Teachers Health Trust

Why the Trust?For Teachers by Teachers• WE ARE A NON-PROFIT HEALTH PLAN GOVERNED BY

TEACHERS FOR TEACHERS

• The Trust is governed by a Board of Trustees and all of its members are active teachers

• The Appeals Committee members that review claim and eligibility appeals are all active teachers

• All benefit changes and premium adjustments must be approved by the Board of Trustees

Why the Trust?Excellence in Service

• All operational services and claims payments are provided in Las Vegas by Nevada residents

• Call center and walk-in customer service - all located in Las Vegas and staffed by Nevada residents

• Contracts with outside vendors are continually reviewed for pricing and service in order to provide the best products at competitive pricing

Why the Trust?Reduced Administrative Cost for Operations

• Cost of operations (administrative expenses) is 5% of total revenues• Less than 1/3 the amount spent by for-profit insurance

companies• Nationally, for-profit insurance companies average 15% for

administrative expenses• In Nevada, for-profit insurance companies incur state and

federal taxes in excess of 5.5%, exclusive of federal income taxes

• The Trust, as a non-profit organization, is exempt from most taxes

• 95% of revenues are used to pay teacher’s health care claims

Financial ViabilityThe Real Facts • The Teachers Health Trust is experiencing cash flow issues but is

still FINANCIALLY STRONG • As of March 1, 2013, the Trust has $27.7M in investments

• AAA rated corporate and municipal bonds and investment grade mutual funds, all readily convertible into cash

• Annual investment income is $1.4M

• The Trust maintains a $5M revolving line of credit with Bank of Nevada that is paid in full each month • Interest paid is less than income earned on investments, allowing

the Trust to maximize its investment income which provides more revenue to meet operational costs

• The Trust does not have any other debts or obligations to banks or other financial institutions • The Trust owns its own building, which is fully paid for

Contributions and Premiums The Real Facts• Deficit spending for first eight months of this fiscal year is $225K per

month

• Proposed premium increase would have provided $500K per month in additional revenue since September 1, 2012

• Maximum rate of $8 per insured person per paycheck

• The School District has not increased its contribution to the Trust for teachers’ health care benefits since July 1, 2008

• Dependent premiums have not increased since 2002

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

20%40%60%80%

100%120%140%160%180%200%

109%

172%

56%

113%

180%

24% 38%

Health Insurance PremiumsWorkers' Contribution to PremiumsWorkers' EarningsOverall Inflation

Contributions and Premiums The Real Facts

• Nationally, from 2008 to 2012, all healthcare costs have increased by 14.6%*

• Nationally, the average premium for family healthcare coverage has increased by 24.2% during this period• Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor

Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

• Source: Centers for Medicare & Medicaid Services*

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums,

Inflation, and Workers’ Earnings, 1999-2012

57%

14%11%

29%47%

Cost Savings

• Other cost-savings measures • Created own proprietary provider network, saving hundreds

of thousands of dollars• Reducing staff through attrition (retirements and family

moves)

• During this new fiscal year, the Trust has been able to obtain significant enhancements with its health care provider contracts which have significantly reduced claim costs by more than $5M• Laboratory • Prescription Drugs

Prescription Drug Program • Effective September 1, 2012, the Trust signed a contract with CVS Caremark for

its prescription drug program

• Goal was to reduce prescription drug costs by negotiating deeper discounts and to encourage more efficient use of prescription drugs

• The Trust has encountered service problems with CVS which are being

aggressively addressed at this time,• Most of the problems are transitional when the program was moved from Medco

to CVS• Numerous meetings have been held with CVS management and the Trust is closely

monitoring the progress towards resolving these problems • Expect to have problems resolved in no more than 90 days

• BOTTOM LINE: Prescription drug costs have increased dramatically with no end in sight and the School District’s contributions have not increased since July 1, 2008

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

20%40%60%80%

100%120%140%160%180%200%

109%

172%

56%

113%

180%

24% 38%

Health Insurance PremiumsWorkers' Contribution to PremiumsWorkers' EarningsOverall Inflation

Contributions and Premiums The Real Facts

• Nationally, from 2008 to 2012, all healthcare costs have increased by 14.6%*

• Nationally, the average premium for family healthcare coverage has increased by 24.2% during this period• Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor

Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

• Source: Centers for Medicare & Medicaid Services*

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums,

Inflation, and Workers’ Earnings, 1999-2012

57%

14%11%

29%47%

External Review

• The Trust’s independent financial and claims auditors have found claims are consistently paid in a timely and accurate manner, all within industry standards

• The Trust operates efficiently and its benefits are superior to many of the other local health plans

• Additionally, I periodically review the operations of the Trust and discuss my findings with Mr. Alpert

Leadership of the Trust• Peter Alpert Trust CEO

• The Chief Executive officer of an organization with revenues in excess of $140M that employs 70 people

• Since Mr. Alpert, who is a CPA and attorney, assumed responsibility for the executive leadership of the Trust in 2000, he has reduced administrative expenses from nearly 10% to 5%, resulting in annual savings to the Trust in excess of $6M

• Mr. Alpert has an extensive and viable employment history that has proven to be a tremendous asset and the driving force to the success of the Trust

Leadership of the Trust• Peter Alpert the Attorney

• He is personally responsible for all subrogation activates whereby the Trust is entitled to reimbursement for claims caused by negligent third parties, such as automobile accidents • This function is typically outsourced to specialty law firms at

significant expense • A health plan the size of the Trust could expect to pay an annual fee

for this service of between $200K and $300K• Mr. Alpert has recovered reimbursements of more than $6M for the

Trust and these funds are used to pay teachers’ health care claims

• Mr. Alpert also provides all the internal legal services for the Trust at no additional fee, which other organizations outsource at high hourly rates• A health plan the size of the Trust would expect to pay between

$100K and $250K annually for these services

Additional Benefits of the Trust• Health Festival

• Annual event consist of 70-80 health related vendors• Free flu vaccinations, cholesterol screenings, food, fun & festivities

• WellFit for Life• 12-week cardiovascular program• Designed to help participants engage in more active life styles

• Best Weigh To Go• Component of the WellFit for Life program• Spin of the popular T.V. show The Biggest Loser

• Breast & Prostate Cancer Awareness Campaigns• Free Breast & Prostate exams, October, November & December• Free mammograms screenings year round

• Safely Taking Off Pounds (S.T.O.P.)• Medical Weight Management program

• Lifestyle Decision Program• On-line program focusing on helping our participants to self-manage chronic conditions

• Diabetes Day in May• Annual Diabetic Health Fair

• Back-to-School Immunization Workshop, annual $600 Routine Care Benefit, and Health Improvement Benefit

Not Just an Insurance Company

• Each member is important to us

• Our members are more than just a number they are human beings

• Positively impact people’s lives

• Trust diligence is saving lives