Ricardo Alonso-Zaldivar, AP (Published by The Washington Post)
- Don’t overlook the concerns raised by key healthcare industry stakeholders. Within the healthcare system nothing happens in isolation, and repealing and replacing the ACA will certainly have an impact on employer-sponsored plans. *A must read*
Margot Sanger-Katz, The New York Times
- The Republican’s ACA repeal and delay plan assumes the sustainability of the current healthcare system while they put a replacement plan in place. This article questions that assumption and warns that even a carefully planned delay may result in an unintentional quick repeal for some Americans. *Worth the time*
Haeyoun Park and Troy Griggs, The New York Times
- If your employees have questions about repealing the ACA, give them this link. It’s the simplest explanation that we’ve found. *Quick and easy*
Mercer’s Washington Resource Group
- House Republican leaders, President-elect Trump, and HHS nominee Tom Price have all have ACA repeal and replace proposals. This article compares the proposals' key features, which offer some indication of what a final ACA replacement plan may look like. *Skim this one* (Mercer Select Intelligence membership required. Not a member? Learn more)
A campaign promise to repeal the ACA is one thing, while figuring out how to dismantle the massive law with its many far-reaching elements is quite another. This Washington Post article discusses the paths Trump and Congress could take to walk back various parts of the healthcare reform law. According to the article, the GOP majorities in both chambers are likely to use the reconciliation process to overturn key aspects of the ACA that involve federal spending, such as the subsidies granted to millions of working Americans to help them pay for health coverage. But reversing other parts of the law, such as its insurance marketplaces, or instituting various Republican-backed healthcare approaches, would require a political path that could be more arduous. The ACA rules that affect employer-sponsored health plans are not grabbing the headlines and don’t get much ink in this article, either. But the message for employers that’s emerging is that this Band-aid will be coming off slowly. It’s not too soon to start thinking about how to position your program for the changes ahead.
It is hard to argue that employers have not done a pretty good job in recent years managing cost. The threat of the excise tax obviously had something to do with that, and keeping health benefit cost growth to about 4% annually has required some effort. We at Mercer think we have helped our clients make some great strides in the fight to manage health care cost and improve quality with initiatives like Mercer Complete Care, a personalized advocacy and clinical care solution, and our new Specialty Pharmacy PBM Carve-out offering. We have also implemented Quality Improvement Collaboratives (QIC) in several metropolitan areas across the country to bring employers together with providers to improve the quality of hospital care.
But that is not enough. There is still so much to be done and we believe employers must be the agent for change – after all, they provide health coverage to over half of Americans! When we look back over the past 10 years, the greatest strides in health benefits were driven by employers.
Our challenge to our clients and to the entire employer community is to focus on what we call the “four vitals” for healthcare transformation:
- Pay for value – Aligning reimbursement with value, not volume.
- Drive to quality – Delivering the right care at the right time, in the right setting, error free.
- Personalize the experience – Leveraging better data and technology to engage employees in the right behaviors, every day.
- Embrace disruption – Injecting change into the system, with internal stakeholders and external partners, to be future-ready.
Sharon Cunninghis, North American Leader of Mercer’s Health business said it best: “Employers are pivotal players in today’s healthcare system, yet their role has remained remarkably passive. In fact, employer-provided coverage translates into a nearly one trillion dollar annual spend. The time has come for employers to work with other key stakeholders to translate this potential leverage into actual market transformation – and we see our point of view as the roadmap.”
And if lower cost trend and better outcomes are not enough of an incentive to take charge and be one of the leaders, remember that a healthy workforce is strongly aligned with increased productivity, reduced absenteeism, higher retention, and better overall engagement – key ingredients of business success.
Time for us all to up our game.
For more on this, check out our article in BRINK News.
This New York Times article offers an interesting “compare and contrast” analysis of public exchange plans versus employer-sponsored plans. Whether you’re satisfied with benefits on the public exchange really comes down to your perspective. If you were among the millions who were previously uninsured, you’re likely to be happy with your exchange coverage. If you came to the exchange after having had employer-sponsored coverage, the story is very different. A more limited choice of providers in the health plan network and higher out-of-pocket requirements are among the chief differences noticed by those coming off employer plans. In the end, a typical plan on the public exchange “looks more like Medicaid, only with a high deductible.” So while the public exchange is helping to fill a gap in the U.S. health care system, it’s not proving to be a source of comparable coverage for early retirees or those who would like to quit a corporate job to freelance or start a business. And each year, as these plans get skinnier, we’re seeing fewer employers that would even consider dropping the company plan to send employees to the public exchange.
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!
Benefit teams have had a lot to cope with lately – ACA reporting, the new ADA/GINA wellness rules, and the Cadillac tax, to name just a few of the high-priority issues on their plates. So it’s not surprising that when we ask clients about their absence, disability, life solutions (ADLS), they tell us they haven’t had time to review them over the past few years. And many don’t see much to be gained from a review, since they don’t believe they would be able to negotiate a better rate.
But we’ve found that a cursory underwriting review that’s completed in as little as one day may identify opportunities to reduce program costs – in some cases, by as much as 25%. As you work on your strategic planning for 2017, take a look at your ADLS programs and remember there is always room for negotiation, even during your rate guarantee period.
The only time carriers may increase rates during a guarantee period is when lives/volumes fluctuate significantly (usually +/-10-25%). So reviewing your experience during the rate guarantee can only identify a savings opportunity or confirm the current pricing. Given the competitive nature of the ADLS marketplace, our experience has been that carriers are willing to partner with employers, offering rate decreases when warranted, during a current rate guarantee period.
At renewal time, don’t automatically accept rate increases. Even if your loss ratio is over 100%, there may be significant negotiation opportunity on the incurred claims (specifically the reserve component). It’s important to keep in mind that most long-term disability carriers base these reserves on a book of business; rather than a specific employer. If you understand how your rates are set, you are in a better position to negotiate them down.
It’s important to confirm the terms of the renewal. Many employers incorrectly assume that certain terms will automatically renew or that actuarial calculations must be reasonable. Here are some questions to ask your carrier:
- Are they using the most recent base reserve table?
- Will all performance guarantees automatically renew? Request a formal renewal to make sure you’re getting the strongest guarantees possible.
- Have all employees eligible for waiver of premium been identified? Even when you have integrated the LTD and waiver of premium programs, employees may be missed because of differing definitions of disability or other reasons (e.g., manual intervention in the claim process).
- If you instructed your carrier to price basic and supplemental life on a stand-along basis, confirm this is still the case.
- It’s easy for busy underwriters to miss a step when ensuring supplemental life rates do not cross Table 1. Confirm the work was done correctly so you remain compliant.
Other points to keep in mind: Benchmarks are not audits! Benchmarks may be helpful indicators but the only way to objectively assess a carrier’s claim management performance is to perform a claim file review audit. You can start with a short one-day claim file review to confirm if a larger sample is needed. It’s a good idea to conduct these short claim file reviews on an annual basis; at minimum every 2-3 years.
Finally, don’t be afraid to renegotiate ADLS contracts. While most fully insured and ASO contracts will auto-renew, an employer can review and renegotiate the terms of these contracts at any time.
This post is part of our 2017 Planning Checklist series.
Employee well-being programs have become a mainstay in employers’ overall benefit offerings. Most large employers offer programs designed to support health and well-being, and each year our National Survey of Employer-Sponsored Health Plans finds that more are contracting optional and niche services from health plans or specialty vendors, as opposed to offering just their plan’s standard services or in-house initiatives (48% did so in 2015, up from 30% in 2012). That’s why we were surprised to see a recent Wall Street Journal article suggesting that employers may be taking a step back from wellness programs. The article pointed to SHRM’s 2016 Employee Benefits Survey, which found that certain wellness program elements have decreased in prevalence, notably onsite seasonal flu vaccinations and 24-hour nurse lines. But although certain services are being offered less, the study reports that more employers are increasing wellness offerings (45%) than decreasing them (19%). It also highlights that employers are becoming more strategic in their program offerings; if employers are taking a ‘step back’, they’re doing so to take stock of their current offerings and evaluate what works best for their workforce.
Other developments in the health care ecosystem may account for changes in wellness program offerings. As access to retail health clinics continues to expand, making flu shots easier and cheaper to obtain than with a primary care physician, some employers may pull back on this offering and dedicate those budget dollars to other well-being resources. And our survey found sharp growth in offerings of telemedicine in 2015 (from 18% to 30% of large employers) and advocacy services (from 52% to 56%), both of which may be taking the place of some previously offered 24-hour nurse lines.
Employee well-being programs will continue to evolve as employers assess their offerings, whether based on participation levels, employee surveys or ROI analysis. Health care market developments and innovations that arise will also impact well-being offerings, but it’s clear that these programs have become an essential part of the American workplace and are here to stay. There was lot of buzz earlier this year over a study published in JOEM (which we’ve written about here) linking robust health and well-being programs with better stock performance – perhaps because the findings resonated with many sponsors of high-performing programs who have been hoping for a better way to measure the value of their investments in employee health.
There’s been a lot of discussion lately about the gig economy. According to the Bureau of Labor Statistics, 15 million people in US were self-employed in 2015. It is predicted that by 2020 more than 40% of the workforce (60 million people) will be independent workers – freelancers, contractors, temporary employees. Harvard Business Review called it “the rise of the super-temp” and predicted that – perhaps contrary to current perceptions – these contractor positions will be held by the best and the brightest. There are even new platforms to pair talent with businesses, like Contently, Hourly Nerd, Field Nation, and our own Mercer PeoplePro.
Consider the next generation of workers – digitally savvy kids who see the global grid as their toy. Pair that with two more trends – an increasingly global labor pool and the aging baby boomer population interested in retirement on their own terms. What does this mean as we think about the future workforce and a possible “new normal” for benefits?
In Mercer’s 2016 Global Talent Trends study, 85% of the nearly 2,000 HR leaders who participated said that their talent management program and policies needed an overhaul. We also surveyed about 4,500 employees for the same study, and even including those who say they are generally satisfied with their current organization, one in three are seriously considering a change in employment in the next 12 months. Typical underlying factors include lack of development, outdated processes, and discontent with their manager’s role.
How big of an issue is pay? Looking at survey results from the past five years, we find that pay satisfaction levels have been steady – but with only about 55% of employees surveyed reporting that they are satisfied. Few think pay-for-performance is adequate. Fewer see how their work contributes to the organization’s overall goals. Few think they are fairly paid. What do they say about benefits?
- 89% say benefits are just as important as salary
- More than a third are already having trouble paying for health care now and about half express anxiety for the future
- Being able to afford health care in retirement is the top savings objective
Returning to the gig economy, it looks to me as if an employer that wants or needs full-time workers will have to make a case not only that their organization is a better place to work than their competitors’, but that full-time employment beats independent work! That will be harder to do if talented workers believe that the employer-sponsored health plan doesn’t provide adequate coverage and they need to take matters in their own hands in terms of paying for health coverage. And employers that can hire contract workers will still need to consider how to help keep them healthy, productive and engaged.
All of this to tee up a couple of questions that will need answers sooner than you might think: What do we need to do to attract workers going forward and what will the new normal for benefits be?
More employees leave their employers during the first 12 months after having a child than at any other time. That’s not surprising when you consider the added stress, late nights, and new responsibilities that a newborn brings. The need for flexibility and work-life balance almost always intensifies after the birth or adoption of a new child, and a growing number of organizations are trying to ease the burdens of new parents by offering generous leave benefits. Employers that compete the most for talent – like those in high-tech – may have started the trend, but now even more traditional employers are feeling the pressure to provide attractive leave benefits. “It’s almost an arms race to come up with the most innovative, generous and creative programs,” says Mercer’s Rich Fuerstenberg in this Houston Chronicle article. Between paid leave of 20+ weeks, the option to avoid business travel for one year, and so-called “baby money” for extra expenses, employers are going above and beyond what’s required by federal law (just 12 weeks of unpaid parental leave for eligible employees by employers with 50 or more employees). Expect to hear more about parental leave in the coming months as the presidential election heats up and it becomes a key policy issue. Employers should use this opportunity to look at the demographics of their organization and decide if expanding parental leave benefits would make their value proposition more competitive in this tight labor market.
Employee Benefit News recently recognized 50 visionaries who are “driving technology innovation, overcoming organizational and technology barriers, deploying leading-edge technology, and shaping benefit technology regulation and policy” – including our own Dr. David Kaplan, leader of Mercer’s Innovation LABS team. More than ever before, employers are keenly interested in the latest innovations as they realize the value of creativity and forward-thinking solutions to stay competitive in this tight labor market. Mercer’s LABS team has worked with quite a few innovative companies this past year – Rethink Benefits, Kurbo Health, and ConsejoSano, to name a few – to facilitate the process of bringing their solutions to market. Innovation is more than just a buzzword, and the latest benefits and perks aren’t just for Silicon Valley start-ups. Innovation is absolutely key for any organization when it comes to talent attraction and retention; your organization’s value proposition needs to reflect the expectations and dynamics of today’s workforce and their families.
We caught up with Dr. Kaplan for a quick conversation on how innovation – in particular, technological – will change the employee benefits landscape over the next 10 years.
Dr. Kaplan: Digital technology will allow employers to offer personalized benefits that are both broader and more meaningful than the benefits offered today. Despite the huge financial commitment that employers have made in benefits, they too often go underappreciated by participants.
Us: How so?
Dr. K: The classic scenario for this underappreciation is when a specific benefit configuration does not cover an individual’s most important issue and is therefore viewed as an “inadequate” benefit program despite the “value” of the coverage. For example, if an employee has a child with autism and an employer offers nothing to support a family facing this challenge, the employee may not feel like they have “good benefits”.
Us: What’s the role of technology in addressing this problem?
Dr. K: Over the next 10 years, digital technology will make personalization of benefits possible through two mechanisms. The first is administrative simplification which allows employers to offer much more complex and flexible plans including true “flex” plans that will allow employees to choose the coverages that matter most to them. The second is digitalization which will empower the development of a much broader range of point solutions that can be offered at an attractive price point for employers and employees alike.
A new report from the Conference Board signals tough days ahead for employers. In the next 10-15 years, they project the demand for labor in the US will exceed supply. A labor shortage puts added pressure on organizations to retain existing employees – something that is already a top concern of human resources leaders. In a recent Human Resources Executive survey – What’s Keeping HR Up at Night? – respondents reported eroding levels of employee engagement as their #1 concern. Of the 12 strategies to boost employee engagement and retention that the survey asked about, only three showed an increase in usage: enhancing employee benefits, offering/enhancing wellness programs and increasing/improving leadership training. As the war for talent escalates, it will be increasingly important for benefits professionals to understand their organizations’ staffing projections and plans. This will allow them to respond with benefit and wellness offerings that aid in the recruitment and retention of employees in a tight labor market.
The deadline for ACA reporting to the IRS about coverage in 2015 was extended from March to June, and at this point most employers have a handle on their results. As reported in our recent survey – Living with Health Reform – virtually none of the nearly 650 survey respondents believe they will be liable for the “a” assessment – meaning they all offered coverage to substantially all employees working 30 or more hours per week. And just 8% thought they might be at risk for the “b” assessment – meaning that some of their employees might qualify for and obtain subsidized coverage on the exchange because their employer’s plan did not offer affordable contributions or meet minimum plan value requirements.
However, the requirement to offer coverage to “substantially all” employees working 30 or more hours per week will get harder to meet in 2016 when the definition of “substantially all” increases from 70% to 95%. Employers with limited-duration employees, like long-term temps and interns, might become liable for an assessment. About one in four respondents say they will pull back on use of these workers, and another 16% are considering it.
Are you interested in learning more about the ACA’s impact on employers and how they are responding? Join us for our April 28 webcast where we’ll share more of the highlights and insights from our latest survey.