ABOUT THE PENNSYLVANIA PUBLIC

SCHOOLHEALTH CARE TRUSTPLAN OF HEALTH INSURANCE

BACKGROUND

• Planned for years• Officially constituted as non-profit

organization in March 1999• Endorsed by PaFT, PSBA, PSEA, PASA, and

PASBO• Functions as Taft-Hartley Trust

Labor/Management• Initial funding provided by Heinz Family

Foundation• First Managing Director hired July 2000

HOW DOES THE TRUST WORK?

• Acts as the Benefit Provider

• Uses panel of Participating Physicians and Hospitals

• Negotiates Discounts from Providers’ Fees

ORGANIZATION• Trustees: oversight responsibility• Managing Director: day to day activity

responsibility• State divided into 4 regions

– Western Pennsylvania (80,000)– Central Pennsylvania/Lehigh Valley (75,000)– Southeastern Pennsylvania (50,000)– Northeastern Pennsylvania (25,000)

• Solicitor• Independent auditor• Access to consultants as necessary

Organizational Structure

Officers/Trustees

Philip A. Smalley Managing Director

Levin Legal Group, P.C. General Counsel

Trustees Barbara Frankhouser, PSBA

Albert Fondy, PaFT Edward W. Godin, PSBA

James Weaver, PSEA *Alex Matthews, PSBA Bernard Murray, PaFT

James P. Testerman, PSEA Barbara Andrews, PSBA *Gerald L. Fowler, PASA

*Timothy J. Shrom, PASBO Barbara L. Bolas, PSBA *Patsy Tallarico, PSEA

*Carolyn Dumaresq, PSEA *Tom Gentzel, PSBA

Carol Kaufman Consultant

Field Office Affairs

Alt. Health Care Options Alternative Medicine

Employee Benefit Data Svc Fiscal Agent

HealthCare Strategies Utilization Management

The Loomis Company Third Party Administrator

CONTRACTED SERVICES

Alex Matthews, PSBA President

Patsy Tallarico, PSEA Vice President

Carolyn C. Dumaresq, PSEA

Secretary Tom Gentzel, PSBA

Treasurer

Revised June 2001

John Brunette Senior Consultant

Central/East

Tatiana Gazarh Data Input Tech

Coordinator

Advisory Committee

Marketing Consultant

Western/Central

Express Scripts Pharmacy Benefit Mgmt.

Tra-Tech, Inc. Network Development

William M. Mercer Actuarial Services

PPSHCT 1-01-02

*Denotes Executive Committee Members

Who is Eligible?

• School Districts

• Intermediate Units

• Vocational/Technical Schools

• Community Colleges

The Stakes Statewide

• Over 230,000 employees/550,000 members

• Approximately $800,000,000 being spent annually on health care

Immediate Goals of the PPSHCT

• Maintain quality health care benefits

• Seek competitive advantages

• Promote Labor/Management cooperation

• Control cost to taxpayers

Health Insurance Issues in Bargaining

• Hinder the Process

• Raise issues that the Parties can’t control

• Force hard-line positions

Typical PPSHCT Client Services

• Technical– Define and monitor terms and arrangements with third party administrators– Analyze utilization trends– Generate regular insurance summaries/reports

• Customer Service– Resolution of participant claim matters– Promotion of optimal labor management climate– Facilitate formation and operation of regional advisory committee

• Educational/Developmental– Develop and present health care seminars and symposiums to promote health

care awareness– Conduct product briefings

• Consultative

PPSHCT Enhanced Choice Plan

• Development of Enhanced Choice Plan – a self-funded option.

• Self-funding is not new. Currently 60% of all employers are in self-funded plans.

What is Self-funding?

• The Trust collects premiums from the employer

• The Trust contacts with a third Party Administrator to pay claims

• The Trust manages risk with stop/loss insurance

What Is Stop/Loss Insurance?

• Limits Liability– Creation of a reserve fund– Purchase Individual Stop/loss– Purchase Aggregate Stop/loss

Advantages of self-funding

• Cash flow

• Lower Administrative Costs

• More Plan Flexibility

• Better data on Utilization

Health Care Strategies Inc.

• Allows you to actively participate in your healthcare– Provides information about Doctors and

Hospitals

– Provides specific disease and condition Protocols

– Provides wellness experts for proactive health care

• Reduced retention/administrative fees• No carrier reserve requirement; interest on excess funds

accrues to Trust• As Trust grows, need for extra funding to stabilization

Fund decreases• Marketing fees minimized• Greatly expanded provider network that can be

customized to meet the needs of a specific group (In and out of state)

• Leveraging the numbers to obtain the best possible discounts with providers and rates with re-insurance carriers

The Advantages of An Affiliation With The PPSHCT

The Advantages of An Affiliation With The PPSHCT

• Avoidance of network development expense• Commitment to managed care (versus managed cost)• Access to Centers of Excellence• Best health interest of members stressed• No brokerage fees built in to premium deposits• Greater flexibility to affect benefit design• Health Insurance “Off” the bargaining table• Significant resources available to clients through the Trust

affiliates• Your Insurance; Your Trust – PPSHCT works for you.

To Affiliate with the PPSHCT

• $1,000 per district application fee plus 1% of premium on monthly basis

• Commitment to Labor/Management philosophy

• Authorization to receive, review, and analyze three years of utilization data

• Three year commitment/execute a Participation Agreement

What is Group Health Insurance?

• A Large number of people paying to provide health care to those that need it

• The 6% - 60% Rule Applies

• Chronic and Catastrophic

“There is nothing more difficult to execute, nor more dubious of success, nor more dangerous to administer than to introduce a new system of things: for he who introduces it has all who profit from the old system as his enemies, and he has only lukewarm allies in all those who might profit from the new system”

Niccola Machiavelli