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.
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.
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.
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.
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.
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.
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.
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.
Health Care Reform Five Years In, Mercer’s latest survey on health reform, asked employers about open enrollment results for 2015 to determine the impact of ESR on employer-sponsored plans. We found that while enrollment did not rise on the national level, some employers had quite significant increases, while others reported decreases. The survey also examined how the ACA is affecting workforce strategy, and asked about employers’ preparations for avoiding the excise tax on high-cost plans in 2018 and for meeting ACA reporting requirements.
The survey — the eighth in our series on health care reform — was fielded in January and February of 2015. Respondents included 568 employers of all sizes, industries, and geographic locations in the US. The full report is now available, and you can download it here.
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.
However, what this research makes clear is that the provision of programs, while certainly aligned with the needs of women and likely helpful in improving gender diversity in the workplace in the past, is no longer enough — and may even lull some organizations into complacency. For example, although flexible work schedules and maternity leave are associated with higher current female representation throughout organizations, they are also correlated with slower improvement in female representation at the executive level. And while organizations that offer a greater number of such programs also have greater representation of women, we again see slower improvement in female representation in executive positions.
We see these results as an indication that some organizations are substituting active management of their female talent through the different stages of their professional lifecycle — and real leadership engagement in improving gender equality — with off-the-shelf programs that are insufficient on their own to promote advancement into the leadership ranks. In fact, without proactive and engaged support for her career development, a woman who avails herself of programs that help provide better work/life balance as needed during certain periods of her career may be unwittingly deprived of the encouragement or opportunity to seek new challenges and advance her career during other stages of her professional lifecycle. In addition, ingrained bias and negative stereotypes within the organization may put any employee who takes advantage of options such as flexible schedules and leave at a disadvantage when it comes to performance ratings and promotion.
Francine Blau and Lawrence Kahn (2013), Cornell labor economists, summarize part of the challenge with managing flexible leave programs as follows:
“While parental leave and part-time … policies appear to raise women’s labor force participation, it is plausible that [they] reduce the likelihood that women will be able to enter high-level jobs, which generally require full-time, full-year, career-long commitments. [Furthermore], more generous leave policies and a higher incidence of part-time [opportunities] may lead employers to engage in statistical discrimination against women as a group, anticipating that women will take advantage of such opportunities.”
As evidence that such stigma might be attached to women leveraging such programs, we found that it does indeed matter who uses available programs. We asked organizations to report which benefit or talent management programs were most important for retaining and developing female talent. Greater usage of organizations’ “top 5” programs (those ranked as most important for retaining and developing female talent) by women is associated with higher current female representation [in executive roles]. But similar usage by women and men is associated with improved future female representation. We also see improved future female representation when programs are more widely used.
We conclude that the impact of various programs and benefits on gender diversity has more to do with the way the programs and the employees who take advantage of them are led and managed than it does with simply whether or not the program is offered. As further evidence of this, we found that, although offering maternity leave to employees is correlated with lower projected representation of women at the executive level, among organizations that also ranked maternity leave as one of the top five benefits for meeting the needs of women, there is no negative correlation between the program and future female representation. This suggests that companies that view maternity leave as a critical program to strengthen diversity are actively managing their employees before and after their leaves, with no negative implications for overall career development.
From the conclusion of the report, here is some advice on how to help ensure that benefit programs support true gender diversity:
- Broaden your understanding of what it takes to support women. Look beyond typical programs when considering how best to support and enable all talent. For example, we find that gender-specific programs focused on either health or financial wellness, neither of which is a common practice today, are associated with improved diversity.
- Implement new programs and benefits ONLY in the context of an enabling environment. Foster an organizational culture that is comfortable with different employees contributing to the overall enterprise in different ways and that actively manages women so they effectively utilize available programs and benefits in the context of their overall career development.
Download the full report and learn more about how Mercer can help address gender diversity issues.
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.
Pay and benefits tend to go hand in hand. The health benefits at organizations with predominantly female workforces are also less generous than in those with predominantly male workforces. Because women generally use health services more than men, the disparity in benefit levels has an even greater financial impact. Women use maternity services, and childbirth, the leading cause of hospitalization in the US, accounts for a quarter of all hospital stays. We found that average employee contributions as a monthly dollar amount are higher in mostly female companies: For coverage in a PPO, the most common type of medical plan, the monthly contribution for family coverage is 31% higher. In addition, average in-network and out-of-network deductibles and out-of-pocket maximums are consistently higher. For example, the average in-network PPO deductibles in mostly female companies are $727 and $1,614, respectively, for individual and family coverage, compared to $557 and $1,318 at mostly male companies.
And the benefit gap doesn’t end with active employment. Mostly male companies are also more likely to offer retiree medical benefits — 27% offer medical coverage to pre-Medicare-eligible retirees, compared to just 19% of the mostly female companies.
The Affordable Care Act (ACA) targeted some health plan coverage practices that discriminated against women. For example, health plans are now required to cover “essential benefits,” which include maternity and newborn care, an annual mammogram for women starting at age 40, and domestic violence screenings. Due to the ACA, most women enrolled in employer-sponsored plans now have access to free contraception. In addition, in 2015, when the Employer Shared Responsibility mandate goes into effect, more US employees will have access to employer-sponsored coverage as companies are required to extend coverage to all employees working 30 or more hours. The industries most affected by this new rule are those with large populations of part-time workers — which also tend to be industries that employ a lot of women. Currently, about a third (36%) of companies with mostly female workforces do not provide coverage to all employees working an average of 30 or more hours per week. They will be required to do so in 2015.
It is important for all employers, and especially those with largely female workforces, to understand the difference in how men and women use health benefits to ensure that plans meet their needs in an affordable manner. One solution may be to offer a range of choices that allow workers to choose between plans with lower premium contributions and higher deductibles, and plans with higher up-front cost but lower cost sharing. Thoughtful dependent coverage tiers and salary-based contributions can also address equity concerns. Because women use health benefits more, it stands to reason they value them more. For employers with a mostly female workforce, the right health benefit package might be the key to a more engaged, productive, and loyal workforce.
Alyssa Grabfield from Mercer conceived and performed the data analysis and assisted with the reporting.
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.
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
How to explain this variation? A number of factors that can affect health plan experience from one year to the next, such as high-cost claims, changes in the employee population due to a merger or acquisition, or changes in the provider network, are beyond an employer’s control. Fully insured employers are vulnerable to carrier rate hikes, especially in markets with limited competition. But our research shows that the steps an employer takes — or doesn’t take — to manage cost over time have a significant impact on their health plan cost and cost growth.
For a third year, we analyzed survey results to see to what extent health plan cost is affected by the use of about 25 best practices (listed below) — strategies ranging from meaningful health plan cost sharing to the use of delivery system innovations such as telemedicine and surgical centers of excellence.
When 1,121 large employers (those with 500 or more employees) responding to our 2013 survey were divided into three roughly equal groups based on the number of best practices they have implemented, as shown in the bar graph at the top of this article, the average per-employee total health benefit cost was 8% percent higher for those in the bottom group — those using the fewest best practices — than for those in the top group.
These encouraging findings, similar to the results of our past analyses, lend support to the belief that the slower cost increases of the past few years are partially the result of concerted employer actions. Perhaps this is why, even after the public health exchanges have become a reality, the largest employers — those with the resources to implement the most sophisticated cost-management strategies — remain the most committed to providing health coverage for the foreseeable future. The advent of private health exchanges, which can incorporate many of these best practices, may offer an opportunity for employers of all sizes to benefit from the strategies shown to bend the health cost trend.
* Mercer will release the actual cost growth for 2014 in November, based on employer costs through September 2014. The Kaiser Family Foundation’s survey, released in September, reported a cost increase of 3% for 2014.