How Virginia Employers are Advancing Healthcare Introductory Comments June 5, 2014

2014 ACA Wellness Considerations Section 2705(j) of the Public Health Service Act as amended by the ACA, raises the allowable value of wellness incentives provided through employment based group health coverage from 20 to 30% of the cost of coverage in Could go up to 50% at the discretion of the secretaries of DOL, HHS and Treasury.

Source:CBO and Joint Committee on Taxation, 2010 Projection ACA Estimated Gains Through 2019: $64.4B Amounts in Billions

Affordable Care Act and Workplace Health Provisions intended to encourage workplace health promotion and prevention as a means to reduce the burden of chronic, improve health and slow the growth of health care costs. One provision is to gather relevant information from employers who provide employees with access to wellness programs – Effectiveness of wellness programs – Impact of wellness programs on access to care and affordability of care on participants and non-participants – Impact of premium based and cost sharing incentives on participant behavior – Effectiveness of different types of rewards

Rand Survey on Wellness Programs Approximately half of US employers with 50+ employees offer wellness promotion initiatives 46% of employees in organizations with wellness programs undergo a clinical screening or HRA and less than 21% participate in interventions 60% of those surveyed said their wellness programs reduced costs and 4/5 said they decreased absenteeism and increased productivity Source:

Rand Survey on Wellness Programs Of those that offer wellness programs, 69% use an incentive: most common are financial for HRA and lifestyle management programs (30%). Also cost sharing for participation or health goals & employer contribution to Health Reimbursement accounts used. Only 2% frame incentives as penalties and 11% frame as both penalties and rewards. Average maximum incentive was less than 10% of total coverage Source:

2012 Rand Study Results Source:

Impact on Monthly Costs Source:

Participation vs Results Based Source:

Case Study: J&J More than 8,000 employees have participated in one or more programs Programs: UPLIV (online stress management), Human Performance Institute, digital health coaching, Successes include: – Smoking Cessation: 42% participating quit in 6 months – Weight management: 55% had success – Stress Management: 58% saw improvement in 6 months Cost reductions of $400 per employee over 2007 baseline data with improved productivity.

Not all are successful...

Benefit Redesign

2012 Rand Survey: CDHPs 59 of large employers offer one such plan and 17% of Americans with employer sponsored plans are enrolled in a CDHP Plans with a deductible of at least $1,000 per person and an associated savings account, saw a reduction in spending between 17 and 21% Patients used less care and when they did access care, they used less care. For example, they used 4.9% less name brand drugs, 6.5% less visits to specialists and 17.7% fewer hospital visits. There was a reduction in preventative care Estimate by Rand: If CDHP enrollment was increased to 50%, the estimated savings is $57B in costs Source:

Other CDHP Facts Kaiser Family Foundation in August 2013 found that the average cost of a family coverage through CDHP was nearly $1,500 less per employee than PPO coverage. National Business Group on Health survey in 2014 that 22% of employers will only offer CDHP plans which is triple the number from Source: