District Administration - May 2007 - (Page 50)

$300 — was spent on cardiovascular diseases in 2001. Source: U.S. Centers for Disease Control and Prevention BILLION, Employer-Sponsored Health Plans, conducted by Mercer Health & Beneﬁts. For schools, Texas seems to be leading. HISD and neighboring Katy and Aldine districts are among the estimated 5 percent of districts with more than 500 employees that oﬀer a high-deductible health plan in conjunction with an HRA, says Mercer consultant Susan Prochazka, who works with the Houston district. (About 3 percent of districts oﬀer highdeductible health plans with an HSA, an increasingly common variation because employers don’t have to fund them and because they are portable when an employee changes jobs.) One of the most eﬀective messages was this: Two-thirds of employees spend $750 or less per year on health care, and that’s exactly how much the district was putting into employee-only HRAs each year. HISD oﬀers two CDHP plans, one more generous but with a higher premium than the other. When employees go to a doctor for nonpreventive care beyond routine physicals or immunizations, they pay the full cost until they hit the deductible, which can be $1,000 or $1,500, depending on the plan. After meeting the deductible, the plan pays 75 or 80 percent of the cost. Employees can use the money from their HRA to pay those remaining costs. Just like other health plans, the employees’ out-of-pocket costs are limited to $2,500 or $3,000. Participants also get up to $1,000 worth of preventive care for free. Employees pay a higher percentage for oﬃce visits to doctors out of network, compared to doctors in network. In Houston, administrators contrib50 May 2006 ute $750 annually to every employee’s account plus some additional deposits to the HRA each year, and the accounts can grow as unused HRA money rolls over into subsequent years. Starting this year, the district is contributing another $250$300 quarterly into HRAs if employees or dependents diagnosed with diabetes are in a disease management program. Houston’s decision to oﬀer CDHPs was the culmination of steps to manage health care costs when, after three years of guaranteed rates, the district faced a large increase in premiums in 2000. The ﬁrst step was to become self-insured. Organizations that self-insure set aside reserves to pay claims up to a certain level and buy reinsurance, or stop-loss coverage, to pay catastrophic claims above that point. Then HISD introduced programs to get employees involved in improving their health, including classes about chronic illnesses such as hypertension, asthma and diabetes. “We had hundreds of people sign up to take those classes,” says Melinda Garrett, HISD chief ﬁnancial oﬃcer. In the next phase, with the introduction of CDHPs in 2004, employees learned about cost. “Employees did not have a clue what the cost of health care really was because they were in their HMOs for so long,” Garrett says. “Any little sniﬄe, they’d go to the doctor and think it cost just $10,” when it actually cost the district much more, she adds. In the ﬁrst year Houston oﬀered its 17,500-covered employees two CDHP options, 36 percent enrolled. The percentage jumped to over 50 percent this year. “For a population who had never received an Explanation of Beneﬁts, paid a deductible or coinsurance, or had to consider going out of network, it was a major change,” says Prochazka. The Mercer survey shows that for districts that oﬀer an HRA-based CDHP as one option, 26 percent of employees enroll in the CDHP. That number is 10 percent for HSA-based plans. In 2004, the diﬀerence in average claims costs between the CDHP and other plans was astounding—$1,971 per person vs. $4,526. And this is because a smaller number of healthier people with lower claims were more inclined to try the lower-cost option, leaving employees with more health problems and thus higher claims in the HMOs—a phenomenon known as “adverse selection.” The gap has closed as the appeal of the lower-cost CDHP plans widens beyond healthy employees to the broader population. In 2006, the district paid $2,301 for each participant in CDHP plans vs. $4,109 for the other plan. “There was some real consumerist behavior going on here,” Prochazka says. “People were more thoughtful about how they spent the HRA money because they thought of it as theirs.” CDHP plans are attractive because of their cost: premiums are almost half that of the district’s open access HMO. But HMOs still hold great appeal for many people. “People who live paycheck to paycheck and have a hard time saving often avoid the CDHP option because they fear the deductible, even though their overall cost is likely to be higher,” Prochazka says. “Also, people who prefer the simplicity of a copay and no paperwork for oﬃce visits avoid CDHP plans.” For the district, the bottom line has been stabilized claims costs, says beneﬁts manager Brad Bailey. For employees, it has been ﬂat premiums over three years, and more beneﬁts, such as free generic medications. “We’re always out there looking for the new idea that will be a beneﬁt to our employees,” Garrett says. Part of the success of Houston’s CDHP is due to the communication strategy that $76.6 —the direct medical costs associated with physical inactivity in 2000. Source: U.S. Centers for Disease Control and Prevention BILLION District Administration

Table of Contents for the Digital Edition of District Administration - May 2007

Contents
Editor’s Letter
Letters
News Update
Inside the Law
Curriculum Update
Administrator Profile
District Profi le
Focal Points for Pre-K8 Math
Games Students Play
Healthy Choices
Tragic Lessons
Learning with Personal Media Players
New Products
Computer Literature
Problem Solution
Professional Opinion
Speaking Out
Online Edge
Calendar of Events
Research Corner

District Administration - May 2007