If you read the new Horizon health plan pooling study for Wisconsin schools you know it proposes a “relatively simple solution” that could potentially save districts money - by placing Wisconsin school employees into one big state plan. The new proposed pool would be modeled off the current state employee pool with a uniform benefit plan design which would limit plan offerings to a High Deductible Health Plan (HDHP) that is paired with a partially funded HSA. According to the Horizon health play study, collectively statewide public school districts could save a combined $258 million in premiums if every district enrolled in the new pool.
But as we all know from our struggles with health plan design and spending, the suggested savings and one-size-fits-all plan does not fit every district. What the report fails to address with this solution is what actually is driving the costs of health benefits and what the differences are in coverage.
Measures of success. The main goal of the proposed solution is to save money which is great, if saving money is your only measure of success. But when we look at the lowest cost plans, we look at several key performance indicators (KPIs):
Using these as guiding principles, district health plans tend to not only have sustained savings, they have improved their population's health, changed behavior and increased overall employee satisfaction.
Regional cost drivers. Significant opportunity exists to understand geographical adjusters driven by the different health systems the districts use, and the different financial reimbursement models the providers work with. Providers that consistently charge over 300% Medicare base charges for fees are incentivized to have more claims. Providers with a “capitation model” of reimbursement are incentivized to help improve population health and reduce health plan costs for both plan sponsors and members. When we look at regions where we see some of the highest charges for service, pooling doesn’t solve this problem and is often exacerbated by the lack of visibility into what’s driving health plan spending. Wisconsin School Districts experienced this once before when most districts were with one carrier in a pooled arrangement. Lack of transparency, combined with a lack of engagement and accountability, actually leads to increased health plan costs collectively.
Plan variation. The proposed savings detailed in the study would come from plan members migrating to a high deductible health plan (HDHP). While that can be a cost-saving option, there are other plan options that can generate savings deeper than just the deductible and out of pocket spend. This study doesn’t address significant plan variances or the ability to compare and contrast the coverage details for procedures, limitations, formulary differences and exclusions. The savings stated also omits the fact that the current statewide plan which was used to benchmark savings has an underwriting process that consistently applies a 30% rate load, which would offset the suggested savings from switching to the suggested plan.
Retirees. The report also does not address how pooling would accommodate retirees or the impact on districts that have a lot of retirees either on the health plan or other post-employment plans (OPEB). The Local Annuitant Health Program (LAHP) that has taken on retirees has not been successful to date in terms of participation nor stability. Rates increased by 35% effective January 2021 and are also set to increase another 35% January 2022. As a result, the statewide approach attempted for retirees has not demonstrated the desired outcome for Wisconsin public schools. We plan to discuss this further at our next “Ask Us at USI” webinar on Tuesday, May 11, 2021. Visit our Events page to register.
While pooling statewide schools into one plan is perceived as leverage for buying power, it fails to recognize that providers only care about their local members that use their facilities when negotiating pricing. Providers in southern Wisconsin that have no locations in northern Wisconsin don’t consider members in Milwaukee or Eau Claire as being important to their procedure pricing or planning … which their procedure pricing directly impacts the rates and stability of all insurance considerations. Therefore, this suggested approach does not address the underlying causes of cost differences. Districts that have figured out a good provider partner likely will not benefit from this proposed plan. Before deciding, make sure you understand what is really driving your costs and what you are actually getting from your provider alignment and health plan arrangement.
Planning for each district needs to consider the dynamics and implications of what is and is not available when applying the Horizon proposed model. USI offers guiding principles for a vetting process which we’ve developed through our decades of extensive work with Wisconsin school districts. The process helps manage expectations, digest and understand options, and maximize results.
Sticking to a process is easier said that done when a new vendor or product comes along promoting an “easier way.” Understanding the dynamics of the proposal requires more information to accurately determine if it is a good idea. We encourage districts to review the model proposed by the Horizon study and consider both the short-term and long-term implications the model has in terms of cost, compliance and culture for your benefit planning.
Healthcare is a local and personal dynamic that requires an in depth understanding beyond just cost. USI consistently demonstrates the ability to have the lowest healthcare costs for our clients along with the highest staff member satisfaction. Contact us to learn more.
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