Posts belonging to Category health insurance

Will Employers Stop Offering Health Benefits?

Ezekiel Emanuel (an oncology doctor, professor of ethics at Penn and brother of Chicago mayor Rahm Emanuel) was one of the architects of the Affordable Care Act — which, as we all know, mandates that employers with at least 50 full-time-equivalent employees provide health insurance. So it’s a bit surprising to learn that Emanuel has just written a new book in which he predicts that, as a result of the ACA, most employers in the United States will have stopped offering health benefits to their employees by 2025.

Why will companies stop offering health benefits? Because, Emanuel argues in the book — Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System (how’s that for a title?) — the online insurance exchanges will provide employers with a viable alternative for doing so. Now, after you’ve picked yourself up off the floor from laughing so hard at the idea of being described as a “viable alternative” (although many of its worst bugs appear to have been fixed), note that Emanuel does acknowledge the botched rollout of the federal online exchange and some of the state ones, yet he describes others (such as Connecticut’s state exchange) that are working well. If all of the exchanges are fixed to the point that consumers can obtain health insurance by spending only 30 minutes or so enrolling, he says, then companies will indeed have a viable alternative to the expense and administrative hassles of providing benefits and can instead simply give their employees money to go out and purchase benefits on their own. The ACA’s excise taxes on high-cost health plans scheduled for 2018 are yet another incentive to get out of the health-benefits game, says Emanuel.

Private exchanges, which are essentially a defined-contribution approach to health benefits, have certainly sparked a lot of interest among employers lately. As many as 33 percent of respondents said private health exchanges would be their preferred approach to managing health care in the next three to five years, up from 5 percent now, according to Aon Hewitt’s Health Care Survey of more than 1,230 employers covering in excess of 10 million employees (Aon happens to be one of the vendors that offers a private exchange; others include Towers Watson, Buck Consultants and many smaller vendors). Brian Poger, CEO of consulting firm Benefitter, said at the just-concluded Health & Benefits Leadership Conference in Las Vegas that for many employees — especially low-wage workers with families – the health coverage available on public exchanges might be a better deal than that provided by their employers, considering that many have cut back or eliminated coverage for spouses and families.

Jettisoning traditional health benefits has yet to become a major trend among U.S. employers: Accenture estimated that 1 million employees enrolled in private exchanges last year, a tiny percentage of the nation’s workforce (although it also estimated that number could grow to 40 million by 2018). There is also the risk that employees on private exchanges will “buy down” — that is, purchase less-costly plans that may ultimately leave them with less coverage and worse health outcomes than traditional health plans, which tend to have “marginal” price differences, Mike Thompson, healthcare practice leader at PwC, told me last year. Companies that switch to private exchanges may also risk breaking the linkage between benefits and wellness, he said.

The expression “paradigm shift” is an overused cliché, but it’s clear we’re in one now when it comes to health benefits. Rest assured we’ll continue to cover this area closely.

Innovation Central

One of the most dynamic sessions at this year’s Health & Benefits Leadership Conference was the “Ideas and Innovators” session, in which experts from a variety of fields give five-minute presentations summarizing their thoughts on what HR leaders should do differently with regard to benefits.

Here’s a sampling of what some of them had to say: Lindsey Pollak, a millennial workplace expert and spokeswoman for The Hartford insurance company, called on companies to encourage mentoring between baby boomers and millennials. “Ninety percent of the millennials we surveyed said they appreciated guidance from boomers,” she said. “Millennials are digital natives, so they can mentor boomers in the use of technology.”

Millennials want the ability to customize their benefits, she said: “Millennials weren’t given teddy bears as kids; they were taken to Build-a-Bear workshops — they’re used to having things tailored for them.”

The same Hartford survey found that 70 percent of millennials consider themselves leaders, whether in their families, workplaces and communities. Companies can harness this leadership spirit for health and wellness, said Pollak — yet must keep in mind that millennials have also proven to be slow to sign up for benefits such as disability insurance. “Millennials aren’t taking advantage of these benefits — you must reach them on this.”

Brian Poger, founder and CEO of consulting firm Benefitter, urged employers to consider getting out of the business of providing health benefits (perhaps an odd thing to hear at a conference devoted to employee benefits). “Most employee raises are being absorbed by rising healthcare costs,” he said. “Why not offer cash instead of health benefits?”

Poger cited a McKinsey survey that found 85 percent of employees would stay with their employer even if they stopped offering health benefits. Many employers are charging signficantly higher premiums for spousal and family coverage or dropping it altogether, he said, which can be a major hardship for families earning the U.S. median household income of $51,000 a year. “Giving employees cash to purchase a family policy on the exchanges may be a better deal for them,” he said.

Lexie Dendrinelis, health promotion and wellness leader at manufacturing firm Barry-Wehmiller Cos., discussed how her company has made leadership and culture — rather than exercise and eating well — the centerpiece of health and wellness. “People can’t focus on their personal health if they’re stressed out about an unsafe workplace,” she said. “Building trustworthy leaders and cultures is the best intervention.”

At Barry-Wehmiller, the company has committed to building a “caring culture” where “we are committed to sending our friends home safe, well and fulfilled.” The company uses incentives and rewards to highlight positive behaviors and takes a “holistic approach” to caring for its employees and families, said Dendrinelis. “We are looking at creating a thriving culture that will bring down healthcare costs.”


Lessons from a Trusted Source

Consumer Reports has been a trusted source of information for folks in the market for a new car, a toaster oven or a snowblower. So why not healthcare?

I could be mistaken, but as a long-time subscriber, I’ve been noticing an increasing number of healthcare-related articles in Consumer Reports as of late. Articles86507521 like “Six Last-Minute Health Insurance Buying Tips” and “Six Tips for The Last Month of 2014 Health Care Open Enrollment.” But as Tara Montgomery made quite clear in her March 18 keynote during HRE‘s Health & Benefits Leadership Conference at Caesars Palace in Las Vegas, CR‘s commitment to healthcare these days goes well beyond an article here or there.

In its very first issue, Montgomery pointed out, CR covered healthcare, with a story on Alka Seltzer and whether it lived up to all of its claims.

But it wasn’t until around 2003, she explained, that CR expanded its efforts in the healthcare arena. Then, five or six years ago, she said, CR really stepped up its efforts as quality data started to emerge.

Montgomery, who is senior director of health partnerships and impact at CR, walked attendees through the multitude of products CR offers, and the partnerships it’s engaged in, that are aimed at informing consumers and giving them tools for making better decisions. (HRE also recently interviewed Montgomery, if you’d like to read more.)

Leveraging the trust inherent in the CR brand, Montgomery said, “We want to teach consumers how they can become better shoppers for healthcare.”

Near the end of her presentation, Montgomery offered attendees some of the lessons CR has learned along the way, including:

  • How valued its brand is to employees. “There’s a lot to be said for using a trusted messenger in this alienating healthcare system,” she explained.
  • There are a lot of good, positive stories that can be told regarding health and well-being, and people who have taken responsibility for their health.
  • You have to “push” your messages, because people are not out there seeking this kind of information, just yet.
  • When you put the right tools at the point of decision-making, good things happen.
  • Personalize what you do.  “One size fits all is not very helpful,” she said. “Don’t talk to everyone at once, but segment your audience.”
  • Use entertainment and humor in your communications. The organization is able to take advantage of its team of journalists, who are talented storytellers—and that is much better than sending out official documents.
  • Put safety first, which almost always results in cost-savings, too.
  • Write your materials at the 7th grade level. CR‘s research has found that even consumers with a high literacy level are extremely comfortable with communications at that level and didn’t feel the material was dumbing down to them. (Also, don’t make it text heavy and use graphics.)
  • It’s OK to incorporate games, but make sure that they’re truly helpful and not just gimmicky.
  • Make sure your messages have cultural relevance. “Don’t just show generic individuals sitting in the doctor’s office,” she said.

Creating a Culture of Well-being

The breakfast spread—fresh fruit, yogurt, oatmeal, muffins—preceding yesterday’s opening keynote at the 2014 i4cp Conference at the Fairmont Scottsdale Princess should have been a clear giveaway as to the focus of this year’s opening keynote.

457068405Author Tom Rath, whose latest book is Eat Move Sleep, opened the conference with an engaging and thought-provoking talk on well-being and productivity. (Rath apparently delivers keynotes all the time, but this was the first time I personally heard him speak.)

Rath notes that the big question far too few corporate leaders ask is: How do we ensure that employees have the energy they need to be effective on a day-to-day basis? (Rath noted that only 8 percent of employees say their well-being is better off because of their employer.)

If organizations want to build an engaged and productive workforce, he told attendees, leaders are going to need to begin to ask that question.

One interesting sound bite from Rath’s remarks was that the relationship employees have with their boss or manager has a huge influence on their well-being and engagement. (In other words, bad bosses will inevitably result in unhealthy outcomes.)

Based on the research out there today, he said, “we wonder if the quality of your immediate manager may be more important for your physical health than the quality of your physician.” That’s certainly a sobering thought.

Rath noted that, when followers were asked what they want from their leaders, trust was at the top of the list. But right up there as well was caring. “If you were to step back and say, ‘What’s the hallmark of any great relationship between a leader and manager, and someone who works for him or her?’ ” he said, “I would say it’s that sense of caring … .”

At a little more than 200 pages, I’m looking forward to reading Eat Move Sleep (which was generously included in attendees’ registration packets) on my trip back to Philadelphia. I’ll be the first to admit I could probably do a lot better on all three fronts. Perhaps Rath’s book could be of some assistance.

Employees’ Share of Healthcare Costs Going Up

employees paying moreHealthcare costs for large U.S. employers rose at the smallest rate in 15 years last year (at 4.1 percent), and are expected to rise at 4.4 percent this year, according to a just-released survey from Towers Watson and the National Business Group on Health. The annual survey, based on responses from 595 large U.S. employers, also finds that while the vast majority remain committed to providing benefits to active employees, they expect to make moderate to significant changes to their plans in the next few years.

Employees are continuing to bear a greater share of healthcare costs, with the survey finding that employees now pay more than $100 more per month for healthcare compared to just three years ago. Employees’ share of premiums increased by nearly 7 percent to $2,975 this year, while the total share of costs borne by employees has climbed from 34.4 percent in 2011 to 37 percent in 2014.

Employees can expect to continue paying more for spousal and dependent coverage, with nearly half (49 percent) of employers having increased employee contributions for dependent tiers at higher rates than for individuals and another 19 percent expecting to make this move next year. Nearly one quarter (24 percent) of companies now use spousal surcharges of $100 per month when other coverage is available elsewhere to the spouse. Notably, only 56 percent of companies believe subsidized healthcare for spouses will be “very important” for 2015 and beyond — down from 70 percent who say it is very important today.

Before jumping on the “let’s dump spousal coverage” bandwagon, though, employers may want to consider an EBRI report last month that found doing this may not save companies money after all.

Do Workers Value Their Benefits?

disgruntledThe latest Mercer Workplace Survey finds that the perceived value of employee benefits among workers who participate in their company’s health and retirement benefits is starting to erode — especially among the younger generation. Workers under the age of 50 who say their benefits are “definitely worth it” in terms of what they pay out of pocket has “dropped precipitously” in two years from 45 percent to 30 percent, according to Mercer.

The survey, which is based on input from 1,506 employees enrolled in their companies’ health and retirement benefits, finds that benefits are still critically important: 93 percent agree with the statement “My health benefits are as important as my salary” while 86 percent disagree with the statement “My benefits don’t matter much to me.”

These rising levels of discontent can at least be partly attributed to cost-shifting by employers, says Mercer’s Beth Umland:

Out-of-pocket expenses for employees are likely to continue to rise. We’re seeing more cost-shifting and rapid growth in high-deductible consumer-directed health plans as employers are asked to cover more employees under health reform.”

Employees are also undoubtedly peeved about cutbacks in 401(k) matches and delayed matches by many companies. Although AOL has reversed its decision to delay its 401(k) match (CEO Tim Armstrong had originally said the delay was needed to compensate for the cost of “distressed babies,” among other things), other large firms like JPMorgan Chase, Oracle and Caesars Entertainment have reduced or delayed payment of their 401(k) matches and lengthened vesting schedules for their DC plans, according to an analysis of hundreds of government filings by Bloomberg News.

IBM shifted last year to a lump-sum payment of its 401(k) match, similar to what AOL originally did. Oracle stretches out the vesting schedule for its DC plan participants: employees are 25-percent vested after their first year of employment, another 25 percent vested after a second year and fully vested after four years with the company, according to Bloomberg.

These measures can make it much harder for employees to save enough for retirement, Brigitte Madrian, a Harvard professor who studies retirement policy, told Bloomberg:

There’s been an implicit contract for years and years — workers save and companies match — but now they’re changing the rules. Most individuals can’t do it on their own. We’re going in the wrong direction.”

The Mercer findings directly contradict a new survey from Guardian Life Insurance Co. which finds workers value their benefits plans more than they did two years ago.

Guardian says this increase in perceived value “suggests that American workers are valuing their benefit packages more than ever and reaffirms the value of workplace benefits for employers’ business strategy, especially for retaining employees.”

Getting More Value from Your Healthcare Spend

There’s been no shortage of tools released over the past few years aimed at improving the way healthcare purchasing decisions are made. As most employers know only too well, making wise decisions on this front is no easy feat. But with the combination of valid data and the right kind of tools, employers should find themselves in a much better position to get more value from their healthcare spend.

To that end, the National Business Coalition on Health released first thing yesterday morning at the group’s  annual conference in Scottsdale, Ariz., an online decision-support and planning tool called ValuePort. Later that morning, NBCH Chief Operating Officer Karen Linscott walked me through a quick demo of the product, pointing out its various features and how they work together.NBCH

Specifically, the tool has three components: a calculator to identify and prioritize areas to improve employee health and realize cost savings for 12 of the most prevalent health risk and chronic conditions (diabetes, obesity, depression, etc.); analysis of the employer’s progress in adopting value-driven health practices; and evidence-based strategies to improve employee health and, in turn, reduce costs. (The tool also includes access to a variety of published case studies and other content.)

ValuePort, which was funded in part  by the Centers for Disease Control and Prevention, was tested in a pilot phase this year with seven business health coalitions involving 40 employers. At first, licensing of the product will be limited to coalition member organizations, with each coalition determining how it will market it to its members. Sometime next year, NBCH will make the tool available to third parties and non-member organizations.

A year from now, Linscott said, NBCH has set its sights on having about 15 to 20 coalitions licensing the tool, with each one having between five to seven participating employers.

Linscott said that the tool is designed to give purchasers a “clear understanding of where they are today in terms of opportunities to improve the value of their healthcare spend and trend that improvement over time.”

While she acknowledges other tools are out there, Linscott explained that ValuePort is the only one she’s aware of that brings all of the pieces together.

As more and more employers begin to use the tool, Linscott said, employers will be in an even better position to benchmark other organizations. “Employers are highly motivated by what the Jones are doing and are seeking objective information that shows them whether someone is doing things better than they are,” she added.

Linscott is hopeful ValuePort will be able to deliver that information and more.

Tomorrow’s the Exchange-Notice Deadline

If you haven’t done a thing yet to become compliant with the Affordable Care Act’s Oct. 1, 2013, deadline for posting and distributing your public-healthcare-exchange notices … well … kinda too late at this point, right?

99274052--gavel and hourglassThe good news is there’s no penalty in place yet for ACA noncompliance. That won’t be ushered in now until Jan. 1, 2015, when the emplyoyer mandate is enforced. And the U.S. Department of Labor also just announced several days ago that there will be no penalty for failing to comply with the exchange-notice deadline tomorrow.

But, penalties or no, if you haven’t gotten your ducks lined up, there’s much to be done. This post on The National Law Review website spells out in detail just what’s required of you, effective tomorrow — the same day all exchanges must be open for enrollment for coverage starting Jan. 1, 2014:

The health-insurance-exchange notice must provide employees with information necessary to make informed decisions about their health insurance. The notice must explain what the web-based exchange is; include information about the premium subsidies that may be available if an employer’s plan is unaffordable or does not provide minimum value; and explain the consequences if an employee decides to purchase a qualified health plan through the exchange instead of employer-sponsored coverage. (The notice does not, however, need to explain what insurance options may be available online.) The notice may be distributed electronically or via hard copy, and while there is no requirement to obtain an employee’s signature, employers may want to track delivery and receipt of the notice. Additionally, after Oct. 1, 2013, employers are required to provide notices to new hires within 14 days after the date of hire.”

The Law Review post also contains links to the two model notices the DOL has made public — one for employers that do offer health plans to their employees and another for those that do not.

And remember, this notice requirement applies to all employers subject to the Fair Labor Standards Act, whether they’re consiered “applicable large employers” (employing at least 50 full-time-equivalent employees) or not. Where that “large employer” differentiation will apply will be in the enforcement of the delayed employer mandate. (No doubt I’m sharing things most of you are fully aware of, but I figure it doesn’t hurt to remind.)

I contacted Lori Basilico — a partner at Boston-based Edwards Wildman Palmer specializing in employee benefits — just to get her sense of what tomorrow’s deadline would bring. Since the DOL’s notice that there would be no penalty for Oct. 1 noncompliance, she told me, there won’t be too much frantic scuffling.

Besides, she says, “most of my clients seem to be complying with it anyway.”

The real confusion lies in what’s coming in 2015 and what that means you’d better be doing in 2014 to get ready, says Basilico. The biggest confusions among employers, she says, are twofold. One conundrum is whether they’re “applicable large employers,” penalizable under the new law. The stickler here is what constitutes an FTE — which could, in turn, impact your 50-or-more count. The law sets the definition of FTE at 30 hours a week or more, but what about “part-timers and other people who don’t necessarily work around hours counted?” says Basilico. “For universities, there’s confusion around adjunct professors, for instance.”

The second big confusion — actually integral with the first — has to do with who’s full-time and who’s part-time. “This gets very confusing for people hovering at, say, 29 to 30 hours a week,” she says. Maternity leave and Family and Medial Leave Act leave might also muck up the waters, as might the ACA’s “look-back” clause designed to help employers accurately count their FTEs prior to the employer-mandate enactment … as might the fact that that date was extended a year from January 2014 to January 2015 awhile back … as might the fact that, under the law, part-timers’ hours can be aggregated to equal FTE counts … the “as might” list goes on.

Yes, Basilico says, “it’s going to be difficult for awhile, but as soon as employers get this figured out, once a couple years have gone by [and they've lived with the law and gotten it under their belts], this will be easier … .”

And how are employees feeling about all this? In a recent Tell It Now poll, timed to coincide with tomorrow’s exchange-notification deadline, Chicago-based ComPsych asked employees in its database, “How concerned are you about upcoming healthcare changes (ACA/’Obamacare’)?” Seventy-five percent said they were either very worried or somewhat worried. Here’s the actual breakdown:

  • 47% said, “I’m somewhat worried: I’m not sure how I will be impacted or what to expect.
  • 28% said, “I’m very worried: The changes will impact me significantly, and I don’t know where to turn for information.
  • 25% said, “I’m not worried: The changes won’t impact me/I know what to expect.

If nothing else, this should provide you with some impetus to examine your communication initiatives around “Obamacare” to ensure they’re relieving whatever worries they possibly can. And what better time to get started than the day your exchange notification is due?


Taking a Pulse in the Big Easy

There seems to be little question that the Affordable Care Act and Exchanges were top of mind for those benefit managers attending this year’s Benefits Forum and Expo in New Orleans.

That’s certainly what many told me during the breaks when I asked what brought them to the Big Easy, besides the gumbo and jambalaya. Further evidence could be found at the well-attended sessions addressing those topics.

One such workshop was “Mercer’s View on Benefits Exchanges: What’s the Buzz,” which surveyed the Private Exchange landscape (including Mercer’s own Marketplace offering) and the different approaches available to employers. The session was presented by Mercer Partner Chris Covill, who shared why he thought Private Exchanges are likely to continue to gain traction.

In his presentation, Covill cited one-stop shopping and the ability to offer a menu of options for employees as significant selling points. Employers also view “decision-support tools” as a crucial component of any Exchange, he said, adding that companies “want to make sure their employees are making the right decisions.”

179273064Covill said he couldn’t share specific client names or how many employers have signed onto Mercer Marketplace, but indicated they number in the dozens, including two “large, jumbo employers.” (As you might expect, Private Exchanges will be among the topics covered at HRE’s Health and Benefits Leadership Conference next March in Las Vegas.)

ACA and Exchanges, of course, weren’t the only issues on the agendas of those attending the Benefits Forum. More than a few of the attendees I spoke to said they were there to primarily scout out fresh ideas on the wellness front.

To be sure, companies continue to crave meaningful ways to effect and sustain behavioral change on this front. (Hopefully, attendees will return home with a few ideas.)

At one session, titled “Building a Culture of Wellness Without Breaking the Bank,” I was reminded that wellness programs don’t necessarily have to cost employers a king’s ransom.

That workshop focused on Brookings, Ore.-based C&K Market Inc., a 2,100-employee grocery chain that was recognized as one of the healthiest employers based in Oregon in 2012. Beginning a few years ago, C&K started to build out a full menu of wellness options for all of its employees (as well as their spouses and dependents), including programs focused on weight loss, walking, smoking sensation, financial assistance and screenings.

In all, C&K spends around $310,000 a year for its wellness initiatives, many of which are done internally, according to Kate Wilkinson, general counsel and director of human resources for C&K. Its team-based weight-loss program, called Biggest C&K Loser, utilized sponsor-donated incentives aimed at getting people enthused about the program. Its cost: just around $10,000.

Seeking a Remedy in Healthcare

As of this morning, we can add one more large employer to the list of those embracing private exchanges: Walgreens.

158362155Walgreens joins the ranks of IBM, Darden and a handful of other large employers that have pulled the trigger on private exchanges. In its press release, the drugstore chain said it would be providing its 160,000 eligible employees with coverage through Aon Hewitt’s Corporate Health Exchange.

Kathleen Wilson-Thompson, Walgreens senior vice president and chief human resources officer, describes the initiative (branded as the “Live Well Benefits Store”) this way …

“Under this new program, employees will have expanded choices to personalize their health care coverage in a competitive environment, giving our diverse workforce the flexibility they need to meet their health care needs. We will continue to invest in the health of our employees and their dependents while using a marketplace solution that offers a wide variety of plan options that meet the affordability standard of the Patient Protection and Affordable Care Act.”

To date, many employers have taken a wait-and-see approach to private exchanges. But in light of Walgreen’s announcement this morning, one would think more, particularly in the retail sector, could be taking an even closer look in the months ahead.

Meanwhile, in another healthcare-related development announced this morning, Penn State has backed off of its well-publicized plan to charge “a $100 monthly surcharge for Penn State employees who fail to participate in a screening portion of a new wellness initiative … .”

Despite the fact many private employers have instituted such penalties, Penn State officials have been on the defensive ever since the plan became public.

Penn State President Rodney Erickson put the reversal this way ..

“We have decided to suspend the $100 per month surcharge so that people who are uncomfortable with any aspect of the survey will not feel as if they are being penalized. There is still a tremendous financial challenge that we must address in the coming year and beyond, but we also need to acknowledge the concerns of employees and seek their advice on how to overcome these fiscal roadblocks and still provide quality health care.”

In announcing the shift, Senior Vice President for Finance and Business David Gray pointed out that the university still needs to address double-digit increases in the cost of healthcare, but for the time being anyway, this surcharge isn’t going to be part of the equation.