Product Innovation (Healthcare Section)

Healthcare Product Innovation International Association of Black Actuaries Annual Meeting, 2002 Moderator: Stafford L. Thompson, Jr. FSA Presenters: Becki M. Hall, ASA, MAAA Claudia Ellis Discussion Points Current Healthcare Model Concerns with Current Model Focus in New Product Trends New Product Innovations Current Healthcare Model Health Maintenance Organization (HMO) Point of Service (POS) Open Access Preferred Provider Organization (PPO) Indemnity Concerns with Current Model Healthcare premium increases in the double digits Employees want more choice “Managed Care” does not seem to be effective Focus in New Product Trends Cost Cost shifting from employer to employee Employee have more control over managing medical cost Employers do not want to experience double digit premium increases Choice Employee is in control of choosing plans and providers Employee is in control of managing health Focus in New Product Trends Administration Concise information for employers Reduction in administration cost driven by technology Disease Management Focus on chronic conditions Current programs center around diabetes, heart disease, and asthma Believed to be the driver of cost management for the future New Product Innovations Tiered Co-payment Plans Defined Contribution Strategies Cashing Out Electronic Benefit Exchanges Self-Directed Health Plans Tiered Co-payment Plans Designed to allow access to care while managing cost Hospital and Physician Plans Only works in areas where sufficient competition exist Quality versus Cost in the tiering process Defined Contribution Strategies Cashing Out Employee receives a cash voucher Employee purchases insurance in the individual market Controversial approach Defined Contribution Strategies Electronic Benefit Exchanges Intermediary between employer and health plans Intermediary provides a choice of health plans for employees Intermediary administers enrollment and risk-adjusts payments to health plans Examples: Sageo, Lumenos Defined Contribution Strategies Self-Directed Health Plans (SDHP) “Consumer driven” Key Components: Medical spending/savings account Insurance coverage Access to information Defined Contribution Strategies SDHP Recent Developments Employer groups are beginning to sign on to the MSA hybrid concept Over a dozen carriers offering such products with MSA components Internal Revenue Service issued recent guidance: MSA can be carried over The money funded by employer to employee is not taxed and is not to be a sal