepaid cards Cash bonuses Soft incentives Merchandise Paid time off Premium reductions Co-pay reductions Gift cards Cash bonuses HSA contributions Merchandise Paid time off Future 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

13 Healthcare Incentive Solution Tools Multi-Incentive Capabilities: Create multiple purses of funds on the same card to support different incentive types Control usage to certain merchant categories by purse Examples: Health assessment reward can be restricted to doctor s office, pharmacy or health-club-type merchants. Ongoing reward for participating in a weight loss program can be restricted to a health club. Reward for successful program completion can be unrestricted. Card Transaction Control: Control where card is used by merchant category: Grocery stores, BestBuy, sporting goods stores allowed Liquor stores and gambling not allowed 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 13

14 A Pattern of Killer Questions Do employees have easy access to their information? Do employees use information if they have access to it? How do we get employees to utilize the tools and information that is available to them? For those employees who do participate, how do we increase consistent, ongoing engagement? How does an employer get the 70-plus percent of employees who do not participate to begin? How do they become personally invested? 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

15 Emerging Model Individualized, employee-level view: My circumstances, my family and my dependents Personalized tools, information and incentives Individualized to each employee and family Providing actionable information and tools vs. providing access to them Focuses on engagement vs. participation alone 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide. 15

16 Making My Information Actionable Health Plan Coverage HSAs, FSAs, HRAs, etc. Medical Claims Pharmacy Claims Employee and Dependents Preventive Care Condition Management Other Medical Considerations Healthcare Administration 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

17 Actionable vs. Accessible Aggregates and integrates information from many sources Mines real-time information: Health plan coverage and terms Medical and pharmacy claims Health risk assessment and family history information Life-stage and behavioral attributes Health savings account information Merges with external information: National medical adherence, wellness and prevention standards Consumer point-of-contact and impulse testing Behavioral science application results The result. 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

18 Personal Health Messaging and Reminders Messaging to individual employees and their families: Direct mail to the home, , telephone outreach, or text messaging Actionable calendar stickers for the entire family Actionable, relevant and personal: What screenings are needed, and when they must be completed How to schedule an appointment The physician s name and phone number Key answers: T Is it covered by my health plan? What will it cost my family? Can we utilize our Health Savings Account (HSA)? What would we have saved with an HSA? 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

19 Getting to Personal Health Investment Actionable information for the individual/family Integration of personal information at the point of action Personalized education regarding conditions, prevention, etc. Motivation aligned to individual Incentives determined by participant, not by the program Staged and restricted to the needs of each individual Integration of health, wealth and incentives Configured to individual consumers and families Real engagement, real results, real impact. 2011Total System Services, Inc. Confidential and proprietary. All rights reserved worldwide

20 The Next Big Things Spending Accounts Jeff Bakke, Chief Strategy Officer, Evolution1

21 Healthcare: What Employees Want To be healthy, happy, and productive Help paying for healthcare costs Flexibility without added complexity For it to be it easy and simple to understand and pay for care Help preparing for the future

22 Mobile Is the Next Web Mobile will surpass the desktop for Internet use in 2013 (Morgan Stanley) 85% of US adults have a mobile phone Over 70% use text messaging Over 50% have a smartphone Smartphone use grew 49% in ,000,000 iphones/ipod Touches in 3 years 100,000 Android phones activated daily 22

23 What you probably knew: Mobile use is rising fast It s easier and more accessible It s wizzy What you may not know: For spending accounts, it simply works better

24 Mobile Experience Receipt Filing & Upload Access to Funds 24

25 Healthcare: What Employers Want Healthy, happy, productive employees Continue to provide benefits Minimize cost, and make it predictable Flexibility without added complexity Help preparing for new health insurance buying models

26 Defined Contribution Health Employer creates an account for each employee Employer sets a contribution amount Employees choose what insurance meets their needs through a health insurance exchange Employees can contribute additional funds either for insurance or current/future out-of-pocket costs Group or individual approach with 1-n health plans 26

27 Defined Contribution Health Employee Funded $ Employer Funded Traditional Insurance Plan ER Responsibility Co-pays Declining Benefits Health Insurance 1-3 choices Rising Costs (~8%) Low Transparency Consumer Driven Health Plan Healthcare Account(s) EE Responsibility Some ER Flexibility Health Insurance CDH/HDHP 1-3 choices Rising Costs (~4%) Defined Contribution Health EE Responsibility Healthcare Account(s) Health Insurance Many Options w/guidance Fixed Contribution Amount ER Flexibility 27

28 Pay 2014 PPACA Implementation? Play Cost Inflation Tax Benefit $2,000 per EE over 30 -or- $3,000 per uncovered receiving credit Cost $11,204 per employee* Inflation Increasing by 6-8%+ 6 per year* Additional wages / retention impacts DC from eliminating Health benefits Tax Deductible to employer Eliminating employee benefits Benefit Providing a benefit to employees Penalty is indexed Cost Additional income Employer decides (inc. penalty) to EE not pre-tax Out of the healthcare Inflation business Employer decides Easy to plan and budget Contributions deductible to employer Tax Contributions deductible to employee *Towers-Watson, Sep-2012 Benefit Providing a benefit to employees Out of the healthcare business Easy to plan and budget for 28

29 A Solution for All Employees 29

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33 What you probably knew Employee education Employee plan selections Employee elections What you may not know Find a partner with the solutions to help you succeed More employee education Navigation & underwriting support Contribution management Health plan quotes Premium payments Employee account access Account servicing Access to funds Employer reporting Ongoing contribution analysis Compliance Public exchange vectoring 33

34 The Next Big Things Consumerism and Exchanges Ralph Bernstein, SVP U.S. Bank Healthcare Payment Solutions

35 What Is Consumerism? Dictionary.com says con sum er ism 1. a modern movement for the protection of the consumer against useless, inferior or dangerous products, misleading advertising, unfair pricing, etc. 2. the concept that an ever-expanding consumption of goods is advantageous to the economy. 35

36 What Should Healthcare Consumerism Be? The deliberate and well-considered participation by consumers in their healthcare buying experiences, resulting in the proper balance between healthy outcomes and reduced costs. Is this healthcare consumerism? Insured Americans are using fewer medical services, raising questions about whether patients are consuming less healthcare as they pick up a greater share of the costs. -- The Wall Street Journal, 7/29/10 36

37 Who Are Today s Healthcare Consumers? Total Insured: 255M Thru Employer: 139M Self-Insured: 116M Total Uninsured: 51M Ineligible: 15M Age 18-34: 21M (The Young Invincibles ) All Others: 15M Sources: U.S. Census; McKinsey; Annals of Internal Medicine 37

38 What s Happening in the Market? Consumer Driven Healthcare (CDH) is on the rise An increasing understanding among providers, employers, and consumers that health and wellness are ultimately personal responsibilities More consumers opting for high-deductible health plans Wellness programs beginning to take root Defined Contribution plans waiting in the wings 50% 40% 30% 20% 10% 0% 15% Workers % Workers 34%* 1,000 or More Workers Among Firms Offering Health Benefits, Percentage That Offer an HDHP/SO, by Firm Size, 2010 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,

39 What s Happening in the Market? but there are challenges Growing payment issues, including collection, bad debt, and fraud Consumer fear and reduced engagement If I put off going to the doctor, that s money I don t have to pay. Why even have insurance when I ll never meet the deductible? How can I afford it? Mortgage first. This can wait. 39

40 Johnny: Dr. Mangus: Johnny: Dr. Mangus, how s my mother? It s her pancreas again, Johnny. She s gonna need an operation immediately. How much is it gonna cost? Dr. Mangus: $ Johnny: $49.95? Dr. Mangus: This week only. Source: Johnny Dangerously Johnny: Dr. Mangus: Where am I gonna get that kind of money? Why don t you knock over a gas station? 40

41 How will the transition to Consumer Driven Healthcare change the relationship among, and the behavior of, employers, consumers, and providers? 41

42 What s Changing for Employers? More benefits program options savings accounts, spending accounts, wellness programs Greater need to educate employees in new and effective ways Potential cost savings as greater payment burden shifts to employees 42

43 Employers are paying 36% more for Healthcare than they did just five years ago. Today, they spend approximately $8,000 per active employee on healthcare growing at 8% per year. But Employers who offered CDH plans along with traditional health plans saved $7 million per 10,000 enrolled members Employers who offered CDH instead of traditional health plans saved $21 million per 10,000 enrolled members Employers who combined the CDH plans with best-in-class engagement strategies saved $23 million per 10,000 enrolled members Sources: 16 th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care, Aon Consulting/ISCEBS Survey; 2009 study by Aetna. Savings are over a five-year period. 43

44 What s Changing for Consumers? Greater share of healthcare payment responsibility More active role in decision making Need to better understand healthcare plans and payment options 44

45 Wellness Employer mandate for employee ownership of healthcare decisions and behavior change 8 in 10 (80%) will increase employee communication / education aimed at reducing cost or improving health Nearly half (45%) will implement programs to improve treatment and medication compliance 3 in 10 (29%) will introduce contribution-based incentives 3 in 10 (21%) will implement consumer driven health plans (CDHPs) Source: Optum Health 45

46 Defined Contribution Health (Revisited) Employer creates an account for each employee Employer sets a contribution amount Employees choose what insurance meets their needs through a health insurance exchange Employees can contribute additional funds either for insurance or current/future out-of-pocket costs Group or individual approach with 1-n health plans 46

47 Defined Contribution as a Consumer Experience Employees can allocate their benefit dollars as they see fit. Choosing their plan Paying their premium Setting aside dollars in a benefit saving or spending account Opting to participate in a wellness program 47

48 How Would Defined Contribution Work within a Health Exchange? Employers provide a lump sum to employees and let them choose best options from an exchange Cost savings Decreased administrative responsibility Employees benefit from portability; they own their policy and can take it with them 48

49 HDHPs and HSAs in Health Exchanges Exchanges will include four categories of health plans, based on actuarial value: Bronze (65%), Silver (70%), Gold (80%), and Platinum (90%) All will cover essentials, but lower-value options will have less robust benefits. High Deductible Health Plans (HDHPs) are expected to be critical components of the exchanges as consumers look for cost-effective coverage. Deductibles for minimum coverage in the exchanges could be substantial up to 12,700 for families.* Individuals will need to rely on benefit spending accounts -- like HSAs -- to bridge financial gaps. HSAs will grow along with HDHPs. *Source: Kaiser Family Foundation, 4/14/11 49

50 SUMMARY 50

51 Questions? Jeff Hancock TSYS Jeff Bakke Evolution1 Ralph Bernstein U.S. Bank Healthcare Payment Solutions

52 THANK YOU 52