The Maryland Healthcare Landscape Greater Baltimore Committee November 7, 2017 Chet Burrell President & CEO PROPRIETARY AND CONFIDENTIAL
Median Household Income in Maryland – Richest State in the Nation (Highest) Maryland: $76,596 District of Columbia: $75,991 National Median $56,277 Virginia: $66,916 (Lowest) Mississippi: $40,910 Source: United States Census Data, 2016 PROPRIETARY AND CONFIDENTIAL
Insurance Premiums vs. Earnings & Inflation Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings 1999-2017 300% Workers’ Contribution 270% to Premiums 250% Health Insurance Premiums 224% 200% 167% 150% 160% 98% 100% 92% 64% Workers’ Earnings 45% 50% Overall Inflation 24% 47% 35% 21% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2017. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2017; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2017 (April to April). PROPRIETARY AND CONFIDENTIAL
Small Employers Offering Coverage Less Frequently Percent of Firms in CareFirst Region (DC, MD) with Fewer Than 50 Workers Offering Health Insurance, 2008-2016 60% 55% 55% 53% 52% 50% 45% 45% 44% 44% 43% 43% 40% 39% 35% 30% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Agency for Healthcare Research and Quality. Medical Expenditure Panel Survey-Insurance Component, 2008-2016. PROPRIETARY AND CONFIDENTIAL
ACA Individual Market by Metal Level • The high level of cost sharing of Bronze and Silver products plans (40% and 30%, respectively) leads to high out of pocket costs and member underinsurance. Metal Level Distribution of CareFirst Maryland Individual ACA Subscribers Maryland Subscribers: 85,811 129,594 115,575 107,635 13,680 12,143 10,802 Platinum 11% 11% 13% 20,088 17% 19,200 15% 15,921 Gold 19% 47,312 41% 62,710 58% 53,909 42% 32,747 Silver 38% 43,096 37% 25,497 38,862 24,282 24% 30% Bronze 28% 7,285 5,079 7% 3,943 3% 2,059 2% Catastrophic 4% YE 2014 YE 2015 YE 2016 2017 Maryland Source: Individual ACA Extract (D&I), October 26, 2017 PROPRIETARY AND CONFIDENTIAL
Increases to Out-of-Pocket Expenses – Sign of the Times • The total allowed out-of-pocket maximum has increased approximately 3-5% each year from 2014-2018. • The 2018 out-of-pocket maximum for an individual is $1,000 more than the maximum in 2014, and for a family is $2,000 more – a total increase of 15.7% in four years. Highest Allowed Out-of-Pocket Maximum 2014-2017 $17,000 Family $14,700 Total Increase: $14,300 $15,000 $2,000 or 15.7% $13,700 $13,200 $12,700 $13,000 $11,000 $9,000 Individual $7,350 $7,150 $6,850 $6,600 Total Increase: $6,350 $7,000 $1,000 or 15.7% $5,000 2014 2015 2016 2017 2018 Year-Over-Year Increase +3.9% +3.8% +4.4% +2.8% PROPRIETARY AND CONFIDENTIAL
Percentage of Workers Enrolled in an HRA or HSA-Qualified High Deductible Plan, 2006-2017 HDHP/HRA HSA-Qualified HDHP 30% 28% 28% 24% 25% 21% 19% 20% 20% 19% 19% 17% 15% 15% 11% 13% 12% 14% 9% 9% 10% 6% 7% 6% 6% 4% 5% 4% 3% 9% 9% 9% 9% 8% 8% 7% 7% 2% 3% 3% 3% 2% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2017. PROPRIETARY AND CONFIDENTIAL
Employers are Increasingly Shifting More Cost to Members • CareFirst first introduced CDH high-deductible plan designs in 2006 in response to: • Employer demand for less expensive alternatives • The prevailing wisdom has been that shifting more costs to the consumer would cause them to make more informed healthcare choices and work to control costs over the long term • Through benefit buy-downs, enrollment in high-deductible plans grew rapidly after they were first introduced in 2006 CareFirst High Deductible Plan Enrollment in 2017 Individual Under 65 Small Group Market 51+ Risk Market Market High Deductible Plan 28% 32% 45% 55% 72% 68% Other PROPRIETARY AND CONFIDENTIAL
Premiums Apply Market Pressure • Pressure on the system is coming from consumers and small businesses resisting escalating premiums and out of pocket costs Total Possible Cost for Maryland (Baltimore Metro Area) Members Monthly Annual Out-of-Pocket Total Possible Premium Premium Limit Cost Individual Market (BlueChoice HMO Silver $3,500) Single 1 $465 $5,580 Family of Four 2 $1,487 $17,844 Small Group Market (BlueChoice HMO HSA/HRA $1,500) Single 1 $370 $4,440 Family of Four 2 $1,108 $13,294 1 Based on a 40-year-old 2 Based on two 40-year-olds and two children PROPRIETARY AND CONFIDENTIAL
Premiums Apply Market Pressure • Pressure on the system is coming from consumers and small businesses resisting escalating premiums and out of pocket costs Total Cost for Maryland (Baltimore Metro Area) Members Monthly Annual Out-of-Pocket Total Possible Premium Premium Limit Cost Individual Market (BlueChoice HMO Silver $3,500) Single 1 $465 $5,580 $7,350 Family of Four 2 $1,487 $17,844 $14,700 Small Group Market (BlueChoice HMO HSA/HRA $1,500) Single 1 $370 $4,440 $5,500 Family of Four 2 $1,108 $13,294 $11,000 1 Based on a 40-year-old 2 Based on two 40-year-olds and two children PROPRIETARY AND CONFIDENTIAL
Premiums Apply Market Pressure • Pressure on the system is coming from consumers and small businesses resisting escalating premiums and out-of-pocket costs Total Cost for Maryland (Baltimore Metro Area) Members Monthly Annual Out-of-Pocket Total Possible Premium Premium Limit Cost Individual Market (BlueChoice HMO Silver $3,500) Single 1 $465 $5,580 $7,350 $12,930 Family of Four 2 $1,487 $17,844 $14,700 $32,544 Small Group Market (BlueChoice HMO HSA/HRA $1,500) Single 1 $370 $4,440 $5,500 $9,940 Family of Four 2 $1,108 $13,294 $11,000 $24,294 1 Based on a 40-year-old 2 Based on two 40-year-olds and two children PROPRIETARY AND CONFIDENTIAL
Provider Consolidation Raises Costs • Consolidation of provider systems do not yield “economy of scale” savings to the member, account, or health insurer • Large provider systems use size as leverage for more favorable reimbursement • Large provider systems have more costly PSP arrangements • Consequence of consolidation of provider systems is a systemic increase in fee schedules and overall cost • As providers consolidate, more care is directed to these more expensive provider systems • Federal Policy aids in the move toward consolidation by calling for integrated care delivery PROPRIETARY AND CONFIDENTIAL
Largest Health Systems Congeal into Oligopolies Johns Hopkins Health System 2000 2017 Johns Hopkins Johns Hopkins Hospital Hospital Anchor Hospital Anchor Hospital Children’s Kennedy Kennedy Krieger Sibley Hospital of St. Krieger Institute Memorial Petersburg Institute Hospital Fla. Affiliate Affiliate 2011 2011 Sibley Bayview Bayview Johns Hopkins Johns Hopkins Memorial Medical GBMC Affiliate Medical Health System Hospital Center Health System Center 2010 1984 Howard Co. Howard Co. Suburban Suburban General General Hospital Hospital Hospital Hospital 2009 1998 Mt. Mt. Washington Washington Pediatric Pediatric Hospital** Hospital** 2006 Johns Hopkins Health System Hospital Beds* 2,696 Practitioners* 3,314 2016 CareFirst Admissions 22,102 2016 Inpatient Revenue ($M) $376.9 2016 Outpatient Revenue ($M) $365.0 Total 2016 Revenue ($M) $741.9 .**University of Maryland Medical System and Johns Hopkins Health System each own 50% of Mt. Washington Pediatric Hospital. PROPRIETARY AND CONFIDENTIAL
Largest Health Systems Congeal into Oligopolies MedStar 2000 2017 Joined to form Joined to form MedStar Health MedStar Health in 1998 in 1998 Georgetown - Medlantic - Medlantic Union University Georgetown Union Memorial -Helix Health -Helix Health Hospital University Memorial Hospital Hospital 2000 Hospital 1987 Franklin Montgomery Franklin Montgomery Square General Square General Hospital Hospital Hospital 2008 Hospital 1987 MedStar MedStar Health Health Good Southern Southern Good Samaritan Maryland Maryland Samaritan Hospital Hospital Hospital Hospital 2012 1994 Harbor St. Mary’s Harbor Hospital St. Mary’s Hospital 2009 1996 Washington National Washington National Hospital Rehabilitation Hospital Rehabilitation Center Hospital Center Hospital 1998 1998 MedStar Hospital Beds* 2,891 Practitioners* 4,731 2016 CareFirst Admissions 18,150 2016 Inpatient Revenue ($M) $378.2 2015 Outpatient Revenue ($M) $380.5 Total 2015 Revenue ($M) $758.7 * Hospital beds and practitioners based on 2015 data. PROPRIETARY AND CONFIDENTIAL
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