System-Wide Strategies forSystem-Wide Strategies forControlling Cost in the Private SectorControlling Cost in the Private Sector

Deborah CholletDeborah CholletSenior Fellow, Mathematica Policy ResearchSenior Fellow, Mathematica Policy Research

andandThe Robert Wood Johnson Foundation’sThe Robert Wood Johnson Foundation’s

State Coverage Initiatives ProgramState Coverage Initiatives Program

ILLINOIS HEALTH FORUMILLINOIS HEALTH FORUMChicago, IllinoisChicago, Illinois

December 7, 2005December 7, 2005

Principal methods to control cost

Cost sharing to reduce utilizationCost sharing to reduce utilization

High deductible health plansHigh deductible health plans

Rx formularies and tiered copaymentsRx formularies and tiered copayments

Cost-quality connection: tiered cost sharingCost-quality connection: tiered cost sharing

Information technologyInformation technology

Disease management programsDisease management programs

Managed care/utilization managementManaged care/utilization management

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Average Annual Deductiblefor Single Coverage, 2000 and 2005

$239

$602

$44 $71

$204

$323

$92

$220

$0

$100

$200

$300

$400

$500

$600

$700

Conventional HMO PPO POS

2000

2005

Source: Kaiser-HRET Survey of Employer-Sponsored Health Benefits, 2000-2005.3

Percent of Firms that Offer Health Plan with a Deductible of $1,000/$2,000+

5%

20%

5%

20%

5%

20%17%

33%

0%

5%

10%

15%

20%

25%

30%

35%

Small firms (3-199)

Mid-size firms(200-999)

Large firms(1000-4999)

Jumbo firms(5000+)

2003

2005

Source: Kaiser-HRET Survey of Employer-Sponsored Health Benefits, 2003-2005.Note: High-deductible plans had a single deductible of at least $1,000 and a family deductible of at least $2,000 in 2005.4

Covering High Deductibles:HSAs and HRAs

20.0%

1.9% 2.3%3.9%

0.0%

5.0%

10.0%

15.0%

20.0%

Firm offers ahigh-deductible

plan (HDP)

Offers an HDPwith HRA

Offers an HDPwith HSA

Offers either

Source: Kaiser-HRET Survey of Employer-Sponsored Health Benefits, 2003-2005.Note: High-deductible plans had a single deductible of at least $1,000 and a family deductible of at least $2,000 in 2005. HSAs are Health Savings Accounts; HSAs are Health Reimbursement Accounts.5

Average Copayments forPrescription Drugs, 2000 and 2005

$7 $10 $13

$22$17

$35

$74

$0

$20

$40

$60

$80

Generic Preferred Nonpreferred Fourth Tier

2000

2005

Source: Kaiser-HRET Survey of Employer-Sponsored Health Benefits, 2000-2005.6

Cost-Quality Connection

Preferred provider networksPreferred provider networks

Tiered coinsurance for high-quality hospitalsTiered coinsurance for high-quality hospitals

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Information technology

Consumer technologyConsumer technology Web site information: preventive care, chronic Web site information: preventive care, chronic

care management, relative quality and costcare management, relative quality and cost Nurse hotlinesNurse hotlines Email consultationsEmail consultations

Provider technologyProvider technology Electronic medical recordsElectronic medical records Pharmacy software/drug interactionsPharmacy software/drug interactions

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Disease Management

56 percent of all covered workers have a plan with 56 percent of all covered workers have a plan with disease management (DM) disease management (DM)

Diagnosis triggers:Diagnosis triggers: Diabetes – 98% of workers with DMDiabetes – 98% of workers with DM Asthma – 86%Asthma – 86% Hypertension – 82%Hypertension – 82% High cholesterol – 62%High cholesterol – 62%

Source: Kaiser-HRET Survey of Employer-Sponsored Health Benefits, 2005.Note: Estimates are for firms with 200 employees or more.

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Utilization management

Health maintenance organizationsHealth maintenance organizations

Pre-admission certificationPre-admission certification Inpatient – 75%Inpatient – 75% Outpatient surgery – 55%Outpatient surgery – 55%

Case management for large claims – 81%Case management for large claims – 81%

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Agenda for Health Care Cost Control

Inefficient/ineffective careInefficient/ineffective care Inappropriate care providedInappropriate care provided Appropriate care not providedAppropriate care not provided Medical errorsMedical errors

Monopoly providersMonopoly providers

Population health statusPopulation health status

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