Purchasers

10-14-2010MGMT E 5520

Brenna Baccaro

Healthcare System Stakeholders Presentation

Who are They?Employers who buy health insurance

Most large companies in the U.S. provide health insurance as an employee benefit.

Employer-Sponsored Insurance Fluctuations

• Parallel to Economic Conditions

Percent of Workers Offered Employer-Sponsored Insurance, 1995, 2001, and 2005

Source: Kaiser Family Foundation calculations based on data from the Current Population Survey, 1995, 2001, 2005, conducted by the Bureau of Labor Statistics.

Purchaser Variation• Provided in all industries, more prevalent in some. • E.g. Compare Agriculture with Manufacturing:Percent of Workers Offered Employer-Sponsored Insurance, by Industry

Incentives for All Purchasers

Win-Win Incentives for Employers– Attracts and retains workers– Keeps workers healthy= productivity ^

In general, bigger groups = lower rates, so health insurance is more affordable through employer

Provides consumers with better “protections” from insurance industry = more likely to be covered.

Purchasers Seek Out PBMs• Pharmacy Benefit Management– Provide prescription drug benefits

• Provide purchasers (and consumers) more affordable prices for prescription drugs– Retail pharmacies– Rebates from manufacturers– Mail service pharmacies– Approve biogeneric production (stop brand

monopolies)

http://www.consumeraffairs.com/news04/2007/02/images/supplements.jpg

PBMs

• Administer to ~ 200 million U.S. residents (68% of population)

• Almost all covered workers in employer-sponsored health plans receive prescription drug benefits.

• …Too good to be true?

http://www.consumeraffairs.com/news04/2007/02/images/supplements.jpg

Purchasers Demand Transparency• Do PBMs provide real value or just serve as

middlemen?– Do they really save money?

• How do we know PBMs are acting in purchaser’s /consumer’s best interests?

• Will all necessary medications be available if costs are cut?– Many lawsuits• Medco- switching / destroying prescriptions• Caremark- reselling returned drugs in Florida

When It Doesn’t Work• Low wage workers are least likely receive insurance offers

Percent of Workers Offered Employer-Sponsored Insurance, by Worker Earnings, Compared Across Years

Source: Kaiser Family Foundation

http://healthyliving.ocregister.com/files/2009/04/healthinsurance_h.jpg

Problems with Small Business

Purchasers & Tragedy of the Commons

• Even with attempts to problem-solve, health care still costs too much

• In general, we treat government-provided healthcare as “free”, and overuse it.

= depleted funds

Purchasers & Tragedy of the Commons

• Employer-based insurance may not be a good thing– If market shifts further away from individuals– So then what happens if we lose our job?– employer-provided plans have a tax-free status

• Great, but often overly generous coverage. • Depleting resources unnecessarily

Purchaser Problem-Solving

• Often keep costs down by shifting costs to employers (co-pays, deductibles)

• Reduce coverage overall– Good for purchasers, bad for consumers?

• Expand your pool of employees – join another group!

Changes in Government: Solutions

• Health reform law likely to affect purchasers– Mandates + subsidies for employers– Small businesses who offer health insurance can

get tax benefits– State-based health insurance exchanges• Hopes to help small business purchasers / individuals

Key Web Sources• Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private

Businesses, September 2010• http://www.kff.org/insurance/snapshot/chcm091610oth.cfm• • Kaiser Family Foundation Employer Health Benefits 2010 Annual Survey• http://ehbs.kff.org/• • Employer-Sponsored Health Insurance; Trends in Cost and Access• http://www.ahrq.gov/research/empspria/empspria.htm• • Assessing the Value of Pharmacy Benefit Management Companies through

Accreditation• https://www.prescriptionsolutions.com/RxSolWeb/mvc/staticContent.do?pageUrl=/rxso

l/chp/rxsolutions_com/consumer/about_us/press_release/20071211_assessing_the_value_of_pharmacy_benefit_management_companies_through_accreditation.html

• • Health care is heading toward a tragedy of the commons. May 22, 2009

Health care is heading toward a tragedy of the commons - Business First of Louisville

+ MLA Bibliography• Employer Health Benefits 2010 Annual Survey - Kaiser Family Foundation. Web. 14 Oct. 2010.

<http://ehbs.kff.org/>.• "Employer-Sponsored Health Insurance: Trends in Cost and Access." Agency for Healthcare Research

and Quality (AHRQ) Home. Web. 14 Oct. 2010. <http://www.ahrq.gov/research/empspria/empspria.htm>.

• "Health Care Is Heading toward a Tragedy of the Commons - Business First of Louisville." Louisville News | Business First of Louisville. Web. 14 Oct. 2010. <http://louisville.bizjournals.com/louisville/stories/2009/05/25/editorial3.html?page=2#ixzz12Koh89RI>.

• Research, By Doing. "Buyers Guide to Health Insurance." Small Business Advice from the Champions of Small Business. Web. 14 Oct. 2010. <http://www.allbusiness.com/health-care/health-care-regulation-policy-health/11790912-1.html>.

• "Snapshots: Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September 2010 - Kaiser Family Foundation." The Henry J. Kaiser Family Foundation - Health Policy, Media Resources, Public Health Education & South Africa - Kaiser Family Foundation. Web. 14 Oct. 2010. <http://www.kff.org/insurance/snapshot/chcm091610oth.cfm>.

• "TPC Tax Topics | Health Insurance Tax Incentives." Tax Policy Center Home. Web. 14 Oct. 2010. <http://www.taxpolicycenter.org/taxtopics/healthinsurance.cfm>.

• Web. 14 Oct. 2010. <https://www.prescriptionsolutions.com/RxSolWeb/mvc/staticContent.do?pageUrl=/rxsol/chp/rxsolutions_com/consumer/about_us/press_release/20071211_assessing_the_value_of_pharmacy_benefit_management_companies_through_accreditation.html>.