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Healthcare Cost Trends & Management Strategies Presented by: Daniel J. Weir

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Overview •  •  •  •  • 

Historical and Projected Health Care and Premium Costs Cost Trend Premium Trend MNSure

•  •  • 

Medical Assistance Minnesota Care ACA and MNSure

District Bargaining and Management Strategies

•  •  • 

Eligibility Contribution Plan Design

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U.S. National Health Expenditures as a Share of GDP, 1960-2021 25.00%

20.00%

15.00%

10.00%

5.00%

20

16

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

80

78

76

74

72

70

68

66

64

62

18

20

20

20

20

20

20

20

20

20

20

20

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

60

0.00%

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Source: cms.gov

Life Expectancy Graph 1900 – 2085 90 85 80 75 70 65 60 55

45

1900 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085

50

Male

Female 5

Source: Socialsecurity.gov

Baseline Health Care Spending Projections, 2000 – 2018 $80

Actual Spending

$70

Projected Spending

$60

Billions of Dollars

$50

$40

$30

$20

$10

$0 2000

2001

2002

2003 2004 2005 2006 Total Health Care Spending

Source: Minnesota Department of Health

2007

2008

2009 2010 2011 2012 2013 2014 2015 Health Care Spending excluding Medicare & LTC

2016

2017

2018 6

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Minnesota Health Care Spending and Projections, 2010  “Minnesota  health  care  spending  reached  $37.7   billion  in  2010.”      “Health  Care  spending  consumed  13.9  percent  of   Minnesota’s  gross  state  product  in  2010  and   amounted  to  nearly  $7,090  for  each  person  in  the   state.  ”      “Without  a  conGnued  focus  on  reforming   Minnesota's  health  care  system,  Ehlinger  said,   health  care  spending  could  more  than  double  in  10   years  to  $76.7  billion,  consuming  about  18  percent   of  the  state’s  economy.”   7 Source: Minnesota Department of Health,

Minnesota Health Care Spending per Person by Payment Source, 2010 $11,677 $12,000 $9,746 $10,000

$8,761

$8,000

$5,248

$6,000

$4,711

$4,296

$4,000

$2,000

$872

$0 MA

MCHA*

Medicare*

MNCare

GAMC

Private Health Ins.

Out-of-Pocket

*Excludes Medicare Supplement insurance. MA is Medical Assistance, GAMC is General Assistance Medical Care, MCHA is Minnesota Comprehensive Health Association. Individuals with dual coverage are included in each of the respective coverage option. Source: MDH Health Economics Program

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United States Average Annual Premiums for Single and Family Coverage, 1999 -2013 $16,351

$18,000 $16,000 $14,000 $12,000 $10,000 $8,000

$5,884

$5,791

$6,000 $4,000

$2,196

$2,000 $0 Single

Family 1999

Source: Kaiser/HRET Survey

2013

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Health Insurance Premiums and Cost Drivers in Minnesota, 2009 Administrative 9.2%

Other Medical 11.4%

Other 0.4%

Drugs 12.3%

Physician 31.1% Outpatient Hospital 14.8%

Inpatient Hospital 20.8% Source: Minnesota Department of Health Note: “Other Medical” includes skilled nursing, nursing facilities, home health care, emergency services, services of health professional other than physicians and dentists, durable medical goods, and chemical dependency/mental health.

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Projected Medical Cost Trend

Unit Cost Inflation

Projected Medical Cost Trend Utilization

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Source: www.pwc.com

Premium Trend

Medical Cost Trend

Changes in Benefit Design

Medical & Pharmacy Utilization

Premium Trend Source: www.pwc.com

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Projected Cost Trend & Premium Increases

Projected Costs

2013

2014

Cost Trend Increase

7.5%

6.5%

Premium Increase

5.5%

4.5%

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Source: www.pwc.com

MNSure Enrollment

Medical Assistance •  Minnesotan's with income at or below the Federal Poverty Level may receive health insurance coverage at little or no cost

Minnesota Care •  Minnesotan's with income between 55% and 200% of the Federal Poverty level may qualify for Minnesota Care with premiums of $4 to $50 per month

MNSure Individual/Small Employer •  Minnesotan’s with income between 100% and 400% of the Federal Poverty level may qualify for subsidies and lower premiums through MNSure, may be limited to between 2% and 9.5% of household income

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MNSure Projected 2016 Minnesota Exchange Enrollment

Enrollment in the Exchange

Percentage of Total Population Enrollment

Medical Assistance and Minnesota Care

850,000

15.7%

Individual Enrollees

300,000

5.6%

Small Business Employees