Utah’s Health System Reform Utah Solutions for Utah Needs Norman K Thurston, Ph.D. Health Reform...

Utah’s Utah’s HealthHealthSystem System ReformReformUtah Solutions for Utah NeedsUtah Solutions for Utah Needs

Norman K Thurston, Ph.D.Norman K Thurston, Ph.D.Health Reform Implementation CoordinatorHealth Reform Implementation Coordinator

5/16/115/16/11

“Our health system reform efforts have been targeted to respond to Utah’s unique business and demographic needs.”

“The lessons we’ve learned in our novel experiments in health system reform can serve as a guide to other states as they begin their own reform efforts.”

Governor Gary R. HerbertGovernor Gary R. Herbert

The overarching philosophy of Utah’s approach to health reform is the invisible hand of the marketplace, rather than the heavy hand of the government is the most effective means whereby reform may take place.

Utah’s Approach to Health Utah’s Approach to Health System ReformSystem Reform

Identify Problems Commit to Systemic Change Develop a Vision Create a Comprehensive Plan Understand the Problem

Utah’s Approach to Health Utah’s Approach to Health System ReformSystem Reform

Identify ProblemsIdentify Problems

Escalating Premium Costs Consumer Detachment Employers Dropping Insurance Too Many Uninsured Misaligned Incentives Inefficient Delivery of Care

Commit to Systemic ChangeCommit to Systemic Change

Health Insurance Markets Personal Responsibility Transparency and Value Maximize Tax Advantages Optimize Public Programs Modernize Governance

Develop a VisionDevelop a Vision

“Our health system reform efforts have been targeted to respond to Utah’s unique business and demographic needs.” Governor Herbert

Consumer-driven markets that include:Greater ChoiceExpanded Access Individual ResponsibilityAffordabilityHigher Quality Improved Health

Develop a VisionDevelop a Vision

Create a Comprehensive PlanCreate a Comprehensive Plan

Get started:Establish Foundations for Future Success

Be Thoughtful:Allow 3 Years (or more) to understand the issues

and develop the approach Focus on critical areas of identified need Patience:

It will take as long as 10 years for reform to be fully implemented

Understand the ProblemUnderstand the Problem

The Uninsured in Utah10.6% in 2007 (300,000 people)Majority are employedMany are part-time workersMost in small businessesMany young immortals (18-34)

Comprehensive Plan for Comprehensive Plan for ChangeChange

Insurance Market Reforms:Administrative SimplificationUniform ApplicationHigh Risk Pool Threshold

Transparency & Value:Tort ReformTransparency & Consumer DataPayment Reform

Personal Responsibility: Empower ConsumersEnhance Consumer Choice

Maximizing Tax Advantages:Help EmployersDefined Contribution Market


Optimizing Public Programs:Medicaid and CHIP waiversPayment Reforme-Notify

Modernize Governance: State EmployeesState Contracting Rules


Two Key ElementsTwo Key Elements

Defined Contribution Market The Utah Health Exchange

The Defined Contribution The Defined Contribution MarketMarket

An Entirely New Insurance Market Similarly to Defined Contribution

Retirement Benefits Employers Set Payment Amounts Employees Have Control Over How Funds

are Spent to Meet Needs Choice and Accountability Move to the

Employee Side of the Equation

Keeping All Payments Pre-TaxEmployees cannot be penalized for

health statusGuaranteed issue (Same options for all

employees)Contributions cannot be discriminatory



Advantages to the EmployerSimple Expand Benefit Offerings Predictable future costs Tax Advantages


Advantages to the Employee Individual Control & ChoicePay with Pre-Tax Dollars Expansion Portability Premium AggregationEngagement


Impacts on the health system Informed choice leads to competitionPlans respond directly to consumersConsumer involvement leads to better

health choices and outcomes

“Rather than the traditional one-size-fits-all approach inherent in the-defined benefit model, employees can now use the defined contribution from their employers to shop for health insurance tailored to their individual needs and circumstances.” Governor Herbert


Why an Exchange?Why an Exchange?

Fundamental health reforms are the foundation

Technology can facilitate reforms The Utah Health Exchange is

designed to enhance consumer choice and the ability of the private sector to meet consumer needs

What is the Utah Health What is the Utah Health Exchange?Exchange?

Internet-based information portal Connects consumers to vital information

Single shopping point with reliable information

Side-by-side comparisons Consumers make informed choices about

healthcare Execute choices electronically

The Utah Health ExchangeThe Utah Health Exchange

“With the creation of the Utah Health Exchange, Utah employees also benefit from expanded access, choice, and control over their health care options.” Governor Herbert

Core Components of the Core Components of the TechnologyTechnology

Health, Cost & Quality Information Individual & Family Products

Find a BrokerBuy directComparison shop (a la Travelocity.com)

Employer-sponsored plansBackbone of the Defined Contribution MarketFacilitates transactionsEnables comparison and choice

Utah Health Exchange Utah Health Exchange TimelineTimeline

March 2008Legislative Task ForceEstablished an “Internet Portal”

March 2009 Defined Contribution Market

August 2009Limited Launch for Small BusinessesThree Carriers (SelectHealth, Regence, Humana)


March 2010Updates based on lessons learned

April 2010Large Group Pilot

August 2010Full Launch for Small BusinessesAdded United Health Care


2011 (Current)Focus on Small EmployersMarketing and Outreach Incorporate Information from All Payer

Claims Database

How Does it Work?How Does it Work?

Small Employers – 2-50 employees75% Participation requirement

Brokers/Insurance Producers$37 pepm commission

Private partnerseHealthApp bswift HealthEquity $6 pepm admin fee

How Does it Work?How Does it Work?

5-Phase Process FlowApplication ProcessUnderwriting & Rate SettingEmployer DecisionsShopping & Enrollment Period Invoicing and Payment

Current Status (April 1, 2011)Current Status (April 1, 2011)

Plan Choice:146 plans from 4 insurers

4-Month Enrollment: 100 Employers (20 previously

uninsured)1,300 Employees2,800 covered lives

Current Status (April 1, 2011)Current Status (April 1, 2011)

Defined Contribution:Range of $0 - $1,683$360 per employee on average

Rate ComparisonRates are audited to be comparable with

traditional small group rates

Lessons Learned & Keys to Lessons Learned & Keys to SuccessSuccess

Engage brokers as a valuable partner Embrace private solutions instead of

hiring programmers Solution must be scalable Ensure a level playing field inside/outside

the Exchange Beta tests are especially critical Plan extra time and go slow

Health System Reform in Utah Health System Reform in Utah – 2011-12– 2011-12

The Utah Health ExchangeFine tune the small group ExchangeFocus on scalabilityExplore multi-state collaborationDesign consumer-centric module

Modernize the State Employees Health Benefit Defined contributionBetter choices

Optimize the Medicaid programProper incentivesControl costs - Pay for valueConsumer involvement

All Payer Claims Database Inform consumersPower-up risk adjustmentKey to payment reform

Health System Reform in Utah Health System Reform in Utah – 2011-12– 2011-12

Utah’s Health System Reform Utah Solutions for Utah Needs Norman K Thurston, Ph.D. Health Reform...

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