Results of Perception Analyzer Research Project
Results of Perception Analyzer Research Project
Report to the State Teachers Retirement Board
Special Health Care Committee
Background
- Presentation and research format involves several staff and many members.
- Perception Analyzer Research reflects the perfect communications scenario.
- Visual and verbal presentation
- Expert presenters
- Virtually one-on-one dialogue
- Audience’s undivided attention
- Results are directional.
Why Are You Here Today?
(Directed at participants in Project)
- The Retirement Board wants to be data driven in its decision-making.
- The board wants to be provided with data regarding member reaction and receptivity when making decisions about health care.
- STRS Ohio spends $1.2 million per day to cover health care costs for program enrollees. Prescription drug costs account for about 40 – 45% of this amount.
- Today, we want to test some ideas with you that would impact enrollees in STRS Ohio’s Health Care Program.
Participant Demographics
- 47 benefit recipients, age 65 or older.
- 58 benefit recipients, younger than age 65. (Total of both lines: 104.)
- 9 out of 10 had 25 or more years of service.
- About half of participants had both themselves and a spouse enrolled in the health care program.
- 9 out of 10 are enrolled in Plus Plan.
- 9 out of 10 stated their overall health was “excellent” or “good”; consistent with prescription drug use.
- Years since retirement: one-third, 1 – 5 years; one-third, 6 – 10 years; one-third, more than 10 years.
STRS
- For the most part, STRS Ohio’s health care plans are competitive to the marketplace for retirees with 25+ years; however, they are much less competitive for retirees with less service and for non-contributing spouses.
Two Basic Approaches
Option A
- Health care cost trends are passed on equally to everyone enrolled in the program through premium increases. Competitive position in the marketplace is unchanged.
OR
Option B
- To become more competitive in the marketplace, some services are enhanced and premiums increase more slowly by requiring individuals who use health care services to pay more through increased drug copayments or increased maximum out-of-pocket costs (i.e., plan design changes).
More than 93%of Health Care Program Enrollees Are in Either a Plus Plan or a Basic Plan
- Plus Plan (
o Higher premiums; lower out-of-pocket expenses
- Basic Plan (
o Lower premiums; higher out-of-pocket expenses
Option A
No Changes to Plus or Basic Plans
Preliminary 2007 Enrollee Monthly Premiums
(Data taken from charts; BR = Benefit Recipient)
The three figures after each item below represent: 2006, 2007, Amount of increase.
Plus Plan (Medical Mutual)
Non-Medicare
30+ Year BR: $148; $169; $21
15-Year BR: $370; $422; $52
Spouse: $501; $652; $151
Medicare A & B
30+ Year BR: $58; $69; $11
15-Year BR: $145; $174; $29
Spouse: $242; $313; $71
Basic Plan (Medical Mutual)
30+ Year BR: $89; $94; $5
15-Year BR: $220; $235; $15
Spouse: $295; $336; $41
Medicare A & B
30+ Year BR: $40; $40; $0
15-Year BR: $74; $84; $10
Spouse: $123; $152; $29
Option B
Medical Coverage Changes
Basic Plan
· Cover preventive services (e.g., annual physicals and mammograms) at 100%. No deductibles or coinsurance.
Medical Coverage Changes
Plus and Basic Plans
· Increase annual outpatient alcoholism treatment limit to $1,000 from $550.
· Expand coverage for nutritional counseling benefit to include single conditions that can be impacted by changes in diet (e.g., obesity, diabetes, high blood pressure).
Prescription Drug Program Changes
Plus and Basic Plans
- Increase copayments.
o Increase retail Tier 2 copayments to $30 from $25 to increase generic incentive (e.g., Lipitor, Fosamax and Plavix).
Current: $10/$25/$50 Proposed: $10/$30/$50
o Raise mail-service copayments to 2.5 times retail from the current 2.0 times retail.
Current: $20/$50/$100 Proposed: $25/$75/$125
Prescription Drug Program Changes
Plus Plan
- Increase the Plus Plan annual out-of-pocket maximum for prescription drugs to $2,000 from $1,500 per enrollee.
(Once the enrollee has paid a total of $2,000 out-of-pocket in retail and mail-service copayments, that individual pays nothing for covered drugs for the remainder of the year.)
Prescription Drug Program Changes
Basic Plan
- Increase the annual prescription drug benefit for the Basic Plan to $5,000 from $3,100 per enrollee; make generics exempt from the benefit maximum.
(The enrollee pays 100% of the cost of prescriptions for the remainder of the year once STRS Ohio has paid $5,000 in retail and mail prescription drug costs; however, the enrollee would continue to pay just the copayment for generic drugs, even if the $5,000 maximum was reached.)
Prescription Drug Program Changes
Plus and Basic Plans
- Encourage the use of generic drugs by increasing the out-of-pocket amount an enrollee pays for a brand-name drug if a generic is available.
Retail Example:
Cost of brand-name drug $121.20
Cost of generic drug -$46.52
Difference $74.68
Generic copayment +$10.00
Enrollee pays $84.68
Brand-name drug, Prilosec (20 mg); you pay: $84.68
Generic drug, Omeprazole (20 mg.); you pay: $10.00
Prescription Drug Program Changes
Plus and Basic Plans
- Move certain classes of drugs – some of which can now be purchased over-the-counter – to Tier 3 ($50 retail/$125 mail).
o Proton pump inhibitors (e.g., Nexium)
o Non-sedating antihistamines (e.g., Claritin)
o Erectile dysfunction (e.g., Viagra)
Retail Copayments: $30 to $50
Mail-Service Copayments: $75 to $125
Recap of Medical Coverage Changes
- Cover preventive services at 100% (Basic Plan only).
- Increase annual outpatient alcoholism treatment limit to $1,000.
- Expand coverage for nutritional counseling to include single conditions.
Recap of Prescription Drug Changes
- Increase retail Tier 2 copayments by $5.
- Raise mail-service copayments ($20/$50/$100 to $25/$75/$125).
- Increase the annual prescription drug benefit for the Basic Plan by $1,900 per enrollee; make generics exempt from the benefit maximum.
- Increase the out-of-pocket amount an enrollee pays for a brand-name drug if a generic is available.
- Move certain classes of drugs to Tier 3.
Option A Impact
No Changes to PLUS PLAN Preliminary 2007 Enrollee Monthly Premiums
The three figures after each item below represent: 2006, 2007, Amount of increase.
Plus Plan (Medical Mutual)
Non-Medicare
30+-Year BR: $148; $169; $21
15-Year BR: $370; $422; $52
Spouse: $501; $652; $151
Medicare A & B
30+-Year BR: $58; $69; $11
15-Year BR: $145; $174; $29
Spouse: $242; $313; $71
Option B Impact
Proposed PLUS PLAN Changes Made
Preliminary 2007 Enrollee Monthly Premiums
Plus Plan (Medical Mutual)
Non-Medicare
30+-Year BR: $148; $164; $16
15-Year BR: $370; $411; $41
Spouse: $501; $633; $132
Medicare A & B
30+-Year BR: $58; $64; $6
15-Year BR: $145; $161; $16
Spouse: $242; $290; $48
Option A Impact
No Changes to BASIC PLAN
Preliminary 2007 Enrollee Monthly Premiums
Basic Plan (Medical Mutual)
Non-Medicare
30+-Year BR: $89; $94; $5
15-Year BR: $220; $235; $15
Spouse: $295; $336; $41
Medicare A & B
30+-Year BR: $40; $40; $0
15-Year BR: $74; $84; $10
Spouse: $123; $152; $29
Option B Impact
Proposed BASIC PLAN Changes Made
Preliminary 2007 Enrollee Monthly Premiums
Basic Plan (Medical Mutual)
Non-Medicare
30+-Year BR: $89; $94; $5
15-Year BR: $220; $236; $16
Spouse: $295; $338; $43
Medicare A & B
30+-Year BR: $40; $40; $0
15-Year BR: $74; $79; $5
Spouse: $123; $142; $19
Which option should the STRS
First Vote
Option A 59%
(64% NM, $2% M)
Option B 41%
(36% NM, 48% M)
Reasons members cited to choose Option A:
- “Not that much difference in premiums so Option A better.”
- “Don’t know what drugs are in what tiers with Option B.”
- “Would be ‘penalized’ for using a brand-name drug with Option B.”
- “Would spend more for drugs than save in premiums with Option B.”
- “Option B would unfairly penalize sicker people.”
Reasons members cited to choose Option B:
- “I don’t want to pay for someone else’s drugs.”
- Option B would cost less.”
- “Some preventive services at no cost with Option B.”
If Option B is adopted, would you switch to the Basic Plan?
Yes: 20%
No: 80%
One out of five would switch to the Basic Plan from the Plus Plan.
Current Status of the STRS
- Changes in premium subsidies, plan design and enrollment eligibility have been implemented to extend the life of the health care fund.
- A dedicated revenue stream for the health care fund is being pursued to enable STRS Ohio to offer health care coverage at competitive rates well into the future.
- However, market forces are impacting the program and contributing to adverse risk selection.
STRS
- In the health insurance business, premiums are based on age and also often based on underwriting or preexisting conditions.
o Younger and healthier individuals usually pay less.
- STRS Ohio bases its premiums on years of service credit; there is no underwriting and no preexisting condition limitations.
Adverse Risk Selection Is a Problem for STRS
- An adverse risk individual is a person whose medical cost is greater than the insured pool average cost.
- When a disproportionate share of these individuals are in a plan, it has a compounding effect on the medical cost trend.
- Premiums have to increase even more to cover the additional costs.
- Eventually the cost is too high for everyone.
A “Sicker” Risk Pool Is Resulting in Less Competitive Premiums
- Currently, healthy enrollees with low health care costs and younger enrollees are leaving the program for less expensive plans, which is raising the overall premiums for everyone.
- Enrollees who previously “opted out,” are enrolling in the STRS Ohio program when they become sick, which is also contributing to higher overall premiums.
Plan Design Changes to the Plus and Basic Plans Can Help STRS
- Attract and retain healthy enrollees by enhancing preventive coverage benefits.
- Reduce premium increases through changes to prescription drug coverage so STRS Ohio’s health care plans are more competitive in the marketplace.
Premium Projections
(no plan design changes)
Plus Plan (Medical Mutual)
Years represented below: 2006; 2007; 2010; 2015
Non-Medicare
30+-Year BR: $148; $169; $230; $360
Spouse: $501; $652; $870; $1,400
Medicare A & B
30+-Year BR: $58; $69; $95; $150
Spouse: $242; $313; $405; $650
The effects of adverse selection – if not controlled – will have a compounding effect on these premiums.
Which option should the STRS
First Vote Second Vote
Option A 59% 52%
(64% NM, 52% M) (64% NM, 37% M)
Option B 41% 48%
(36% NM; 48% M) (36% NM; 63% M)
[The above numbers are as shown on the chart.]
Reasons members cited to choose Option A:
- “Not that much difference in premiums so Option A better.”
- “Don’t know what drugs are in what tiers with Option B.”
- “Would be ‘penalized’ for using a brand-name drug with Option B.”
- “Would spend more for drugs than save in premiums with Option B.”
- “Option B would unfairly penalize sicker people.”
Reasons members cited to choose Option B:
- “I don’t want to pay for someone else’s drugs.”
- “Option B would cost less.”
- “Some preventative services at no cost with Option B.”
- “Better for the health care program.”
Direction
- A majority of the members still want Option A.
o Like what they know/have experience with.
o Confusion/uncertainty regarding prescription drugs (e.g., moving drugs to different tiers).
o Like knowing what their costs will be in advance (premium).
o Uncomfortable with the “subjectivity” that goes into decisions about tiers.
o Some question equivalency of generics vs. brand-names.
- Can’t do enough communication to overcome these issues.
- Some members are beginning to see the Basic Plan as a viable option versus leaving the STRS Ohio Health Care Program, but some proposed prescription drug changes make the Basic Plan less attractive.
- Members understand adverse selection; message resonates well.
- Support efforts to solve health care problem.
posted by Kathie Bracy at 1:03 PM
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