1. Trends and Issues in Health Care presented by Dan Kosmicki, Tom Hamernik, Daryl Obermeyer

2. Summarize the ongoing decisions of the Educators Health Alliance on matters that could have a future impact on EHA member participants. Share potential changes in healthcare options.

3. Topics to cover Nebraska History on Teacher Health Insurance Current National Trends Issues impacting 2009/2010 EHA pricing EHA recent trends and results Possible EHA changes

4. School Year Monthly Single Premium Monthly Family Premium Monthly Dental Premium % Change in Family Premium 67-68$9$21 68-69$9$2624% 69-70$9$260% 70-71$10$2912% 71-72$11$3210% 72-73$11$320% 73-74$11$320% 74-75$12$359% 75-76$19$5043% 76-77$23$6224% 77-78$26$6911% 78-79$31$8320% 79-80$31$830% 80-81$31$830%

5. School Year Monthly Single Premium Monthly Family Premium Monthly Dental Premium % Change in Family Premium 81-82$41$11134% 82-83$51$13723% 83-84$62$16923% 84-85$67$1807% 85-86$67$1800% 86-87$67$1800% 87-88$70$1916% 88-89$82$22317% 89-90$106$29030% 90-91$130$35623% 91-92$147$402included13% 92-93$160$438included9% 93-94$163$444included1% 94-95$172$471included6% 95-96$179$490included4%

6. School Year Monthly Single Premium Monthly Family Premium Monthly Dental Premium % Change in Family Premium 96-97$165$449included-8%$0 ded. 97-98$169$462included3%$0 ded. 98-99$186$509included10%$0 ded. 99-00$200$541included6%$0 ded. 00-01$217$588included9%$0 ded. 01-02$233$632included8%$100 ded 02-03$263$710$1712%$250 ded. 03-04$271$764$178%$250 ded. 04-05$301$850$1611%$250 ded. 05-06$330$931$1610%$250 ded. 06-07$361$1,018$169%$300 ded. 07-08$390$1,100$178%$300 ded. 08-09$448$1,209$2010%$300 ded.

7. Educators Health Alliance (EHA) board consists of 12 voting members compromised of:  3 NASB appointments  3 NCSA appointments,  6 NSEA appointments NASB has been a part of since 2001 NCSA has been a part of since 2000  Independent actuarial consultant – Kevin Dolsky

8. National Healthcare Trends in 2009

9. Cost-shifting arising from the growing large number of uninsureds, Costs associated with maintaining the current offering of Medicare and Medicaid services continue to increase and will account for nearly one in every four dollars spent by private payers in 2009. This trend is expected to continue in part because the federal government is underfunding public medical insurance programs and the number of uninsured's is increasing.

10. Wellness programs and initiatives to personalize the experiences of health plan members are on the rise. Employers will rely on prevention and disease management programs to temper costs in 2009 rather than shifting higher levels of cost-sharing onto workers. The number of privately insured continues to slowly decrease, which increases cost shifting, making it more difficult to control costs and increases competition among health plans as they try to keep cost growth in check without sacrificing member satisfaction.

11. In 2009, the downward trend is expected to level off, according to a new PricewaterhouseCoopers Health Research Institute (HRI) report, "Behind the Numbers: Medical Cost Trends for 2009," which is based on HRI analyses and a survey of more than 500 employers and provider-based health plans. Actual Medical costs are expected to grow 9.6 percent in 2009, compared with a 9.9 percent rate in 2008 and double-digit annual increases in prior years.

12. Issues impacting 2009/2010 EHA pricing

13. 2009-2010 EHA Pricing Survived the new underwriting rules which went into effect for 08-09: o Surcharge groups with low participation o 31 subgroups surcharged o 150+ subgroups receive discount Survived implementation of the new 4 Tier pricing structure which went into effect 08-09: ( comparison to single rate) o Single (1.00) o Single & child(ren) (1.85) o Employee & Spouse (2.10) o Employee, Spouse and Children (2.6965) Survived the open Enrollment period/opportunity for 08-09

14. 2009-2010 EHA Pricing Impact of the Federal government’s new 2010 Medicare & Medicaid claim reimbursement rates which will decrease the amount which doctors and hospitals can collected on fees from the federal programs, thus physicians and hospitals must increase rates charged to the insurance carriers and those self insured. Federal governments requires health insurance carriers to utilize new medical billing coding system, and have compliant computer systems.

15. 2009-2010 EHA Pricing EHA experienced better than expected financial results as of August 31, 2008. EHA’s Rate Stabilization Reserve (RSR) is currently above expectations. Targeted range is 10 – 20% of annual contributions. The RSR is available to help subsidize (or lower the immediate effect) of any large medical cost increase.

16. 2009-2010 EHA Pricing Year 2 of the 3 year phase-in for the new Family rate under the 4 Tier pricing structure. Family rate ultimately expected to be at 2.82 of the single rate. Transition phrase-in is funded by RSR. EHA added a $5,000 deductible plan option which is also HSA eligible. Such plan option is available on a subgroup-wide basis only.

17. Possible 2009-2010 EHA Pricing 1% increase associated with the removing of the underwriting rule related to contribution. 2-3% increase associated with Medicare & Medicaid cost reimbursement rate changes Typical 5% increase in member utilization Typical 4% increase in physician, hospital, laboratory costs

18. Possible 2009-2010 EHA Pricing 07-08 trended 5% better than expected 08-09 will hopefully trend better than expected RSR is above target level, thus funds available to stabilize future premium cost pressures

19. EHA’s Recent Trends and results

20. Some of EHA’s Key points from 07-08 $527,000,000 – claims submitted $300,000,000 - premiums collected Claims - 81% paid by Plan & 19% paid by Insureds (80/20 in prior four years) 75,000+ enrollees 35,000+ contracts 55% of enrollment have $300 deductible plan 39% of EHA enrollees are age 45 to 65

21. Some of EHA’s Key points 19% of claim payments associated with claims over $100K (238 members) 12 members with claims over $500k Prescription drug trends increased under 5% annually since 2005 ( more generics used) 8% trend increase in hospital and professional service. Timely claim service responsiveness & payment

22. EHA GROUPS BY DEDUCTIBLE

25. EHA’s 2007-2008 Claim Cost Changes CategoryCost per ServiceNumber of ServicesCost per Member Hospital Inpatient7.3%5.5%13.2% Hospital Outpatient0.8%1.6%2.4% Physician3.8%5.1%9.0% Drug-4.2%5.2%0.8%

26. 07-08 Drugs $42 million 890,000 prescriptions $47 - Average prescription cost 12.7 - Average prescriptions per member $604 - Average drug cost per member $592 - Average drug cost per member to EHA 25% of drug costs from 14 drugs 64% in number of prescriptions were generic 23% of costs were generic First quarter of 2007 - offered free generic drugs

27. TOTAL TREND

28. Possible EHA Changes EHA plan have its own field representative (Plan Advocate) to answer marketing types of questions New look to EHA web site High deductible /Healthcare Savings Accounts Disease Management program (currently Cardiac and diabetic focus) Wellness plans (revisit opportunities)

29. Thanks to the following for contributing information to this presentation Blue Cross Blue Shield of Nebraska Actuarial & Health Care Solutions, LLC Nebraska Association of School Boards Nebraska State Education Association Fellow EHA Board members