Value Based Insurance Design and Low Wage Workers

April 24, 2008

It’s Time for Comprehensive Health Care Reform

The efforts of HCAT to improve the health of our low wage worker members are patches on a dysfunctional system still leaving them underinsured

Employer sponsored coverage falls short for these members and many other Americans

Only through a reform plan that ends the fragmentation in our medical system leading to overuse, misuse and underuse can we begin to match the general health care outcomes and realize similar savings as the other industrialized nations

GENERAL INFORMATION

More than half of employees or their dependents have a chronic health condition that will require ongoing care1

– Chronic illnesses drive approximately 75% of health care costs2

Wellness is increasingly important in fighting obesity, which is associated with a 35% increase in spending on health care services4

– Estimates of ROI for obesity wellness programs is up to 1:54

Preventive health screenings continue to play an important role in managing health costs – About ⅓ of diabetics do not know they have the disease3

– A 10% reduction in cholesterol levels can result in a 30% reduction in the incidence of heart attacks and strokes5

Sources: 1) Hewitt Associates Research, April, 2008 2) American Medical Association, “Strategies to Address Rising Health Care Costs”, 12/07 3) “Weights and Measures: What Employers Should Know about Obesity”, The Conference Board, 2008 4) Centers for Disease Control and Prevention (CDC), “Preventing Diabetes and Its Complications” 5) Cohen, JD. “A Population Based Approach to Cholesterol Control,” American Journal of Medicine, 1997, as reported by the CDC

What We Know

SEIU Health Care Access TrustA Taft-Hartley Plan

Set up to take in newly organized low wage workers

– Child Care

– Home Care

– Janitors

Average income before organizing

– Janitors and Home Care workers – minimum wage – $6.50

– Child Care Workers – $9.00 to $20.00 per child care day

Health Care Access Trust Members

OUR MEMBERS’ PROFILE

45 – 48 years old

80 – 90%+ female

Largely Latino, African, African-American, Rural Caucasian

Inconsistent or no previous health care

Multiple untreated chronic diseases

Have learned how to use the ER as their doctor

Why There Will Be High Cost in the Future

THESE MEMBERS HAVE SERIOUS UNTREATED ILLNESSES

In one bargaining unit 45% of the members surveyed self-identified as having one or more chronic diseases – mostly high blood pressure and diabetes

They are likely to have undiagnosed acute problems such as cancers and serious heart disease

Members tend to have multiple jobs and serious economic strain leading to high stress

Members usually do not have leave to take care of their health without losing income

Why Are These Members Low Cost Today?

Employers are unwilling or unable to provide adequate funding for health care:

– Little or no money in early contract years

– Tend to favor high deductible/high co-insurance plans

Therefore members are at best underinsured

If they have insurance

– Cannot afford the co-pays and co-insurances for necessary services

– Are constantly afraid of high bills if a doctor finds something wrong

Sources: *2006 Center for Disease Control, **UnitedHealth Claims Data, 2007

Opportunity for Greater EngagementTHE PARADOX

How much to spend preventing future expenses and how much to spend controlling today’s highest costs?

59%of future high cost population comes from today’s low cost population*

95%

70%

Claims Costs**

20% of Members

5% of Members

Recognize you can’t do it all with $175 pmpm

Try to get chronic disease treated

Make it easy to see the doctor

Have at least some drug and diagnostic covered

Short change hospitalization and hope you can find community resources to help

Our Philosophy

Walking the SEIU Talkin Our Own Sponsored PlansIF WE ARE WALKING THE TALK

We have to look seriously at evidence-based medicine

We have to encourage personal responsibility

We have to address chronic disease more creatively

We have to realistically address smoking and weight control

Value Based Insurance Design

WHY TRY IT?

VBID overlays a quality of life calculation on evidence based medicine

It differentiates copayment rates based on the value of the medical service to the individual and to the system

It drives patients into essential services by eliminating financial barriers to those services – critical to low wage workers

University of Michigan Department of Public HealthDr. Mark Fendrick

UnitedHealth Care Value Based Insurance Design Team

SEIU Locals 1 and 26Milwaukee and Minneapolis Janitors Respectively

Our Partners

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Challenges to Implementing VBID for Low Wage Workers

Our members are on limited plans due to financing from employers

Some of our employers do not see it as their responsibility to improve their employees' health or explore new avenues for health care provision

Our members have little or no experience with the health care system

A challenge to insurers even with ASO contracts

Incentives – how do we do that in a Taft-Hartley?

OTHERS SEIU HCAT

APPROACH

Plan design ensures access

for targeted clinical services

Whole person approach: Ensure access via plan design Education and engagement via

integrated care/coaching programs Incentives for success: Healthy

actions and outcomes

FOCUSChronic population

and Rx costs

Encourage prevention and compliance across broad population Unique strategies for high/low cost populations Reflects all costs of maintaining health

CONSUMER ENGAGEMENT

Pharmacy gaps, care management

Consumer level – customized communications, retail marketing approach

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Implementing a VBID Plan

IDENTIFYING HEALTH ISSUES

Health Risk Assessment

Biometric Screening

Age appropriate physical exams

GETTING MEMBERS TO THE RIGHT PROGRAM

Healthy and want to stay that way

Smoking and weight issues

Chronic disease issues

Acute illness

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Benefit Design and Incentives

Enrollment Options with additional options for those with identified chronic conditions

– Option 1 – Preventive

– Option 2 – Weight and/or smoking cessation

– Option 3 – Chronic disease control

Eliminate Barriers to Care – to the extent possible zero co-pays for necessary services and drugs

Incentive Plans that are clear and actionable by members – if you do this, you get that

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Care and Coaching Programs

Enhancements to existing disease management programs based on voluntary enrollment using incentives

For selection of program option – “best fit” review of care based on Biometric Screening, Health Assessment, prior claims

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Value Based Insurance Design

THE QUESTIONS WE ARE ASKING

Will the Local leadership be receptive?

How will the members receive these kinds of plans and how do we make them understandable?

Will the employers be willing to work with us on implementing these plans?

How do we implement this kind of plan for workers who have very limited coverage?

Will the insurers we work with be able to administer this kind of program?

Could VBID actually help this population control its chronic disease?

PREVENTIVE CARE PROGRAM WELLNESS LIVING WITH

CHRONIC DISEASE

ACCESS Utilization Data Utilization Data Utilization Data

HEALTH LITERACY Survey Survey Survey

SELF-EFFICACY Survey Survey Survey

OUTCOMES HRA HRA HRA

Evaluation of the Program

Optimal Results

Positive member experience

More engaged, knowledgeable members

Richer, more effective but still affordable benefits package

Maximize SEIU HCAT’s member and employer health investment

What About VBID for Excellent Comprehensive Plans

THE BENEFITS

Should reduce acute incidences due to chronic disease – good for the system and the patient

Provides better value for the health care dollar – financial drivers move patients to high value services

THE CHALLENGES

Is seen as a reduction in benefits because of added cost to low value services

Requires commitment on the part of employers to having a healthy workforce, not just saving money

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Health Care Access Trust