Healthcare Issues for Businesses
Indiana Advanced Aerospace Manufacturing Alliance
December 5, 2008
Over 45 million Americans – including 8 million
children – lack health insurance. Eighty percent of
the uninsured are in working families.
Census Bureau, August 2008
Kaiser Family Foundation, The Uninsured: A Primer 2006.
Skyrocketing healthcare costs are making it increasingly
difficult for employers, particularly small businesses,
to provide health insurance to their employees.
Economic toll of being uninsured:
• Increased morbidity and mortality
• Poor management of chronic diseases
• Personal bankruptcies – over half caused by medical bills
• Productivity loss
• Bad debt
• Inefficient and ineffective care
Davis, The Costs and Consequences of Being Uninsured, Medical Care Research and Review. 60(2):2003.
Financial Cross-Subsidization
$100
Medicare
55%
$92
($8)
($440)
($17)
($136)
($80)
($560)
($1136)
$100
Medicaid
8%
$83
$100
Self-Pay
7%
$20
$100
Commercial
30%
$137.87
$1136
Health insurance premiums have doubled in the last 8
years, rising 3.7 times faster than wages in the same
time period.
Kaiser Family Foundation and Health Research and Educational Trust. (2008). Employer Health Benefits 2008
.
Employers who offer
employee health
benefits are
substantially
subsidizing the
healthcare delivery
system.
For most employers,
healthcare expenses
are the least well
understood
component of their
operating costs.
Obama Healthcare Plan
National Health Insurance Exchange
• Promote competition among private insurance companies
–
–
–
–
–
National competition to lower premiums
Federal regulation to promote fair competition
Comprehensive coverage for all applicants
Simplified paperwork and ease applications
Portability
Obama Healthcare Plan
Reduction of Uninsured
• Mandatory coverage for children < 18 years
• Employers health benefits
– Mandatory for large and medium sized employers, or
– % of payroll expense paid to National Health Plan
– Small employers business health tax credit
• Federal re-insurance for catastrophic claims
– Funds paid must offset employee’s health premium expenses
• Expand eligibility for Medicaid and SCHIP
What provides best marginal
cost change for employer?
Ground rules may
change
substantially.
What’s the best course
of action?
What provides best option for
employees?
What provides best community
option?
Employer’s Analyses of Options
• Base-line information
– Employer’s total healthcare cost experience
• What categories of costs are important to the employer?
• Employer’s expense trends
– Employer’s objectives for healthcare expenses
• What changes in the annual rate of healthcare costs must the
employer realize
– What gaps exist between the employer’s projections of future
healthcare expenses and objectives
Employer’s Analyses of Options
• Why do gaps exist?
– What factors are influencing the growth of the employer’s
healthcare expenses?
• Healthcare utilization
• Healthcare pricing
Employer’s Analyses of Options
• What management options exist to manage factors influencing
healthcare expenses?
• What portfolio of management options exist to management
the gap analyses?
– Cost to implement
– Time to realize benefits
– Amount of benefits projected to be realized
• How will strategies be managed to make mid-course
adjustments?
Questions?
Steve Witz
Director
Regenstrief Center for Healthcare Engineering
Purdue University
witz@purdue.edu
(765) 496-8303