Benefits Barometer 2006 - Caremark · PDF fileThe 2006 Benefits Barometer is produced by...

A research resource for benefit

professionals featuring statistical

snapshots of benefit costs,

health benefit plans and the

benefits management function

2006Benefits

Barometer

a premier health solutions provider of pharmacy benefit management,

disease management, specialty pharmacy, and health management services,

Caremark is committed to providing our clients with personalized service, integrity

and value, while emphasizing safety and quality of care. We have a comprehensive

selection of tailored and measurable health solutions to effectively manage pharmacy

trend and total health outcomes, which enable our clients to optimize their health-

care investment. Solutions such as these are what make Caremark a trusted expert

and leader in the healthcare industry.

As

The 2006 Benefits Barometer is produced by Caremark Rx, Inc. with the cooperation

of SourceMedia, New York, NY.

Benefits Barometer 2006 3

Barometer, n.— an instrument that measuresatmospheric pressure. Today’s benefits professionals are feeling pressure from all

sides of the health benefits environment in theirunceasing efforts to reduce costs while still provid-ing employees with valuable and comprehensiveservices. To assist professionals in this challengingundertaking, Caremark and SourceMedia offer the2006 Benefits Barometer, which draws on a number of sources for data that provide readerswith a profile of the current atmosphere as itrelates to benefit plan designs and useful bench-marking information.

This publication contains three important sections:Benefit Cost Highlights, Health Benefit Plans andBenefits Management. The following sources arethe most frequently cited for the data presented inthis year’s Benefits Barometer:

• The Bureau of Labor Statistics’ 2005 EmploymentCost Index. This quarterly report publishes statisticsthat measure change in labor over time and thelevel of costs per hour worked. Indexes are avail-able for total labor costs, and separately for wagesand salaries, and for benefit costs. Some informa-

tion is available by region, major industry group,major occupational group, and bargaining status.Visit www.bls.gov for detailed statistics.

• Caremark Rx, Inc. For drug trend, disease man-agement and specialty pharmaceutical data, visitwww.caremark.com.

• Deloitte Consulting 2004 Annual 401(k)Benchmarking Survey. Conducted in August andSeptember 2004 among human resources andemployee benefits executives nationwide, the survey includes employer concerns, strategies andplan characteristics, providing the reader with acontemporary view of current approaches amongmany of the nation’s leading organizations.

• The Kaiser Family Foundation and HealthResearch and Educational Trust Survey of Employer-Sponsored Health Benefits, 2005. This annual surveyprovides detailed insights into trends in employer-based health coverage, including changes in premi-ums, employee contributions, offer rate amongfirms, and the use of consumer-driven health plans.The 2005 survey included 2,995 public and privatefirms with three or more employees. Completesurvey results are available at www.kff.org.

• The 2004 MetLife Study of Employee BenefitsTrends. The national study of employee benefitstrends surveyed both employees and employers during the third quarter of 2004. For more surveyresults, visit www.metlife.com.

Special thanks to the AARP, Ernst & Young,Hewitt Associates, Society for Human ResourceManagement, and Watson Wyatt Worldwide/National Business Group.

A research resource for benefitprofessionals featuring statisticalsnapshots of benefit costs, health

benefit plans and the benefitsmanagement function

BenefitsBarometer

4 Benefits Barometer 2006

BENEFIT COSTSLegally

Industry or Total Wages and Paid Supplemental Retirement required Otheroccupation category compensation salaries Total leave pay Insurance and savings benefits benefits

Civilian workersCost per hour worked $25.86 $18.21 $7.64 $1.70 $.64 $2.05 $1.09 $2.12 $.04State and local government workersCost per hour worked $35.46 $24.17 $11.29 $2.69 $.32 $3.79 $2.33 $2.11 $.05Private industry workersCost per hour worked $24.24 $17.21 $7.03 $1.54 $.69 $1.76 $.88 $2.12 $.04

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 0582

0%

-3%

3%

6%

9%

12%

14%

16%

18%

20%

Health Benefits

Total Benefits

Source: Bureau of Labor Statistics, 2005

2004 200520032002200120001999199819971996


2%

3%

4%

5%

6%

7%

8%

Quarter

Wages and Salaries

Benefits

Employment Cost Index, Private Industry, 12-Month Percent Change,Total Benefits, and Health Benefits

Employment Cost Index for Civilian Workers, Changes in Wages and Salaries, and Benefit Costs

Employer Costs per Hour Worked for Components of Compensation,June 2005


Benefit Cost Highlights




0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

LargeMediumSmallOverall

19%

15%

22%

21%

(1-99 employees) (100-499 employees) (500 or more employees)

A

Source: Society for Human Resource Management 2005 Benefits Survey Report

2%

10%

20%

50%

30%

70%

40%

60%

80%

LowerHigherAbout the same

81%

17%

2%

C

Average Percentage of Salary Reflecting Cost of MandatoryBenefits by Firm Size

Change in Percentage of Salary Reflecting Cost of MandatoryBenefits (Compared with Previous Fiscal Year)

Benefit Cost Highlights



0%

2%

4%

6%

8%

10%

12%

14%

16%

2006Projected

200520042003200220012000

9.4%10.2%

15.2% 14.7%

12.3%

9.2%9.9%

Source: Hewitt Associates Health Value Initiative

1

National Average Annual Health Care Cost Increases

0%

5%

10%

15%

20%

200520042003200220012000199919961995 1997 19981993 199419921990 199119891988

* Estimate is statistically different from the previous year shown at p<0.05. No statistical tests were conducted for years prior to 1999.† Estimate is statistically different from the previous year shown at p<0.1. No statistical tests were conducted for years prior to 1999.Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.

12.0%

18.0%

14.0%

8.5%

0.8%

5.3%*

8.2%*

10.9%*

12.9%*13.9%†

11.2%*

9.2%*

Health Insurance PremiumsOverall InflationWorkers’ Earnings

Increases in Health Insurance Premiums Compared to OtherIndicators, 1988-2005


Health Benefit Plans

Source: Hewitt Associates Health Value Initiative

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits:1993,1996; The Health Insurance Association of America (HIAA): 1988, 1990; Bureau of Labor Statistics, Consumer Price Index (U.S. City ofAnnual Inflation (April to April), 1988-2005; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment StatisticsSurvey (April to April), 1988-2005


Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2005

* Tests found no statistically different estimates between fully insured and self-funded plans at p<.05.Note: Data on premium increases reflect the total cost of health insurance premiums for a family of four.

0%

5%

10%

15%

20%

Self-Funded

Fully Insured

POSPPOHMOConventionalAll Plans

0

9.3% 9.1%

4.7% 5.2%

10.0%

8.0%

9.9%9.2% 9.6%

8.1%

Premium Increases, by Plan Type and Funding Arrangement, 2005*

0% 20% 40% 60% 80% 100%

1988 73% 16% 11%

46% 21% 26% 7%

27% 31% 28% 14%

14% 27% 35% 24%

10% 28% 39% 24%

8% 29% 21%42%

24%7% 46% 23%

27%4% 52% 18%

24%5% 54% 17%

25%5% 55% 15%

21%3% 61% 15%

1993

1996

1998

1999*

2000*

2001*

2002*

2003*

2004

2005*

* Distribution is statistically different from the previous year shown at p<.05. No statistical tests were conducted for years prior to 1999. Information was not obtained for POS plans in 1988.

Note: A portion of the change in enrollment for 2005 is likely attributable to incorporating more recent Census Bureau estimates of the number of state and local government workers and removing federal workers from the weights.

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996. The Health Insurance Association of America (HIAA), 1988.

Conventional HMO PPO POS

Health Plan Enrollment for Covered Workers by Plan Type, 1988-2005


Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; The Health Insurance Association of America (HIAA), 1988


0 $12,000$2,000 $4,000 $6,000 $8,000 $10,000

0

Single

Family

All Plans

Conventional

HMO

PPO

POS

Single

Family

Single

Family

Single

Family

Single

Family

$3,413 $4,024$610

$8,167 $10,880$2,713

$3,284 $3,782$498

$7,658 $9,979$2,321

$3,203 $3,767*$563

$7,852 $10,456*$2,604

$3,548 $4,150*$603

$3,183 $3,914$731

$7,551 $10,801$3,250

$8,449 $11,090$2,641

*Estimate of total premium is statistically different from All Plans by coverage type at p<.05.Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2005.

Worker Contribution Firm Contribution

Average Annual Premiums for Covered Workers, by Plan Type, 2005

0

40

80

120

160

200

240

$8$37 $27* $30

Single Coverage Family Coverage

$42* $47 $51 $52

$122 $129$149*

$201*$222* $226

0

1988 1996 1999 2001 2003 2004 2005 1988 1996 1999 2001 2003 2004 2005

S

0%5%

10%15%20%

25%

30%

35%

11%

21%

14%* 14%16% 16% 16%

29% 28% 27% 26% 27% 28%26%

*Estimate of total premium is statistically different from All Plans by coverage type at p<.05.Note: Family coverage is defined as health coverage for a family of four.Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2005.

1

Single Coverage Family Coverage1988 1996 1999 2001 2003 2004 2005 1988 1996 1999 2001 2003 2004 2005

No statistical tests were conducted for years prior to 1999.

Average Monthly Worker Contribution

Percentage of Premium Paid by Covered Workers


Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2005

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2005


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2005

2004

2003

2002

2001

2000

27% 49% 22% 2%

41% 41% 18% 1%

55% 30% 13% 1%

63% 23% 13% 2%

65%3% 20% 10% 1%

70% 15% 8% 2%

Four-tier Three-tier Two-tier

Payment is the same regardlessof type or cost of drug

Other

* Distribution is statistically different from the previous year shown at p<.05.No statistical tests are conducted between 2003 and 2004 due to the addition of a new category.Note: Fourth-tier drug copay information was not obtained prior to 2004.Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005.

4%

Distribution of Covered Workers Facing Different Cost SharingFormulas for Prescription Drug Benefits, 2000-2005

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2000 2001 2002 2003 2004 April 04-March 05

July 04-June 05

4.1%4.7%

6.1%

7.0% 7.1%6.6%

6.1%

3.4%2.8%

1.6%2.3%

2.7%3.0% 3.0%

Manufacturer Price General Inflation

Note: Average increases for 2004 and 2005 exclude Vioxx 12.5 mg and 25 mg tablets, which were withdrawn from the market in September 2004. The average increase in second quarter 2005 also excludes Bextra 10 mg and 20 mg tablets, which were withdrawn from the market in April 2005.Source: AARP Public Policy Institute and the PRIME Institute, University of Minnesota, based on data found in Medi-Span Price-Chek PC (Indianapolis, IN: Wolters Kluwer Health Inc., September 2005).

Average Annual Percentage Change in Manufacturer Prices for Most Widely Used Brand Name Prescription Drugs, 2000 ThroughSecond Quarter 2005

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

All

7.7%

4.2%

7.3%

3.7%

6.0%

2.5%

Employer Health Plan

Gross PEPM Trend

Utilization Trend

S

Gross Prescription Drug Trend, Percentage Increase on All Drug Costs per Cardholder, January to June 2005 overJanuary to June 2004


Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005

Source: Caremark Analytics & Outcomes, Book of Business. ©2005 Caremark.All rights reserved.

Source: AARP Public Policy Institute and the PRIME Institute; University ofMinnesota, based on data found in Medi-Span Price-Chek PC (Indianapolis,IN, Wolters Kluwer Health Inc., September 2005)

s

This page contains prescription brand name drugs that are registered or trademarks of pharmaceutical manufacturers that are not affiliated with Caremark.


$0

$10

$20

$30

$40

$50

$60

$70

$80

Generic‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05

$7 $8 $9 $9 $10* $10 $13 $15*$17*$19*$21*$22*$17

$20$25*

$29*$33*$35*

^ ^ ^ ^

$48

$74*

Preferred Nonpreferred Fourth-tier

* Estimate is statistically different from the previous year shown at p<.05.^Fourth-tier copayment information was not obtained prior to 2004.Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005.

Average Copays for Generic, Preferred, Nonpreferred, and Fourth-tier Prescription Drugs

0

20

40

60

80

100

Small Firms(3-199 workers)

Midsize Firms(200-999 workers)

Large Firms(1,000-4,999

workers)

Jumbo Firms(5,000 or more

workers)

All Firms

5%10%

20%*

5% 7%

20%*

5% 9%

20%*17% 20%

33%*

5%10%

20%*

2003 2004 2005

* Estimate is statistically different from the previous year shown at p<.05.Note: The prevalence shown above is for all HDHPs, regardless of whether they are offered with an HRA, are HSA qualified or neither.Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2003-2005.

Percentage of Employers that Offer a High-Deductible Health Plan by Firm Size





0% 20% 40% 60% 80% 100%

Health care costs

Retirement savings accounts

Workers’ compensation

Benefits for retired employees

Long-term care

87%

44%

31%

25%

18%

M

Source: The MetLife Study of Employee Benefits Trends, 2004.

Employee Benefits Issues Concerning Senior-Level Management Most

40%43%

29%29%

29%26%

24%20%

23%21%

22%25%

20%22%

18%10%

15%18%

11%14%

11%8%

10%5%

Benefits to help work-life balance

Employee decision support tools

Cost shifting to employees

Common platform for administration

401(k) investment education

Retirement planning

Wider array of voluntary benefits

Employee self-service on Net

Internet access for all employees

General financial planning

Outsourcing benefits administration

Build or expand benefits website

M

2004

2003

Source: The MetLife Study of Employee Benefits Trends, 2004

Most Important Employee Benefits Strategies

Benefits Management

Source: The MetLife Study of Employer Benefits Trends, 2004



70

60

50

40

30

20

100

Individualmeetings

Groupmeetings

PaperInternet/Intranet

CustomerService Rep(telephone)

IVR

0

2004

2003

Employers’ Current/Preferred Methods of Enrollment

55%54%

53%49%

37%46%

36%47%

25%17%

22%17%

15%13%

14%

12%

9%11%

Controlling health/welfare benefits costs

Retaining employees

Increasing employee productivity

Increasing employee job satisfaction

Attracting employees

Reducing HR administrative costs

Helping employees make better benefits decisions

Addressing more of employees’ diverse needs

Helping employees make better financial decisions

2004

2003

Most Important Employee Benefits Objectives

Benefits Management




Totalworkers

2–9workers

10–49workers

50–999workers

1,000–2,499

workers

2,500–4,999

workers

5,000–9,999

workers

10,000–24,999

workers

25,000+workers

17%15%

8%

17%21% 19%

26% 26%22%

Percentage of Employers Expecting to Take On AdditionalBenefits Costs, by Company Size

2005

2004

Move from regional tonational plans

Increase the number of plan options

Change medicalvendors

Integrate health careand disability

Change pharmacyvendors

Decrease the numberof plan options

Use clinical riskadjustment

Move from national toregional plans

49%29%

25%17%

21%11%

21%5%

20%9%

13%7%

8%4%

8%4%

Employers Are Changing Their Relationships with Health Plans

Benefits Management


Source: Watson Wyatt Worldwide/National Business Goup on Health,Managing Health Care in a New Era, 2005


Outcomes for the Caremark CarePatterns®

Disease Management Program

The CarePatterns® Disease Management Programs cover more than 3 million lives nationally and are the first toreceive both physician and participant based NCQA accreditation. Outcomes are monitored and reported on clinical, quality and economic indicators for each population. The diabetes program summarizes the improvementin key clinical measures achieved.

Benefits Management

Diabetes Clinical Indicators

100%

80%

60%

40%

20%

0%

CCeenntteerrss ffoorrDDiisseeaasseeCCoonnttrrooll22000022

AAnnnnuuaallBBaasseelliinnee MMoorrbbiiddiittyy aanndd MMoorrttaalliittyy

WWeeeekkllyy RReeppoorrtt 22000044

Source: 2004 Book of Business. ©2005 Caremark. All rights reserved.

HHeeaalltthh PPllaannEEmmppllooyyeerrDDaattaa aanndd

IInnffoorrmmaattiioonnSSeett 22000033


Outcome for the Caremark CarePatterns®

Disease Management Program

Source: 2004 Book of Business. ©2005 Caremark. All rights reserved.

Benefits Management

Caremark was the first and only prescription benefits manager to receive full patient and practitioneroriented accreditation from NCQA in 2002. Effective 9/2005 to 9/2008, Caremark received full patientand practitioner oriented accreditation for its chronic obstructive pulmonary disease (COPD), asthma(adult and pediatric), heart failure, coronary artery disease (CAD), and diabetes programs.

CarePatterns® is a portfolio of disease-specific, patient-centered programs currently available for 10chronic medical conditions, including some of the highest cost-per-patient diseases covered by planstoday. By monitoring a participant's entire care, not just drug therapy, and coordinating the activities of the participant, physician, pharmacist, and the specially trained CarePatterns nurses and case managers, the participant's quality of life can be improved and the overall cost of treatment reduced.

Changes in Hospitalizations


Benefits Management

Expected Spending per Part D Beneficiary

Note: Estimates exclude premiums and assume no supplementation of Part D coverage.

Source: “The Medicare Rx Drug Law — Estimates of Medicare Beneficiaries’ Out-of Pocket Drug Spending in 2006: Modeling the Impact of the MMA,” (#7201), The Henry J. Kaiser Family Foundation, November 2004

Distribution of Part D Participants, by ProjectedOut-of-Pocket Prescription Drug Spending

Under MMA, 2006

This information was reprinted withpermission from the Henry J.Kaiser Family Foundation. TheKaiser Family Foundation, based inMenlo Park, California, is a nonprofit, independent nationalhealth care philanthropy and is notassociated with Kaiser Permanenteor Kaiser Industries.

©2006 SourceMedia Inc. and Employee Benefit News. All rights reserved. SourceMedia, One State Street Plaza, New York, N.Y. 10004 (800) 367-3989


Specialty Pharmaceuticals

Benefits Management

Source: Caremark data on file, 2003 to Q1-Q3 2005. ©2006 Caremark. All rights reserved.

% of Total Gross Cost

Specialty Drug Trend

2004 U.S. Pharmaceutical Market

Caremark Book of Business Specialty Drug Benefit Trend

BETTER OUTCOMES FOR A HEALTHIER BOTTOM LINE

To learn more about Caremark Rx, Inc., visit www.caremark.com.

© 2006 Caremark.All rights reserved.

Targeted SolutionsCaremark delivers personalized, data-driven solutions and disease management programs to fitour clients’ overall health management objectives.

Aligned IncentivesWe collaborate with our clients to achieve their unique goals and meet their financial andbusiness needs.

Improving Healthcare While Controlling CostsWe assist our clients in engaging and empowering plan participants to become prudenthealthcare consumers, which can lead to improved health outcomes and a healthier bottom line.

Caremark is a premier health solutions provider of pharmacy benefit management, diseasemanagement, specialty pharmacy, and health improvement services.

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