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Health Care Strategy - the
Simplot Journey
Idaho State Employee Group Insurance and Benefits Committee- October 7, 2016
Aleasha Eberly – J.R. Simplot Company, Compensation and Benefits
Specialist
2 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Today‟s agenda
• Why Simplot made changes?
• How did we go about it?
• What has been the outcome of the change?
• What lessons did we learn?
• What else can we share with you from our journey?
3 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Why changes for Simplot?
• Grandfathered status could no longer be affordably maintained
• Non-grandfathered status would bring additional cost to the plan
• The Company desire to maintain a 70/30 cost balance was
unbalanced; achieving that balance within the existing plan design
would cause significant cost increase to employees
• Needed an approach that would lower the overall employee and
Simplot cost long-term
• Wanted to position ourselves for future health care industry changes
The time was right for fundamental change.
4 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
How did we go about it?
• Executive involvement
– Guiding principles
– Periodic updates
– Review of two alternative approaches
• Project team
– Included a cross-section of HR representatives
• Support from external consultant
– Bring us new thinking
– Industry
– Expertise in analysis
5 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What did we want to accomplish?
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Company
Why a high deductible health plan
(HDHP)? (aka „Account Based‟ ABHP or „Consumer Driven‟
CDHP)
• HDHP’s are becoming more common
• Affordable entry
• Consumption behavior is reevaluated
When designing the plan, consideration was given to
• Deductible, and
• OOP max
7 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Why go full replacement?
• Resistance to change
• Consistent with administrative strategy
• Consistent with industry trend
• Willingness to help employees with the change
8 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What did the design look like?
9 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What was employee reaction?
10 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What has been the impact of the change?
11 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What has been the impact of the change?
12 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What were our top seven learnings?
1) Communication – early, often and in a variety of ways
2) Strong vendor partnerships and new tools
3) Generous HSA contribution important to transition
4) Expect lots of noise from pharmacy
5) Aggregate family deductible is hard
6) Plan for the transition of your FSA to an HSA
7) Recognize that it is complex and will take time
13 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
What else can we share with
you from our journey?
14 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Appendix
15 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
The “cost squeeze” of Health Care
Reform
40% Excise Tax Cap Ceiling ($10,200/$27,500)
Minimum plan of 60% actuarial value and
affordable to employees
Manage cost trend
Improve workforce health
Reduce risk factors
Optimize vendor performance
Manage high-cost claim risk
Minimize non-core benefits
2014
2018
Plan design needs to
be high enough to
avoid penalties
Plan value needs to be
low enough to avoid
the excise tax
Plan costs need to be
minimized, while still
attracting and
retaining employees
16 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Reasons to revisit health care
strategy • Health care delivery and the employer role in providing coverage is
undergoing significant change — Nearly 50% of employers expect to
make significant or transformative change to their health care
strategy by 2018(1)
• All plan sponsors should evaluate implications of ACA
– Compliance requirements and potential pitfalls
– Strategic opportunities
– Short-term and long-term financial implications
• ACA is only part of the story
– Health care delivery system transformation is underway, but progress varies
widely in markets around the U.S.
– Public and private benefit exchanges are emerging
• Unrealized opportunity to engage employees in their health
(1) Source: 2013 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care
17 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Plan to change health and pharmacy plan design as
most important priority in the next 3 years
Anticipate adopting spousal surcharge, compared to
27% today
Structure employee contributions based on employees
taking specific actions
Currently use defined contribution strategies,
expected to double by 2018
#1 Priority is to evaluate health and pharmacy plan design strategy
Employers take aggressive action
80%
60%
40%
20%
Source: 2015 Towers Watson/NBGH Best Practices in Health Care Employer Survey
18 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Adoption of ABHP nears universal use
And full-replacement ABHP continues to grow
8.0% 10.0% 12.0% 14.0% 15.0% 20.0%
25.0% 26.0%
34.0%
43.0%
4.9% 5.4% 5.0% 5.4% 7.6%
10.7% 12.5% 15.4%
21.3% 23.9%
33%
39%
47% 51%
54% 53% 59%
66%
73%
82%
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Median ABHP enrollment Percentage with 100% enrollment
Percentage offer an ABHP
Note: Enrollment rates are based on companies that offer an ABHP in various years. 2006 is based on the 12th Annual Towers
Watson/National Business Group on Health survey; 2007 is based on the 13th annual survey, etc.
86% by 2016
Source: 2015 Towers Watson/NBGH Best Practices in Health Care Employer Survey
19 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Project approach: “Six views” to evaluate
strategy
Employer View
Simplot’s objectives?
Financial View
Simplot’s current and future projected
program costs? How costs are shared?
Workforce View
Current and future characteristics of
Simplot’s workforce?
Competitive Market View
How competitive are Simplot’s
programs? How is market changing?
Health View
Are there important health/risk
characteristics of Simplot’s population?
Employee View
What do employees know, need and
value?
Employee View
Financial View Employer View
Health View
Workforce View
Competitive
Market View
20 HEALTHIER TOGETHER © 2015 J.R. Simplot
Company
Introducing the new plan
• HR and Leader toolkits and meetings
• Home mailers and postcards
• Workplace posters, table tents, and brochures
• Emails
• Employee meetings
• FAQs
• Weekly blog (The Spill)
• webinars
• Internet microsite (no firewall)
• Intranet articles and resources (behind firewall)
• Vendor websites, materials, and meetings
