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There has been much focus lately on the dramatic differences in the cost of services from hospital to hospital and market to market, and questions about the lack of price transparency abound. But even more concerning is the variation in quality. According to a May 2016 study by the National Center for Health Statistics, CDC mortality statistics don’t tell the whole story. If “preventable medical errors” were on the list of the leading causes of death in the United States, they would rank 3rd, claiming more lives than diabetes, strokes, and respiratory disease each year. To add to this, we know that the patient experience is sub-optimal at best and, in healthcare, we know there is no known relationship between cost and quality. All of this makes a strong case for Centers of Excellences, or COEs.

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There have been lots of stories in the news over the past week about the Department of Justice suit to block Anthem’s purchase of Cigna and the Aetna and Humana deal. As Tom Murphy reports, leadership from both Anthem and Aetna have committed to defend the lawsuits. The final outcome remains uncertain and could entail a prolonged legal process. The two questions we have been hearing from employers are “what does this mean to us?” and “should we go out to bid now or wait and see what happens?” From an employer perspective, nothing changes – you should continue to refresh your benefits strategy and actively manage your health benefits to meet your goals and objectives. This includes aligning with vendor partners that best support your strategy. We recommend that employers not delay a vendor selection due to this potential consolidation. As the legal proceedings unfold, employers will have visibility into any activity that could impact their vendor partner and their member population. The cost trend for employer-sponsored health coverage has hovered around 3% for the past several years – proof we are managing cost while still providing meaningful health benefits. Don’t let this slow you down!

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This month, the International Federation of Health Plans (iFHP) released its 2015 Comparative Price Report, a look at medical prices per unit in private health plans in seven OEDC countries, including the US. While you can guess that most procedures, tests and scans cost more in the US, you might be surprised at the size of the discrepancies. Let’s take a look at the most common surgical procedure performed in the US – the appendectomy. According to the iFHP, the average cost of an appendectomy in the US is almost double the cost in the UK and quadruple the cost in Australia. While the report doesn’t explain the higher average US cost, it does offer a clue by showing how widely prices for this surgery vary within the US – from about $9,000 at the 25th percentile to about $33,000 at the 95th percentile. This degree of cost variation – when it doesn’t result in better outcomes – is why US employers have turned to transparency tools, reference-based pricing, and value-based care.

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Democrats convene this week at their national convention in Philadelphia on the heels of last week’s Republican gathering in Cleveland, and while no issue divides the parties as starkly as healthcare, they agree that states should take a leading role in healthcare reform.

 

The Democrats' platform pledges to “empower the states” to use the Affordable Care Act’s Section 1332 “innovation waivers.” Starting in 2017, these waivers can – if approved by federal regulators – exempt states from one or more key ACA reforms such as the employer mandate, individual mandate, or public health insurance exchanges. The waiver lets a state tailor its own health reform initiative, provided it doesn't reduce the number of insured individuals and adheres to certain other restrictions. States that secure waivers receive federal funds that otherwise would have been spent on public exchange subsidies. Colorado and New York, for example, are considering proposals to pursue waivers to launch single-payer healthcare initiatives.

 

Other items in the Democratic platform call for allowing people to buy into Medicare starting at age 55, reducing prescription drug costs, capping consumers’ out-of-pocket costs, creating a public insurance plan option, and giving states new incentives for Medicaid expansion.

 

While the Republican platform calls for repeal of the ACA, it urges restoration of states’ “historic role” as regulators of health insurance and limited federal involvement. The platform also contains several familiar themes including broader distribution of tax breaks for the purchase of healthcare, greater price transparency, and purchasing pools for small businesses and individuals.

 

The party platforms are more wish lists than to-do lists for a new administration, but they provide key messaging points ahead of the elections and will help frame the policy debate next year.

 

Before leaving for the conventions, Congress left behind a number of bills with implications for employer health care plans. Lawmakers return after Labor Day for a brief work period before leaving again to campaign ahead of the November election. Certain proposals with bipartisan backing could cross the finish line this year as part of larger tax or spending bills, but most bills, such as one liberalizing HSA rules, face dim prospects.

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Mercer’s Washington Resource Group recently released our top 10 compliance priorities for 2017 health benefit planning. There aren’t any surprises on this list. In fact, we’ve recently blogged about many of them. Employee Benefit News created a slide show on our Top 10 and here is a list of related posts and podcasts if you want to take a deeper dive into a topic. 

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The thinking on financial wellness has evolved a lot in the last few years. It’s no longer just about planning for retirement—it’s about how to make progress towards goals and reach financial independence. In a diverse employee population, people are in different life stages and have different mindsets, which affect their financial concerns. Here are five tangible ideas to start a conversation about financial health in your workplace to bring about positive change.

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In an unprecedented move, JAMA published President Obama’s status report on the ACA. In it, the President details the impact of the ACA using charts and data from various sources and offers up some suggestions for what should happen next.

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There’s a lot of buzz about the health care cost report from the Obama administration just published in Health Affairs. Robert Pear in The New York Times provides a balanced take, but the news is being spun in many different directions. The report estimates that national health spending increased 5.5 percent in 2015, to a total of $3.2 trillion, and will easily surpass $10,000 per person this year. That’s faster than the historically low increases we’ve seen in the recession and years of slow recovery (bad), but still slower than during the two decades prior to the recession (good). One reason for the faster growth is a stronger economy, allowing more people to afford the care they need (good); another is soaring prescription drug costs (bad). The report predicts that health spending will grow an average of 5.7 percent a year from 2017 to 2019 and then 6 percent a year from 2020 to 2025. Our National Survey of Employer-Sponsored Health Plans finds that employers, with a lot of hard work, have been holding average annual increases in health benefit cost per employee to about 4% and expect to do so this year as well. That’s also both good and bad – it’s slower than national spending growth overall, but still faster than inflation and in the long run unsustainable. The most sobering number in the government report? The prediction that by 2025 health care spending will account for 20% of the GDP, a far higher percentage than any other developed country in the world (ugly). Of course, back in 1993, it was predicted we would hit that milestone in 2003 and we didn’t – that’s the good news, if you want to call it that.

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The move from fee for service to payment for value is real. This blog post on the Health Affairs site provides a glimpse into the progress being made with this new approach to contracting with providers. I was struck by one sentence in particular – Patients are the most underutilized resource to help reach positive medical outcomes. Since 155 million Americans are covered by employer-sponsored health plans, employers are in a unique position to be able to influence patient behavior. With the advent of consumer-directed health plans, health advocacy and other well-being programs, we have made strides in promoting consumerism and empowering patients. While we have a long way to go to get plan members more comfortable and confident in this role, there’s a big potential upside.

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We got a question in response to our post Checklist: Want to Increase Your CDHP Enrollment? Try This.

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DOL overtime rules are not just a compensation issue. Check out this slide show with advice on how to approach compliance with the new rules, compliments of Employee Benefit News and our Mercer colleagues. But when evaluating changes in your compensation strategy, don’t forget to consider the benefits implications as well. Be sure to quantify the impact of the new salary threshold ($47,476/year) on benefit costs – for defined benefit plans, 401k match, life insurance, LTD, etc. Compliance with these new DOL rules could be an opportunity to reconsider affordable contributions under the ACA, since increases to salary base may allow for higher employee contributions for employers using rate-of-pay or W-2 safe harbors. Separately, evaluate whether reclassified employees will be subject to a different tracking method under the ACA 30-hour rule – it can get complicated! From a documentation perspective, check eligibility definitions for benefits to be sure they are consistent across plans and align with your compensation strategy. 

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Key provisions of IRS proposed rules released last week cover many issues related to ACA premium tax credits including the affordability impact of opt-out payments to employees who decline employer coverage. The affordability of employer-provided coverage affects whether employees and their family members can receive premium tax credits or cost-sharing subsidies from public exchanges, which in turn can trigger employer shared-responsibility assessments. The proposed rules on opt-out arrangements would, if finalized, apply to plan years beginning on or after Jan. 1, 2017.

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