FY2010 AGE-SEX REPORT - FINAL FOR DISTRIBUTION — File 191787

AGE-SEX REPORT Pool I FY2006 – FY2010 Group Insurance Commission Commission Meeting March 2, 2011

March 2, 2011 2 FY2006 – FY2010 COMPARISON SUMMARY  Municipalities and other entities joining the GIC have appreciably affected the enrollment and total cost data from FY2007 – forward – Springfield joined the GIC on January 1, 2007 – The addition of nine municipalities on July 1, 2008 raised our FY2009 municipal enrollment to 12,300 – 11 additional municipalities joined in FY2010, resulting in a FY2010 municipal enrollment of 29,300 – 4,100 sheriff and MassDOT enrollees joined mid-2010  Average cost per enrollee rose 5.9 percent per year on average from FY2006 to FY2010

March 2, 2011 3 AGE-SEX REPORT DEFINITIONS  ENROLLEES: Health insurance contract holders with the GIC. In most cases, enrollees are either employees, retirees, or survivors. However, people covered by a Medicare plan are considered enrollees, even if they never worked for the Commonwealth, a municipality, or another entity (e.g. the Medicare- enrolled spouse of a retiree is considered an “enrollee”).  LIVES: Each person whose health insurance is provided by the GIC.

March 2, 2011 4 AGE-SEX REPORT DEFINITIONS (continued)  TOTAL COST OF HEALTH INSURANCE: Premium cost for HMO plans, and actual expenditures (claims and administrative costs) for the self-insured plans (the Indemnity, PPO, and POS plans). It includes both appropriated funds and employees’ and retirees’ premium contributions.  TOTAL HEALTH EXPENDITURES = Total Cost of Health Insurance + Copayments + Deductibles  RUN-IN: When a person joins a self-insured health plan for the first time, at the beginning of the first plan year, the plan sponsor (GIC) incurs liabilities, but has not yet received provider bills to pay. This is called run-in; its result is to understate enrollees’ year 1 cost.

March 2, 2011 5 TOTAL ENROLLMENT GROWTH FY2006 – FY2010  Total enrollment increased from 141,913 to 176,839 enrollees from FY2006 to FY2010 (24.6 percent)  The growing number of municipalies participating in the GIC is responsible for the majority of the growth during these five fiscal years  The GIC’s enrollment grew in the PPO (34.8 percent), non-Medicare HMO (28.0 percent), and Medicare plans (28.7 percent)  In FY2010, the GIC insured over 320,000 lives (up more than 65,000 since FY2006)

GIC ENROLLMENT FY2006 – FY2010 BASIC, MEDICARE, AND TOTAL 6 45,192 46,721 48,996 96,721 100,552 104,204 107,188 118,666 176,839 157,765 153,200 147,273 141,913 50,577 58,173 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 FY2006 FY2007 FY2008 FY2009 FY2010 TOTAL ENROLLMENT TOTAL MEDICARE PLANS TOTAL NON-MEDICARE PLANS 24.6% increase 22.7% increase 28.7% increase

March 2, 2011 7 ENROLLMENT FY2006 – FY2010 Actives and Retirees  Retiree enrollment grew by 17,700 contracts, and, despite a significant increase in the number of actives (17,200 contracts), increased as a percentage of the GIC population  Three quarters of the retiree enrollment growth was in Medicare contracts (roughly mantaining the GIC’s ratio of Medicare to non-Medicare retirees)  Most of the GIC’s enrollment growth in the past five years (29,300 out of 34,900 enrollees) occurred as a result of municipalities joining the GIC.  The mid-year enrollment of 4,100 county sheriffs and MassDOT employees in FY2010 also significantly affected the results of this report.

GIC ENROLLMENT FY2006 – FY2010 ACTIVE AND RETIRED ENROLLEES 8 77,794 81,298 81,823 70,613 68,771 65,975 64,119 87,152 84,429 95,016 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 FY2006 FY2007 FY2008 FY2009 FY2010 40% 41% 42% 43% 44% 45% 46% 47% 48% 49% 50% Retired Enrollees Active Enrollees Retirees as a Percent of Total Enrollment

March 2, 2011 9 ENROLLMENT FY2006 – FY2010 Retirees  The non-Medicare retiree population grew 25.0 percent from FY2006 – FY2010, mostly due to an 18.8 percent increase from FY2009 – FY2010  The number of Medicare retirees increased by 13,000 enrollees (28.7 percent) over five years, also with a substantial FY2009 – FY2010 increase (15.0 percent)  Non-Medicare retirees have declined as a proportion of the total retiree population since 2004, when they were 30.0 percent of the total, but they are still a much larger percentage of the retiree population (28.9 percent) than they were before the 2002-2003 early retirement incentive (when they were less than 24 percent of the retiree population)

GIC ENROLLMENT FY2006 – FY2010 MEDICARE AND NON-MEDICARE RETIREES 10 23,650 20,036 19,775 19,254 18,927 50,577 48,996 46,721 45,192 58,173 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 FY2006 FY2007 FY2008 FY2009 FY2010 Non-Medicare Retirees Medicare Retirees

March 2, 2011 11 ENROLLMENT FY2006 – FY2010 Retirees (continued)  Non-Medicare retirees remain a significant population in terms of GIC costs. Per capita, non-Medicare retirees are close to twice as expensive to insure as the next most costly group (actives). Medicare retirees are the least costly members for the GIC to insure  A large and growing proportion (36.7 percent in FY2010) of the non-Medicare retiree population are retirees, survivors and their dependents age 60-64  Almost none of the retirees in the 60-64 age group are on Medicare. However, most of them will become Medicare- eligible and join a Medicare plan in the next five years

NON-MEDICARE RETIREES’ AGES FY2006 - FY2010 12 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 0-9 10-19 20-29 30-39 40-49 50-59 60-64 65-69 70-79 80-89 90-99 100+ 2006 Retirees and Dependents 2010 Retirees and Dependents Most non-Medicare retirees and their dependents will become Medicare-eligible at age 65

RETIREES’ AGES - FY2010 MEDICARE AND NON-MEDICARE RETIREES 13 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 100+ 2010 Medicare retirees and retirees' Medicare dependents 2010 non-Medicare retirees and retirees' non-Medicare dependents

March 2, 2011 14 ENROLLMENT FY2006 – FY2010 BY PLAN TYPE  The PPO-type plans, the non-Medicare HMOs, and the Medicare HMOs each grew more than 25 percent over the five years (by 21,200 (34.8 percent), 2,900 (28.0 percent), and 2,000 (50.1 percent) enrollees, respectively)  Results varied widely among the PPO-type plans – from a modest decrease in enrollment (200 enrollees) to a 12,300 contract enrollment increase  Despite the addition of 34,900 enrollees during this time period, the Basic Indemnity Plan continues to lose enrollment (down 8.8 percent from FY2006 to FY2010)

GIC ENROLLMENT BY PLAN TYPE FY2006 – FY2010 15 22,934 25,160 61,100 82,342 13,390 10,461 58,173 45,192 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 FY2006 FY2007 FY2008 FY2009 FY2010 Indemnity Plan Basic PPO and POS Plans HMO Plans All Medicare Plans 34.8% increase 28.7% increase 8.8% decrease 28.0% increase

PPO-TYPE PLANS’ ENROLLMENT FY2006 – FY2010 16 10,760 10,571 2,510 7,033 16,992 29,295 30,838 35,443 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 FY2006 FY2007 FY2008 FY2009 FY2010 Indemnity PLUS Indemnity Community Choice Harvard Pilgrim POS/Independence THP Navigator 14.9% increase 72.4% increase 1.8% decrease 180.2% increase

March 2, 2011 17 ENROLLMENT FY2006 – FY2010 Medicare Plans  The GIC now has two Indemnity-style Medicare plans, one offered by UniCare, the other by Harvard Pilgrim  The number of enrollees in Indemnity Medicare plans has grown by 11,000 (from 41,200 enrollees in FY2006 to 52,200 in FY2010)  Despite losing a Medicare HMO (the former Harvard Pilgrim Medicare plan), the GIC’s Medicare HMO enrollment increased by 2,000 enrollees, or 50.1 percent over the five years

GIC MEDICARE PLAN ENROLLMENT FY2006 – FY2010 18 706 4,565 5,977 4,754 4,600 4,235 3,981 45,117 44,396 42,486 41,211 47,631 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 FY2006 FY2007 FY2008 FY2009 FY2010 HMO Medicare Enrollees* UniCare Medicare Indemnity Plan Enrollees HPHC Medicare Enhance (Indemnity) Enrollees * Includes HPHC Medicare HMO in FY2006 - FY2008. In FY2009, the GIC stopped offering HPHC's Medicare HMO.

March 2, 2011 19 ENROLLMENT FY2006 – FY2010 Demographics - Age  At 58.2 years old, the average GIC enrollee in FY2010 is slightly more than one year older than the average enrollee was in 2006 (57.2 years old)  The GIC’s aging population is reflected in the decrease in the share of enrollees who are in their 30s and 40s (from 29.1 percent of the population to 25.6 percent) and in the growing proportion of enrollees in their 60s (from 17.7 percent to 22.0 percent of the GIC population)  There was a big jump in the number of dependents ages 20 to 24, from 8,400 to 17,500; likely attributable to the Massachusetts Health Care Reform  The average covered life was not quite a year older, at 44.8 years in FY2010 (up from 44.0 in FY2006)

ENROLLEE AGE DISTRIBUTION COMPARISON FY2006 AND FY2010 20 0% 2% 4% 6% 8% 10% 12% 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 100+ Percentage of 2006 Enrollees Percentage of 2010 Enrollees

MEMBER AGE DISTRIBUTION COMPARISON FY2006 AND FY2010 21 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95-99 100+ Percentage of 2006 Lives Percentage of 2010 Lives

MEMBERS FY2006 – FY2010 Age and Family Size PLAN AVERAGE AGE FY10 (FY06) FAMILY SIZE FY10 (FY06) Indemnity Plan (basic) 47.7 (46.1) 2.82 (2.78) IP PLUS 38.5 (35.8) 3.10 (3.08) IP Community Choice 34.3 (32.2) 3.16 (3.18) HPHC POS 36.8 (35.8) 3.18 (3.16) THP Navigator 35.3 (33.7) 3.24 (3.20) HMO Plans (basic) 35.1 (34.5) 3.13 (3.10) BASIC PLANS AVERAGE 37.9 (37.1) 3.13 (3.07) Indemnity Plan (Medicare) 76.6 (76.3) not applicable HMO Plans (Medicare)* 73.6 (72.9) not applicable ALL-GIC AVERAGE 44.8 (44.0) 3.13 (3.07) 22 * In this chart, HPHC Medicare Enhance is included with the HMO Medicare Plans

March 2, 2011 23 TOTAL COST OF HEALTH INSURANCE FY2006 – FY2010  GIC total cost of health insurance increased $603 million dollars (or 56.5 percent), to $1.670 billion in FY2010. Since the GIC experienced 24.6 percent enrollment growth during the same time period; the average per enrollee costs increased at a slower rate (25.6 percent)  Copayment and deductible increases in February 2010 partially offset the FY2010 growth of the total cost of GIC enrollees’ health insurance  The FY2010 costs as they appear in this report are affected by the run-in from the new municipal enrollees and mid-year enrollment of the county sheriffs and MassDOT employees

TOTAL COST OF HEALTH INSURANCE* FY2006 – FY2010 24 Notes: 1) A portion of the costs that would have been incurred and paid in FY2005 were instead paid in FY2006, due to the major enrollment shift from insured plans to self-insured plans in FY2005. 2) A portion of the costs that would have been incurred and paid in FY2007 were instead paid in FY2008, due to an accounting change and the mid-year addition of a large number of enrollees, many of whom joined self-insured plans. * Claims and administrative costs for self-insured plans and premiums for insured plans (see Definitions on page 4) $1,670 million 13.4% increase $1,472 million 10.9% increase $1,327 million 16.3% increase $1,067 million $1,142 million 7.0% increase $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 FY2006 FY2007 FY2008 FY2009 FY2010 Millions Medicare Enrollees' Total Cost (51.9 percent FY06 - FY10 increase) Non-Medicare Enrollees' Total Cost (57.3 percent FY06 - FY10 increase) FY2006 -- FY2010 TOTAL INCREASE 56.5% ($603 MILLION)

March 2, 2011 25 COSTS FY2006 – FY2010 Comparisons  The GIC’s average annual per enrollee cost increase for these five years was 6.9 percent  At 39.4 percent, the GIC’s average per enrollee cost increase from FY2006 – FY2010 was higher than the increase (35.0 percent) reported by Mercer Human Resource Consulting in its national employer survey. However, it is now the national norm for employer- based PPO plans to feature a $1,000 calendar year deductible for individual coverage (a plan design the GIC has not adopted)

AVERAGE COST OF HEALTH INSURANCE ANNUAL PERCENTAGE CHANGE FY2006 – FY2010 26 Sources: National Survey of Employer-Sponsored Health Plans, Mercer Human Resource Consulting, 2010 Survey Report and the U.S. Bureau of Labor Statistics http://data.bls.gov/PDQ/servlet/SurveyOutputServlet -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2006 2007 2008 2009 2010 Annual Change GIC per Enrollee National Average Inflation (CPI)

March 2, 2011 27 COSTS FY2006 – FY2010 By Enrollee Category  Medicare enrollees cost the GIC the least to insure ($3,900 in FY2010 -- Medicare is the primary payer), and their average cost per enrollee increased at the slowest rate over the last five years (18.0 percent)  Per capita, active enrollees cost $1,000 more than Medicare enrollees. However, actives’ per enrollee costs are much higher than Medicare enrollees’ costs because the average contract covers 2.36 lives (each Medicare enrollment covers one life)  Non-Medicare retirees costs are the highest – roughly double the per capita cost of actives and Medicare retirees. Despite a smaller average family size, their costs per enrollee are also more than $2,800 higher than actives.

AVERAGE COST PER ENROLLEE FY2006 – FY2010 28 $14,372 $12,002 $8,872 $11,606 $7,519 $9,444 $3,313 $3,909 $0 $3,000 $6,000 $9,000 $12,000 $15,000 FY2006 FY2007 FY2008 FY2009 FY2010 Non-Medicare Retired Enrollees Active Enrollees GIC Average Enrollee Medicare Enrollees Non-Medicare Retirees - 19.7% increase Active Enrollees -- 30.8% increase Medicare Enrollees -- 18.0% increase GIC Average per Enrollee Cost -- 25.6% increase

AVERAGE COST PER CAPITA FY2006 – FY2010 29 $3,909 $3,313 $4,907 $3,831 $8,765 $7,560 $5,192 $4,178 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 FY2006 FY2007 FY2008 FY2009 FY2010 Medicare Lives Active Lives Non-Medicare Retired Lives Average GIC Life Non-Medicare Retiree Lives 15.9% increase Medicare Lives 18.0% increase GIC Average Per Capita Cost -- 24.3% increase Active Lives 28.1% increase

March 2, 2011 30 COSTS FY2006 – FY2010 Basic (non-Medicare) Plans  Cost per enrollee and cost per capita increased across all basic plans ($2,700 and $1,100, respectively)  The cost of the three plan types went up between $2,000 and $3,700 per enrollee, increasing the most in the Indemnity Plan and the least in the HMO plans  Wide cost variation exists within the group of PPO-style health plans (FY2010 per enrollee costs range between $8,500 and $12,600)

AVERAGE NON-MEDICARE PLAN COST PER ENROLLEE FY2006 – FY2010 31 $12,040 $15,692 $8,767 $11,596 $7,528 $9,555 $12,157 $9,484 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000 $15,000 $16,000 FY2006 FY2007 FY2008 FY2009 FY2010 INDEMNITY PLAN BASIC AVG. PPO-TYPE PLAN AVG. NON-MEDICARE HMO PLAN WEIGHTED AVERAGE 30.3% increase 32.3% increase 26.9% increase Average Non-Medicare per Enrollee Cost -- 28.2% increase

PPO-TYPE PLANS AVERAGE COST PER ENROLLEE FY2006 – FY2010 32 $8,666 $11,551 $9,017 $12,033 $9,336 $12,596 $8,494 $5,879 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 FY2006 FY2007 FY2008 FY2009 FY2010 THP Navigator HPHC Independence UniCare PLUS UniCare Community Choice 33.5% increase 34.9% increase 44.5% increase 33.3% increase

March 2, 2011 33 COSTS FY2006 – FY2010 Medicare Plans  The Indemnity Medicare plans average cost increased from $3,400 per year in FY2006 to $4,000 in FY2010 (a $700 increase, or 19.5 percent)  Medicare HMO plans’ cost increased from $2,900 to $3,000 over the same time period (a $200 increase, or 5.5 percent)  Medicare enrollees’ costs are paid for by the enrollee, the GIC and the federal government. Over the years the federal government’s share of the payments has fluctuated, sometimes contributing to and other times moderating the state’s and the enrollees’ cost increases  The HPHC Indemnity Medicare, new in FY2009, has costs that resemble the UniCare Indemnity Medicare plan

AVERAGE MEDICARE PLAN COSTS FY2006 – FY2010 34 $4,197 $2,882 $2,950 $3,038 $3,062 $3,040 $4,049 $3,512 $3,950 $4,020 $3,355 $3,894 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 FY2006 FY2007 FY2008 FY2009 FY2010 Average Medicare HMO Cost (5.5 percent five-year increase) UniCare Indemnity Medicare Cost (19.8 percent five-year increase) HPHC Indemnity Medicare

March 2, 2011 35 OUT-OF-POCKET EXPENSES FY2006 – FY2010  The overall FY2006 – FY2010 increase in out-of-pocket expenses was 71.9 percent ($71.0 million)  The 24.6 percent enrollment increase accounts for some of the increased out-of-pocket costs, however, the average out-of-pocket expense per enrollee increased $300, to $1,020, in FY2010 $ - $ 2 5 $ 5 0 $ 7 5 $ 1 0 0 $ 1 2 5 $ 1 5 0 $ 1 7 5 F Y 2 0 0 6 F Y 2 0 0 7 F Y 2 0 0 8 F Y 2 0 0 9 F Y 2 0 1 0 M illio n s $ 1 6 9 .8 m illio n $ 1 1 0 .2 m illio n $ 1 0 4 .2 m illio n $ 9 8 .8 m illio n $ 1 0 3 .2 m illio n

March 2, 2011 36 OUT-OF-POCKET EXPENSES  In FY2010, out-of-pocket expenses remain less than 10 percent of total health expenditures  Out-of-pocket expenses added $1,020 to the average cost of insurance per enrollee in FY2010. This is an increase of $300, or 42.6 percent from FY2006 Note: the per family costs on the chart on slide 38 differ slightly from per enrollee costs, since a small number of families are insured on multiple contracts (and thus are counted as more than one enrollee)

SHARE OF COSTS: GIC AND ENROLLEES FY2001 – FY2010 37 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Millions FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 State Share of Premium Enrollee Share of Premium Out-of-Pocket Expenses 9.9% 9.4% 8.5% 74.3% 9.2% 75.6% 8.4% 76.5% 73.9% 8.5% 75.2% 77.0% 8.0% 7.2% 76.9% 77.1% 14.4% 15.7% 15.1% 15.9% 16.9% 16.3% 14.9% 15.1% 15.8% 77.3% 7.0% 72.9% 17.8% 9.2%

March 2, 2011 38 TOTAL HEALTH EXPENDITURES  GIC enrollees’ total health expenditures (the state’s and the enrollees’ insurance costs and enrollees’ out-of-pocket expenses), rose $674 million, from $1,166 million in FY2006 to $1,840 million in FY2010 – an increase of 57.8 percent  This is slightly higher than the 56.5 percent increase in the total cost of health insurance, which rose $602 million, from $1,067 million in FY2006 to $1,670 million in FY2010  Note that the increases in both the total health expenditures and the total cost of health insurance are partially driven by substantial GIC enrollment growth from FY2007 - on

March 2, 2011 39 TOTAL HEALTH EXPENDITURES (continued)  Note that the GIC does not have data on out-of-pocket expenses for the 10,500 Medicare enrollees who are not enrolled in the UniCare State Medicare Indemnity plan (the out-of-pocket expense figures exclude these enrollees’ out-of-pocket costs)  We also do not have, nor do we know of a way to collect, information on the cost of balance bills for the few enrollees who may be subject to balance billing (providers bill the enrollee for amounts in excess of the health plan’s allowed amount)

MEDICAL EXPENDITURES BY THE GIC AND ENROLLEES FY2006 – FY2010 40 $1,840 million $1,166 million$1,245 million $1,430 million $1,583 million $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Millions FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Out-of-Pocket Expenses Enrollee Share of Premium State Share of Premium 7.0% 9.2% 77.3% 72.9% 8.5% 76.5% 7.2% 77.1% 75.6% 8.4% 15.7% 15.8% 17.8% 15.9% 15.1%