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TRANSCRIPT
AT&T and Health Care:A Presentation for 2009 Core Bargaining
Agenda
1. Health Care in the United States
2. Health Care at AT&T
3. What AT&T Is Doing to Address the Health Care Issue
4. Summary
Page 2
Health Care in the United States
Employers
Offer health care coverage to employees
Pay the majority of the cost
Third-Party Administrators
Establish providernetworks & process claims
Operate health plans
ProvidersHospitals, Doctors
Recommend and deliver services
Offer services
Government
Legislative and regulatory mandates
Sponsor Medicare and other programs
Compliance oversight
Individuals
Make purchasing decisions
Use services
Our health care system
is integral to the U.S.
economy –and is a
collection of many critical
parts
U.S. Health Care System
Background
Page 4
The State of Health Care in the U.S.
A variety of factors, from technological advances to
advertising, fuel Americans’ consumption of health
care
Although the rate of increase for health care costs has
slowed somewhat, it is still one of the fastest-rising
costs in America, outpacing the rate of inflation
The U.S. spends more per capita on health care than
most other developed countries; Americans spend
more on health care than on housing, food or
energy
Page 5
2002 2003 2004 2005 2006 2007 2008
$5,679
$6,564
$7,432
$8,205
$8,889$9,408
$10,038
Medical Costs Are Rising Faster than Inflation
+15.6%
+13.2%
+10.4%
+8.3%
+5.8%
+6.7%
U.S. Health Benefit Costs
Annual Medical Cost Per Employee
Source: Hewitt, Health Value Initiative, September 2008Assumptions: Data based on large employers; based on medical, prescription and administrative costs
Page 6
U.S. Dollars Spent on Health Care
1970 1980 1990 2000 2007
$58
All a
mounts
in b
illions o
f dolla
rs$184
$1,027
$556
$1,681
The U.S. spent almost $1.7 trillion
on health care in 2007
Health Care Costs Continue to Increase
Source: U.S. Department of Commerce, Bureau of Economic Analysis, Table 2.4.5 Personal Consumption Expenditures, August 2008
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Energy Food Housing Medical Care
2007
All a
mounts
in b
illions o
f dolla
rs
$586
$1,329
$1,461
$1,681
Medical care
spending in the U.S.
exceeds all other basic
expenses
Comparing Costs
National Spending
Source: U.S. Department of Commerce, Bureau of Economic Analysis, Table 2.4.5 Personal Consumption Expenditures, August 6, 2007
Page 8
Health Care Costs
Consumers make inefficient decisions when
utilizing health care
New prescription drugs and increased usage
New technologies and treatments – and higher fees
charged by hospitals and physicians
Increasing prevalence of chronic diseases and
health conditions
Aging population requiring more medical care
What Is Driving the Increase?
Some reasons include:
Page 9
Encourage active
involvement in making
health care decisions
while emphasizing preventive
care
The AT&T Approach
Movement Toward Balanced Plan Designs
Monthly ContributionsPremiums for Coverage
In-Plan Components
Deductibles
Coinsurance
Copays
Out-of-Pocket Maximum
Network Preventive Care Provided at 100%
Medical Plan Design
Page 10
Health Care at AT&T
AT&T Health Care Objectives
Maintain a healthy workforce and engage employees
in behavior changes
Offer high-quality, cost-effective health care
coverage that is valued by AT&T employees and their
families
Target employee contributions at market levels to
attract and retain talent while ensuring a competitive
cost structure for our products and services
Create greater employee involvement in controlling
health care costs and making informed health care
decisions
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$5.5 billion
Total Annual AT&T Health Care Expense
AT&T subsidizes health care coverage for more than1.2 million people
747,000 Active employees and dependents
485,000 Retirees and dependents
$5.5 billion in revenue...
• Places a company on the Fortune 500, ranking ahead of Barnes & Noble, Pacific Life, Hershey and Western Union
• Is roughly as much as Advertising & Publishing revenues in 2008
• Is greater than the total annual Medicare expense of 34 states in the U.S.
AT&T Health Care
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$3,200
$3,150
$740
$6,200
$6,350
$10,170
Health Care Challenge
AT&T wireline non-management
usessignificantly more health
care and shares a minimal
percent of the costs
Employee-Paid Employer-Paid
Annual Average Health Care Costs (2007)
AT&T Wireline Non-Management
Wireline Non-Management Health Care Among Most Generous
• Wireline non-management employees make minimal contributions to health care costs – no monthly payments, little to no deductibles and small copays
• Only 65 percent of U.S. companies provide subsidized health care
AT&T Management
National Average
$10,910
$9,500
$9,400
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Page 15
Midwest IBEW
Health Cost Trend
Midwest Bargained employees
use substantially more health
care and share a lower amount of the
costs
Source: For AT&T Data - February 2009, Union Data RequestsFor National Averages - Hewitt, Health Value Initiative, September 2008For Cable – Hewitt, based on Cable company benchmarks
$11,300
$9,400
$10,910$10,450
$9,870$9,200
Employee-Paid
Employer-Paid
$280 $640 $650 $740
$3,200 $2,800
$8,920 $9,230
$9,800 $10,170
$6,200
$8,500
2004 2005 2006 2007 Nat'l Average2007
Cable2007
What AT&T is Doing to Address the Health Care Issue
Health Care Plan Strategy
Working closely with health plan providers to control
costs and ensure performance
Emphasizing individual accountability and
responsibility
Improving quality, efficiency and effectiveness of
care
• Health management programs
• Performance-based health care strategies
• Improved prescription delivery
• Electronic health care records
AT&T Efforts to Improve Health Care
Page 17
Focus on a healthy lifestyle
Make wise economic health care decisions
Utilize available online tools and resources
Use the right care, at the right time, in the most
efficient manner
• Use Network providers
• Consider generic prescriptions, when available
• Become engaged in health care choices
• Utilize preventive services
How AT&T Employees
Can Assist in Managing Health Care Costs
Page 18
Summary
Summary
Health costs continue to escalate at an alarming rate –
Company costs per employee have increased almost 25
percent over the life of the current contract
Total medical costs for AT&T wireline bargained-for
employees are 19 percent higher than the national
average
AT&T wireline bargained-for employees enjoy a premium
level of benefits, yet pay only a quarter of what other
employees pay when compared with the national average
Employees and dependents must have a vested financial
interest in making decisions that control health care costs
In order to remain a viable entity in a highly competitive
market, AT&T must maintain a competitive cost structure –
and health care is a large part of that equation
Page 20