Category Archives: health insurance

What CFOs Really Want

Considering the high cost of healthcare today, it’s safe to assume most chief financial officers are hungry for meaningful data surrounding health and productivity. But you’d be mistaken were you to think CFOs were just interested in claims data.

At this week’s IBI/NBCH Health and Productivity Conference at the Fairmont San Francisco, Integrated Benefits Institute President Thomas Parry unveiled the findings of his group’s “Making Health the CFO’s Business” study, which looked at CFOs’ perspectives on the role of health on financial performance.

As might be expected, researchers found that most CFOs, especially those one out of every three executives the researchers identified as “health and productivity leaders,” consider health an organizational imperative, with roughly two-thirds of the 313 respondents viewing health as a “cultural or financial” priority in their respective organizations. But the study also revealed several intriguing data points surrounding the kinds of metrics CFOs’ value most.

According to the findings of the study, which was produced with the help of CFO magazine, most CFOs believe health can have an impact on financial performance in both conventional ways (healthcare expenses and sick-day absences) and less conventional ways (opportunity costs and staffing requirements). “It’s not just about healthcare cost, but all of the other dimensions as well,” Parry said.

In light of this finding, he adds, benefit professionals might want to rethink the kinds of information they’re generating and sharing with their CFOs.

“If you need to make a case to your CFO as to why you need to make an investment, and the only thing you have to build your case on is healthcare costs, you’re going to have a much harder path than your counterpart in another organization who can talk about sick days, absences, turnover and opportunities lost,” says Parry.

Interestingly, the study found CFOs put a fair amount of weight on self-reported metrics, such as employee-satisfaction surveys and workforce health risks. “The idea that self-reporting information is useless flies in the face of what we found,” Parry said.

CFOs also said they find information from their own organizations (such as claims costs, employee surveys and program results) to be more credible than external sources of information, modeled estimates and recommendations from suppliers and consultants.

At the end of its report, IBI offers benefit professionals a handful of lessons learned. But one of the more memorable ones is the need to better understand the mind-set and goals of the CFO before you begin to have a conversation. It just might get you to rethink the kinds of metrics you decide to bring along with you.

Doctor’s Orders

Changing a person’s behavior is obviously no easy feat. But as Dr. Arthur M. Southam reminded those attending yesterday’s opening the session of IBI/NBCH Health and Productivity Forum at the Fairmont San Francisco, it’s an absolute necessity if employers are ever going to successfully get their hands around the “root causes” of America’s healthcare woes.

Southam, executive vice president of health plan operations for Kaiser Foundation Health Plan Inc. and Kaiser Foundations Hospitals in Oakland, suggested to those attending the meeting (produced by the Integrated Benefits Institute and National Business Coalition on Health) that a significant portion of the problem can be tied to just four behaviors: diet, physical activity, smoking and alcohol. “If we can address these four issues, then we’re on our way to tackling 70, 80 or 90 percent of the possible causes …” he said.

Not surprisingly, Southam spent a disproportionate amount of time focusing on the issue of obesity. Despite all of the attention it’s received in recent years, Southam reported that obesity rates continue to soar and, in turn, “undermine everything else we’re working on.”

While awareness and education are important, Southam believes they represent only a small part of the solution. Much more important, he said, are the skills and tools for supporting behavioral change. Southam pointed out that mobile devices and social media, in particular, represent the next frontiers in changing behaviors, especially when they give employees the ability to interact with others who have similar conditions.

Through extensive research, Southam said, he’s also identified a “miracle prescription” that can go a long way to providing relief.

“We’ve come up with a technology that is both preventative and therapeutic,” he said. “It significantly improves obesity, heart disease, cancer, diabetes, depression, respiratory disease and a host of other conditions. It significantly reduces time-off, has no side-effects, comes at a very low cost and requires a minimal up-front investment.

“Everyone can do it and it has an addictive potential … ”

What’s it called? “Walking!”

Were every American to walk 30 minutes a day, five days a week, Southam said, the rate of Type 2 diabetes would be cut in half. That’s right, half!

I imagine it wasn’t a coincidence that pretty much everyone skipped the escalator and took the stairs as they left for the evening reception in the Fairmont’s Crown Room.

One in Five Older Americans Are Cutting Back

Some fresh data released by the Employee Benefit Research Institute that may not come as a huge surprise. Still, that doesn’t make the findings any less disturbing.

A new EBRI report found that one in five Americans age 50 or over report saving on health costs by switching to cheaper generic drugs, getting free samples, stopping pills or reducing dosages. What’s more, nearly as many said they skipped or postponed doctor appointments for the very same reason.

There’s no way to know how that might compare with the state of things five or 10 years ago, since this is the first time EBRI analyzed its data in this way. But the analysis offers further proof that the ability of older Americans to make ends meet these days is showing up in healthcare behaviors.

One in five seems “quite high,” especially when you consider these cuts involve “essentials,” says the study’s author, Sudipto Banerjee.

Suggesting that this is an issue employers can’t afford to overlook as they revisit their plan design and communication strategies later this year.

A full report can be found in the January 2012 EBRI Notes, “Spending Adjustments Made By Older Americans to Save Money,” at

CLASS is Out

A long-term insurance plan enacted under the healthcare-reform law — the Community Living Assistance Services and Support Act — has been eliminated by the U.S. Department of Health and Human Services because it is unaffordable.

In a letter to Congress released on Friday, HHS Secretary Kathleen Sebelius wrote:

“Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” Sebelius wrote.

According to an article on

The law required the administration to certify that CLASS would remain financially solvent for 75 years before it could be put into place.

But officials said they discovered they could not make CLASS both affordable and financially solvent while keeping it a voluntary program open to virtually all workers, as the law also required.

Monthly premiums would have ranged from $235 to $391, even as high as $3,000 under some scenarios, the administration said. At those prices, healthy people were unlikely to sign up. Suggested changes aimed at discouraging enrollment by people in poor health could have opened the program to court challenges, officials said.

“If healthy purchasers are not attracted … then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market,” Kathy Greenlee, the lead official on CLASS, said in a memo to Sebelius. That “would cause the program to quickly collapse.”

David Shadovitz wrote in HREOnline™ about the law when it was made voluntary instead of mandatory — with experts saying that it would post “a host of educational and administrative challenges” for employers.


U.S. Chamber’s Address a Plea for Return to Job Growth

The U.S. Chamber of Commerce used its annual Labor Day briefing today to call on the Obama administration and Congress to get rid of regulations choke-holding U.S. businesses and take immediate steps toward job growth.

According to its release following the 10 a.m. briefing in Washington, the Chamber plans to send a jobs plan to the president and Congress next week “outlining specific, practical steps we can take to help quickly create new jobs,” including approve pending trade agreements and “remove the regulatory barriers that are weighing down our economy.”

“The economic data tells the story,” said Martin Regalia, the Chamber’s chief economist. “The current policies coming out of Washington are not creating economic growth. Both the administration and Congress need to come together to remove the barriers to job creation and open up new markets.”

Randy Johnson, the Chamber’s senior vice president of labor, immigration and employee benefits, pointed out that employers are spending close to $8 trillion on total compensation and $1.5 trillion on employee benefits, while covering 170 million Americans with health insurance and more than 100 million in pension plans.

“Businesses want to expand and hire more workers,” he said, “but they continue to be held back by a rising mountain of burdensome regulations … .

“Still, we are in difficult economic times,” Johnson said, “and it is distressing that [increasing regulations continue to impose] uncertainty and increased costs on employers.”

Your Workers May Be in Worse Shape than You Think

HR and benefits professionals might be surprised to find out — if they asked — just how on the edge financially their employees are … and how many of them in these dire straits there really are. They also might raise an eyebrow or two to learn how many on-the-edge workers actually don’t think a debilitating or catastrophic event could impact them or their family.

Such was the warning from Audrey Tillman, executive vice president of corporate services at the Columbus, Ga.-based supplemental and guaranteed-renewable insurance provider, in an interview Monday. She was referring to the results of a study released earlier this month, conducted by Harris Interactive on behalf of Aflac.

The 2011 Aflac WorkForces Report shows 51 percent of American workers say they are not very, or not at all, prepared to pay for out-of-pocket expenses not covered by major-medical insurance. What’s more, six out of 10 workers do not have a financial plan in place to deal with an unexpected and costly life event, such as a medical emergency. And 31 percent have less than $500 in savings for emergency expenses.

“Remember, these are people who are working!” Tillman says. “These are the people one would assume have some sort of financial stability. We found these statistics startling.”

The study also finds that only 19 percent of employees think it’s likely that they or a family member will ever be diagnosed with a chronic illness, such as heart disease or diabetes, and only 13 percent say they think a serious illness, such as cancer, will ever occur or that there will be a need for long-term care.

Yet, according to the National Safety Council, more than 25 million people in the United States suffered accident-related disabling injuries in 2008 and the American Heart Association reports nearly one in three deaths in 2006 was caused by a form of cardiovascular disease. “So, clearly, these things are happening,” says Tillman.

Worse still, “about half of the workers we surveyed said they’re already struggling with financial stress, and again, remember, these are the people who are working,” she says. “These surveyed employees are real people in the workforce.”

When asked how they would pay for out-of-pocket expenses due to an unexpected illness, 44 percent said they would have to borrow from family or friends, tap retirement savings or use a credit card.

And, for the clincher, 19 percent — one out of five people — have no idea how they would cover the costs.

Aflac products and services aside, says Tillman, this should sound a reverberating wake-up call to employers to take a fresh account of the benefits they’re providing and, in this economy, with so many Americans living on the edge, “make sure the benefits they are providing really make a difference and are really providing that safety net” so desperately needed right now.

“What this says to me as an HR executive is that it’s time many of us survey our employees to find out where the real needs are,” she says. “We should be taking a new look with a critical eye, through our own research and workforce analysis, to become fully aware of what really impacts people.”

Supplemental insurance, for instance, which could mean the difference between financial ruin and recovery in the event of a catastrophe, and which a significant number of employers still don’t offer, “may have to be added in place of something else that may not seem so critical in this economy,” says Tillman.

“The pressure has been on HR to hold the line and cut back on costs,” she says. “This may not feel to an HR executive like a good time to revolutionize the system.”

But workers whose employers provide for them when catastrophe strikes, she adds, will not only stay on as productive workers in the long run, “they’ll become champions for that company.”