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Mercer

The Kaiser Family Foundation recently polled Americans to identify their health care priorities for the next President and Congress. At the top of the list were issues related to prescription drug costs – specifically, making sure drugs to treat chronic conditions are affordable for consumers (74%) and government action to lower drug prices (63%). From an employer’s perspective, the latter is more important, as it would manage the total cost of the drug rather than simply limiting a member's out-of-pocket expense, which just shifts cost back to the plan. While drug prices will be a hot topic for lawmakers and the regulators to address when new leaders take office in January, employers might not want to wait and hope. Over the next five years, it is expected that 40 new specialty drugs will hit the market each year. Now is the time to develop a strategy to get in front of that influx of new high-cost drugs.

 

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The Kaiser Family Foundation released survey results from a recent public opinion poll. There were some interesting findings concerning what Democrats think about Obamacare compared to Republicans. One take-away for employers is that 83% of those asked – whether Republican or Democrat— said they have seen stories about sharply rising health insurance premiums.  But most didn’t realize that these were rates for the public exchanges, or as the article put it: “Just 10 percent of respondents correctly said the stories related to individual Obamacare plans.” This could mean that open enrollment communications will be good news to employees. Mercer’s survey indicates that health benefit cost will rise by only about 4% in 2016, and all indications are that we’ll see a similar increase in 2017.     

 

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Yesterday may have been International Women’s Day, but employers should view every day as an opportunity to attract, retain, and promote women in the workplace. Mercer has an extensive body of research in this area, highlighted in our 2016 Global When Women Thrive report – the most comprehensive and predictive of its kind. “It has been a momentous year for the global women’s agenda with key voices – legislators, economists, businesses and academics – all calling for more action and more resolve around gender parity,” says Pat Milligan, Global Leader of Mercer’s When Women Thrive initiative, in this HR Dive article. “We continue to elevate our voices and the conversation, yet our research shows the pace at which we’re moving means that gender parity remains a long way off.” Employers need to look closely at what they’re doing to promote gender diversity, particularly in terms of involving men in the conversation and implementing robust pay equity analysis processes. An easy way for benefits professionals to support the cause is to offer retirement and financial education focused on women. Less than 10% of organizations offer this type of education despite proof that such practices drive future representation.

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While the word "resilient" is used in different ways, it boils down to how we approach a stressful situation – do we perceive it as purely frightening, or as an opportunity?  If we've never been seriously stressed or tested, we don't know how resilient we are. As this thought-provoking article in The New Yorker describes, researchers who studied children from challenging backgrounds concluded that resilience is a skill that can be taught. That's good news for employers. In the work environment, employers can boost resiliency by finding ways to give employees a sense of control over their own circumstances – the 'internal locus of control' that is discussed in the article. Providing mentors and building a supportive culture can also help. And a growing number of employers – 42% of those with 500 or more employees, according to Mercer's latest survey – are working with outside vendors to offer employees programs that teach resilience or stress management skills.

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Medicare data has long been used as a barometer for health care costs overall, but a new study illustrates the vast differences between Medicare spend and private insurance spend, per capita, in various regions and hospital systems across the country. While it may come as no surprise that spending levels differ between Medicare and private insurance, the extent of the discrepancy is startling. Grand Junction, Colorado, with the third-lowest rate of Medicare spending in the country, was exemplified as a model of better, cheaper health care in Atul Gawande’s widely read “Cost Conundrum” article in 2009. However, it turns out to be one of the most expensive health care markets for the privately insured. As Gawande points out in his take on the recent data findings in this New Yorker article, one of the reasons is that “Medicare can use its authority to set prices for hospitals. Private insurers can’t.” Private insurers must negotiate with hospitals and so the leverage of either party in a particular region is going to directly impact prices. The differences in cost also expose other problems in health care spending, including how hospitals are compensated (for quantity, rather than quality of services) and the lack of competition (meaning, no incentives to keep prices down). While the hospital payment system is not an issue that is going to resolved today, this study lends new urgency to the ongoing movement to transform provider reimbursement.

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Catalyst for Payment Reform (CPR), with the release of their Employer-Purchaser Guide to Quality Measure Selection, helped separate some of the signal from the noise as employers continue to ramp up their focus on delivering higher quality yet efficient care to their members.  CPR’s report addresses a question on many purchasers’ minds: Are the measures of quality that my health plans and providers focus on the ones that really matter?  CPR’s report echoes Mercer’s perspective: Focus on a set of meaningful, practical and focused measures as a starting point to move the needle on improving performance. The report specifically flags measures in terms of implementation feasibility and provides employers with some “how tos” to move things forward.

 

Value-Based Care, in one form or another, is part of every employer’s plan. CPR’s Guide helps provide clarity to one of the most complex parts of the puzzle.

 

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There were a lot of headlines last week when the federal government released US health care spending projections for the next 10 years. An average increase of 5.8% is predicted from 2014-24.That’s up from the historically low increases in 2007-2013 (under 4% annually), but still considerably better than the 9% annual increases of the three prior decades. As this article from The New York Times suggests, with the economy improving and more people gaining insurance under the ACA, you would expect overall spending on health care to rise. But what about the per-person cost of health coverage? Last year Mercer’s National Survey of Employer-Sponsored Health Plans found that employers experienced a 3.9% increase in per-employee cost in 2014 (compared to the 5.5% increase in overall spending announced by the government) and that they expected cost to rise by just 4.6% in 2015. The steps they’ve taken to slow cost growth in their own plans is one factor helping to keep US spending on health care in check even as more people gain coverage.

 

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March 23, 2015, marked the five-year anniversary of the signing of the Affordable Care Act (ACA). Also in 2015, the public exchanges began their second year of operation, and the Employer Shared Responsibility (ESR) requirements went into effect after a year’s delay. ESR sets minimum standards for plan value and affordability, which most employer-sponsored plans already met before the ACA was passed. However, it also mandates that employers offer coverage to all employees working 30 or more hours per week, and over a fourth of all employers did not meet this requirement at the time of the law’s signing. Many waited until 2015 to make the changes needed to avoid penalties. This made open enrollment for 2015 something of a wild card. With employers expanding eligibility to more employees, it was possible we would see a spike in enrollment levels.

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The following is an extract from “When Women Thrive, Businesses Thrive,” a report on Mercer’s compelling new study of gender diversity in the workplace. Results are based on 178 submissions from 164 companies in 28 countries covering 1.7 million employees.

 

As organizations have sought to attract and retain more women over the past several decades, many have added a plethora of programs and benefits intended to provide women and other employees with additional flexibility and support. By offering everything from health care coverage, family leave, and assistance with child care to onsite gyms, lactation rooms, and beauty salons, organizations have provided real benefits to women and others struggling to combine family and domestic responsibilities with careers. It seemed logical to assume that by continuing to add programs, organizations could continue to make progress in attracting and retaining women.

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It’s well known that working women earn less money than their male counterparts, but they may also be at a disadvantage when it comes to health benefits. Using data from Mercer’s National Survey of Employer-Sponsored Health Plans, we compared companies with workforces that are 65% female or more to those with workforces that are 65% male or more. About half of the mostly female companies are in health care and about a quarter are in the services sector, while mostly male companies are found predominately in manufacturing. The percentage of employees in collective bargaining agreements is about the same for the two groups, at just under 15%. Not surprisingly, when the workforce is mostly female, the average salary is about $10,000 less than when the workforce is mostly male.

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Here’s a statistic to keep in mind as we head into open enrollment season: 41% of employees spent less than 15 minutes researching their benefit options for 2013. That’s dismaying, considering that Americans typically spend four hours selecting a computer and two hours selecting a TV, both of which cost far less than the $6,000+ most families spend on health insurance in a year – but somehow not terribly surprising. If, like many employers, you’re introducing significant benefit changes for 2015, you might use that statistic in your communications to get employees thinking about how they research their other purchases -- for example, by reading consumer reports and reviews or comparing specifications -- and encourage them to apply similar focus to their benefit options.

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A couple of weeks ago we reported preliminary findings from our latest National Survey of Employer-Sponsored Health Plans showing that employers predict an average increase of 3.9% in total health benefit cost per employee. If their prediction is accurate, it will mean a fourth year of cost growth under 5%.*

 

It’s important to note that the 3.9% projection takes into account the changes employers will make to hold down cost growth. If they made no changes, cost would rise an estimated 5.8%. It’s also important to remember that 3.9% is only an average, and that some employers — 23% — expect to see no increase in per-employee cost at all, while 15% are bracing for increases of 10% or more.

 

Range of Projected 2015 Cost Increases

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