CO-OPs Work in Ag, Can They Work In Health Care Too?

Presented February 23, 2012 by Ed McClements, CLU, ChFC

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Guaranteed Insurability Regardless of Health Individual Mandate to Buy Coverage Unlimited Benefits (no Annual or Lifetime Caps) Plans Must Meet/Exceed Essential Benefit Levels Large Employer (50+) Mandate to PLAY or PAY*

*refers to a $2,000 per employee per yr. non-deductible tax

penalty to the employer if they do not offer employees

Essential Benefit plans with “Bronze Coverage” Level

Do You Have a Plan to Deal With This?

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U.S. Supreme Court is set to rule this Summer on the constitutionality of the Law

▪ Prediction* 1 – Individual Mandate Unconstitutional (5-4 vote)

▪ Prediction* 2 – The REST of the Reform STAYS

Republicans Sweep Elections (unlikely but possible)

▪ Still questionable if Affordable Care Act is greatly altered

Although many hope that these health care reforms will be

eliminated before they go into full effect, it is looking less

and less likely this will occur…

* STRICTLY my best informed opinion –

it carries NO legal force or effect!

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WGAT had 19,697 as of 6/30/2010

UABT had 12,789 as of 12/31/2010

Self Funded Employer Plans (unknown but

unlikely to exceed 100,000 total participants)

It is estimated that California’s agricultural

labor pool is about 400,000 workers

Bottom-Line: An estimated 2 out of 3

farmworkers have no employer

provided health benefits

In 2014, plans with Annual Benefit Caps will no longer be

eligible for WAIVER status

For example: instead of limiting losses at $25,000 per person

per year, these plans will need to offer UNLIMITED benefits

Ag Associations are working hard to extend that deadline

Bottom-Line: Higher (possibly MUCH higher)

costs for these programs5

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• Time off from work only taken for medical emergencies• Location of medical services can be inconvenient• Office hours for appointments are inconvenient for most• Typical health plans have out-of pocket costs that are too high• Current public programs (MediCal, etc.) raise concerns over

documentation issues (Deficit Reduction Act of 2005 requires proof of citizenship / immigration status)

• County & State budget cuts make getting uninsured care harder• New health insurance EXCHANGES not available to

undocumented workers

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True INNOVATION in

health care delivery

to drive down cost

and drive up access

Lowest Possible Cost High Quality Medical Clinics The New Essential Benefit Levels Easy Access to Medical Care Offer Low Cost Prescriptions Non-Profit and Member Run Structure HEAVILY Invest in Preventive Care No Requirement for Immigration Documentation

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Instead of LARGE (and expensive) PPO networks, we need to create a primary care network out of the top SAFETY-NET clinics around the state

▪ Federally Qualified Health Care Centers

▪ Many awarded Joint Commission Quality Awards

▪ Proven dedication to Latino population

Roll Mobile Medical Clinics to worksites Provide access to the MediCal Rx discount program Make it free and easy to get preventive care Make the whole program non-profit and member run

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Provide each participant with a “Medical Home” Link primary care with specialists & ancillary medical services Work with HRSA – Health Resources Service Administration Federally Qualified Health Centers Rural Health Centers

Carefully selected regional hospitals Use existing Mobile Medical Clinics / purchase if needed Reliance on Promotores to encourage

preventive health practices within the population

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* Exclusive Provider Organization• Like a PPO, but a lot smaller

• Unlike an HMO, an EPO has no gatekeepers

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This Network IS PROPOSED. None of the above clinics have

committed to participate, since the CO-OP is still in its formation stage.

Make it easy

for workers to

see a provider

Large groups create

economic efficiencies

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The ACA provides for Consumer Operated and

Oriented Plans (CO-OPs)

Dept. of Health & Human Services has $3.8 Billion

to lend (with low interest rate loans) to non-profit

groups for CO-OP formation (with a goal of at least

one CO-OP in each state)

CO-OPs are like Credit Unions for health insurance We intend to use the Federal CO-OP funding

program to launch our new style of health planAccording to multiple

sources, we may be the ONLY one in Calif.

New Non-Profit Mutual Benefit Corporation Ag focused formation board Eventually, a member run health insurance company Created for the ACA CO-OP funding opportunity Seeking start-up and solvency loans from HHS Target underserved hourly wage workforce Focused on Latino cultural needs California initially but seeking multi-state growth Dramatically different from current health plans in

management, design and delivery

10% of premiums dedicated to prevention16

Operational Health Insurer

by 1/1/2014

HHS/CMS Funding Award

(mid 2012)

2/23/2012 17

Obtained CA approval of Articles of Incorporation for non-profit

Currently have 14 Board / 6 Advisory commitments

Held 3 Board of Directors meetings

Approved initial by-laws

Opened bank accounts

Named Chair/Vice Chair/Sec. Treasurer/ Exec. Dir.

Hired Milliman as actuarial consulting firm

Hired top law firm for DOI regulatory assistance

Hired public health policy / grant writer

Initiated discussions with select providers

Have raised most initial funding needed for HHS application

Filing formal application prior to April 2, 2012

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Name Title Company

Ed McClements Sr. Vice President Barkley Insurance & Risk Management

Al Barkley CEO Barkley Insurance & Risk Management

Roger Boman CEO Transwestern Ins. Administrators

George Ekizian President Ekizian & Associates Ins. Services

Rudy Avila HR Director Jaguar Farm Labor Contracting

Lynn Grayson CFO Boskovich Farms

Ron Hayduk President Coastal States Insurance Services

Lori LeSuer CFO Villa Park Orchards

Santiago Martin, Jr. President Cal Ag Resources

Glen Michael Managing Partner Benefits Administartion & Insurance Servicecs, LLC

Roy Nishomori President San Miguel Produce, Inc.

Juan Uranga Executive Director Center for Community Advocacy

Jerry Van Winderden President Westland Floral

Mark Weighall Agribusiness Controller Pandol Bros., Inc.

Matt Conroy President Conroy Farms

Henry Vega President Coastal Harvesting

Keith Ford President Ocean Breeze Ag Management

Rene Van Wingerden President Ocean Breeze International

Lenny Villagomez President All Ag

Tim Finster President CAPAX

Executive Director Board Members Advisory Members

Hacia Salud

By-Laws call

for 15 Board

Members

• CO-OP rules require that the majority

of the Operational Board be

comprised of members in the CO-OP

• Transition from Formation Board to

Operational Board must be completed

within 2 years of first membership

• Each “Care Area” will elect a regional

representative

• Care Area with greatest membership

will be able to seat the 8th regional

representative

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Medical Provider Legal Insurance Management Insurance Distribution Labor Advocate Employer At Large

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• Each Care Area will have a Care

Committee (9 elected plan participants

+ a Hacia Salud representative

+ a local provider representative)

• Care Committees meet monthly

• Care Committees will oversee the

coordination of the preventive care

expenditures in their region

• Care Committees will oversee

development and funding of

PROMOTORES programs locally

• Care Committees will also oversee

community outreach funding

“life-changing-grants”, and

other health-focused programs22

Preventive Care Budget

Care Area 1 - San Diego/Riv/SanBer/Imp $2,328,663

Care Area 2 - LA and OC $7,594,162

Care Area 3 - Ventura and Santa Barbara $2,482,750

Care Area 4 - SLO and Monterey $5,692,454

Care Area 5 - South San Joaquin Valley $3,381,014

Care Area 6 - Northern Cal $1,141,689

Care Area 7 - Bay Area $2,282,125

TOTAL First Year Preventive Care Budget $24,902,858

These figures

are expected

to DOUBLE

in 2015

Participating clinics will be directly involved with the

planning for the use of these funds in their regions of

operation

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October 15, 2011 – Letter of Intent to HHS November 1, 2011 – Selection of grant writer November 15, 2011 – Selection of actuary for feasibility study December 31, 2011 – CA certification of Articles of Inc. February 15, 2012 – First draft of feasibility study March 15, 2012 – Final application draft complete March 20, 2012 – Submission of application (deadline is 4/2/2012) June 15, 2012 – Notification of approval or denial of application August 1, 2012 – If approved, start-up funding begins: hiring of

core staff, begin contracting provider network, etc. December 1, 2012 – Ins. Co. application to CADOI June 1, 2013 – License approved August 1, 2013 – Launch public awareness / marketing campaign September 1, 2013 – Issue initial rates January 1, 2014 – First plan participants

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All Hacia Salud Plans will be fully compliant with ESSENTIAL BENEFIT LEVELS (not yet defined for California)

Target pricing for Bronze Level Benefits is <$200 per month per individual (up to age 39) in most areas of California

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Hacia Salud will be operational January 1, 2014

Hacia Salud will offer Bronze /Silver / Gold / Platinum benefit levels to both the Individual and Small Employer (SHOP) Exchange

Hacia Salud will also offer the general public access to the same plans that are available in the exchanges

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Our Estimate for total enrollment statewide:

141,000 total participants by the end of 2014

226,000 total participants by the end of 2015

Our initial target for enrollment was within 5% of

the growth target established by our

independent actuary

In addition to farmworkers… Restaurant workers Hotel workers Janitorial Service employees Manufacturing workers Garment Industry workers Construction workers Landscapers Small business employees Individuals in need of low cost

& high value coverage

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State Organization Name Award Total

IA & NE Midwest Members Health $112,612,100

MT Montana Health Cooperative $58,138,300

NJ Freelancers CO-OP of New Jersey $107,213,300

NM New Mexico Health Connections $70,364,500

NY Freelancers Health Service Corporation $174,445,000

OR Freelancers CO-OP of Oregon $59,487,500

WI Common Ground Healthcare Cooperative $56,416,600

Total Awarded So Far $638,677,300

Earmarked Funding for Entire CO-OP Formation Program $3,800,000,000

Percentage Awarded So Far 16.807%

Potentail Funding Still Available $3,161,322,700

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Can Hacia Salud help you:▪ Understand how employer Play or Pay rules are likely to

impact your company?

▪ Create a strategy to deal with the expected changes to health care in 2014?

Can you help Hacia Salud:▪ Submit a letter of support?

▪ Connect with a Community Clinic you use and can recommend?

▪ Contribute financially to the formation effort?

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For more information, contact:Ed McClements, CLU, ChFC

Sr. VP – Benefits for Barkley Ins.Exec. Director – Hacia Salud CO-OP

(949) 232-9178emcclements@haciasalud.org

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