A new direction in health care purchasing for the public education community

1. ACSA Business Services Council – February 23, 2011 A new direction in health care purchasing for the public education community Janet Walden, Center for Collaborative Solutions, CECHCR John Glynn, J. Glynn & Company Introducing a Statewide School Pool for Health Care Benefits

2. California Education Coalition for Health Care Reform Helping districts and unions become informed purchasers, not just payers of insurance! • Solutions for reducing costs and improving quality Joint Labor-Management Health Benefits Training

3. CECHCR Member Organizations • Association of California School Administrators (ACSA) • California Association of School Business Officials (CASBO) • California County Superintendents Educational Services Association (CCSESA) • California Federation of Teachers (CFT) • California School Boards Association (CSBA) • California School Employees Association (CSEA) • California Teachers Association (CTA) • Community College League of California (CCLC) • School Employers Association of California (SEAC)

4. Health Care Costs Grow 226% Faster than All Other Core Educational Mission Expenses Budget Cuts + Health Premium Hikes = Crisis in Public Education Educational Cost Increases (Non-Health Related)

5. Public Education Spends $6.7 Billion on Health Care Budget Cuts + Health Premium Hikes = Crisis in Public Education

6. School Health Care Costs Projected to top $10 Billion Actual Historical Data NHE Projections Sources: H&W Object codes (3401-3402, 3701-3702, & 3901-3902) 1998-2008; HHS National Health Expenditures projections 2010-2019

7. Employee Premium Contributions Jump 79% in a Single Year Actual Historical Data NHE Projections Sources: H&W Object codes (3401-3402, 3701-3702, & 3901-3902) 1998-2008; HHS National Health Expenditures projections 2010-2019

8. Employee Contributions Projected to Top $9,000 $9,360 Actual Historical Data NHE Projections Sources: H&W Object codes (3401-3402, 3701-3702, & 3901-3902) 1998-2008; HHS National Health Expenditures projections 2010-2019

9. California Health Rankings 50th in quality of care 47th in cost of care ---The Commonwealth Fund, State Scorecard on Health System Performance, 2007 We cannot improve quality - or reduce costs - one purchaser at a time

10. Something Must Be Done • Voluntary solutions from the health plans and healthcare providers are not forthcoming • Federal Health Insurance Reform does not provide for changes in existing employer provided health care benefits The status quo is not sustainable - Action is urgently required

11. The Solution is In Our Hands We must develop innovative ways to provide the leverage and purchasing power we need to: • Reduce costs at the district level • Ease administrative burden • Spend less time in collective bargaining • Have access to comprehensive data

12. A Statewide School Pool for Health Care Benefits Introducing a sustainable solution:

13. A 1.6 Million Member Statewide School Pool • A Statewide School Pool will lower costs and improve services for public education employees and their families through increased district leverage in purchasing and negotiating health care benefits • Second largest risk pool in the U.S.

14. A 1.6 Million Member Statewide School Pool • Schwarzenegger signed AB 256 in 2005 • Mercer projected immediate savings of from $217 to $401 Million • Additional savings on future premium costs

15. CECHCR Examines Options • CECHCR examined the Mercer Report • Engaged with education leaders from 21 stakeholder organizations • Developed a proposed design for a statewide school pool

16. Fundamental Elements of a Successful Design • Everybody in the pool! • The pool must be sufficiently large to provide significant economic leverage to drive down costs

17. Fundamental Elements • Size matters and so does design and execution. • Bigger is not better • is better • When you have better, bigger helps! Better

18. Fundamental Elements • Choice – must provide a range of affordable plans that equal or exceed current offerings • Quality– provider networks must be value-based designs that promote quality outcomes and appropriateness of care

19. Fundamental Elements • Premium rating – must provide a premium rating system that is reflective of regional variations in cost of health care services • Wellness – must incorporate active health promotion programs and incentives to increase health status

20. Fundamental Elements • Local Control – must allow districts and employee groups to choose plans and funding contributions • Governance – must be representatives of all funding stakeholders and assure ongoing responsiveness to local education community needs

21. Fundamental Elements • Ease Burden – must enable reduction in collective bargaining efforts and ease administrative burden • Marketplace competition – must encourage competition with the health plans and providers it engages

22. Fundamental Elements • Transition plan incorporates for an orderly migration to the Statewide School Pool • Incorporates objective performance criteria for the Statewide Pool and transitional voluntary pools

23. Now is the time! • The leadership of the education community must be proactive to lead this effort • Recently signed federal health care reform provides the momentum for us to advance those efforts and focus them on California’s Schools

24. What Happens Now? • Continuing dialog with CECHCR member organizations and other, interested parties • Drafting Legislation www.cechcr.org

25. Questions & Answers A Statewide School Pool for Health Care Benefits