EdHealth

Introduction to Educators Health

A health insurance collaboration founded, owned and governed by its members

January 2014

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EdHealth

Topics

Why was EdHealth started?

What are the benefits to members?

How does EdHealth work?

What are the risks?

Questions and discussion

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EdHealth

Why Was EdHealth Started?

In late 2006, The Boston Consortium (TBC) Board and the Chief HR Officers of the members began discussing waysto slow the rise of medical insurance costs.

They developed a two-pronged approach– In early 2007, work began on a Health Management Initiative –

a program to help lower the level of claims. Healthy You was launched in early 2011.

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EdHealth

Why Was EdHealth Started?

In mid-2009, work began to develop a program to more efficiently and

cost effectively provide medical insurance to participating institutions.

Components included:

– Create savings for participants through a more efficient financial structure

and group purchasing power.

– Multi-institution participation to take advantage of large numbers of

employees to minimize risk volatility and costs, while allowing for

renegotiation of administrative, network and other external charges.

– Make the Healthy You program available to EdHealth members to

encourage employees to be more involved in their own wellness and

disease management.

EdHealth launched on July 1, 2013

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EdHealth

What are the Benefits to Members?

Lower cost than a fully insured plan– Negotiated lower fees with TPAs

– No hidden broker payments

– Larger group = better pricing, less volatility

– Not paying “profits” on base level of claims

Magnitude of savings– Feasibility study: Avg. = 5.5%, range from 4% - 9%

– Early adopter #1: 10% growing to 20% in 4 years

– Early adopter #2: 5.7% in year 1

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EdHealth

Pooled experience

– The concept of insurance is predicated on the law of large numbers – a larger group means the claims are more predictable or “credible” for rate pricing purposes.

– Claims are “transparent” in setting rates, so clear information available for plan design and incentives program decision-making, at an affordable scale.

Captive

– “Non-profit” insurance company – a clear mission!

– Direct access to reinsurers – transparency, lower costs

– Group manages services, control, and sets reserves

– Potential for future dividends

What are the Benefits to Members?

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EdHealth

Focusing on the top 10 sources of health insurance cost, Healthy You is an award-winning program implemented by the Boston Consortium in 2010.

Over 20,000 faculty and staff have participated and adopted healthier behaviors. Incentives have been provided by several participating schools, but in every case, this branded program has become a source of employee satisfaction, often cited in school surveys.

Testimonials can be found at http://www.healthyyouhmi.org/

When combined with EdHealth, it provides a further means to insure savings in health insurance.

The intellectual property of Healthy You will be provided to all interested EdHealth member institutions.

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Healthy You Disease Management Program

EdHealth

How Does EdHealth Work?

Collaborative Educational Ventures of New England, LLC (CEVoNE) was created as the sponsoring organization.

– CEVoNE was launched in March 2011 to bring together institutions from around New England to develop new programs.

The first initiative was to sponsor the creation of EdHealth.

– CEVoNE members provided nearly $1.5 million to fund the initial development of EdHealth.

– EdHealth is now financially independent of CEVoNE.

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EdHealth

How Does EdHealth Work?

Massachusetts LLC, formed on July 12, 2012 Purpose: To implement an integrated program to design and coordinate

the management of each participating institution’s self-funded health care plan.

EdHealth LLC is the “parent” company that oversees the overall program, consisting of:– A group of self-insured plans with individually set self-insured retention

attachment points,

– A pooled stop-loss insurance program administered by a Vermont Reciprocal Captive.

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EdHealth

How Does EdHealth Work?

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EdHealth

EdHealth Captive

(Excess of Stop Loss coverage)

Stop Loss Insurer

(Excess of 125% of expected EdHealth Captive Claims)               

Optional: EdHealth Captive  

(Excess of 125% of Participant's expected SIR)  

               

                 

              EdHealth Stop Loss

              Captive Insurer

Participant's Self Insured Retention (SIR)  

(e.g $100K per claim, up to 125% of expected) (e.g. Next (e.g Excess of

              $400 K per $500K per

              claim) claim)                 

                 

How Does EdHealth Work?

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EdHealth

How Does EdHealth Work?

A common set of plan designs – “evolvable”

Two Third Party Administrators – so far…

Self-insured Plan and Captive administrators

Actuarial and underwriting consultant

Stop loss insurer

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EdHealth

Costs– CEVoNE membership $20,000

– EdHealth• 2014 Application Fee

$53,000 (1)

• Membership Capital Contribution $50,000 (2)

• 3 Months Stop Loss Premium (2)(3)

(1) Pending EdHealth Board approval

(2) Refundable when member leaves program

(3) Based on individual member

How Does EdHealth Work?

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EdHealth

What are the Risks

Initially small group size – risk more concentrated, less distributed fixed costs raises initial rates

Individual member – extended adverse claims experience, especially if early in program

State insurance regulators

Carrier competition artificially depressing rates – incenting “fence-sitters” to take short-term savings, delaying program growth

“Brokers” reluctant to change to “Consultants” moving from commission basis to fully-disclosed fee basis, with corresponding shift in objectivity of advice

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EdHealth

Berklee College of Music

Boston College

Lasell College

Olin College of Engineering

Regis College

Wellesley College

Wentworth Institute of Technology

Wheaton College (MA)

Worcester Polytechnic Institute

Questions and Answers

EdHealth Members (as of January 2014)

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