Last week, The Henry J. Kaiser Family Foundation released new data showing only one in four Americans favor repeal of the ACA. About half of the respondents want Congress to leave the ACA alone or make it bigger and stronger. Contrast that with the results from our latest Mercer poll, where 63% of participating employers said they favored repeal-and-replace of the ACA; only 15% said they oppose; and 22% said they don't have an opinion yet. Why the difference? When pondering repeal, employers may be hoping for elimination of the cost and administrative burdens imposed by the ACA, where individuals may be concerned about losing some of the protections afforded by the ACA – for example, the ban on pre-existing coverage exclusions and coverage eligibility to age 26.
Now that ACA repeal seems imminent, the Kaiser data may indicate the ACA individual protections are more important to Americans than we realized. The data shows that among Republican voters those favoring repeal declined from 69% in October to 52% in November and those who would prefer Congress merely scale back the law increased from 11% in October to 25% in November.
Whatever Congress ultimately decides to do with the ACA, it’s important for employers to know what employees want from their health plan. If you don’t already know, find out what your employees value. Under a repeal scenario, you may choose to retain some of the ACA’s individual protections to promote your organization’s recruitment and retention efforts. Now’s the time to explore how repeal may impact your health strategy so you’re ready to respond to the changes Congress and the incoming Administration will make to the ACA.
This candidate looks awesome: great experience, glowing references. But you noticed her hesitancy when you mentioned your company’s health benefits—the “one-size-fits-all” plan.
It’s the dilemma every small and mid-sized business (SMB) runs into: You need to recruit Tesla-level talent. But your health benefits are more like a 10-speed. Sure, you could buy better benefits, but it would cut into your profit margins. Not a good look when you’re growing.
Health Benefits For SMBs: Is There A Solution?
Actually, yes. A whole new ecosystem of health benefits is arising that puts the consumer at the center. You just have to know where to look.
It starts with a savvy advisor, who will know right off the bat that you’ve got plenty of options. She should tell you about:
- Network value solutions: With these options, commercial health insurers can keep premiums low by assigning members to specific high-quality, efficient health systems.
- High-deductible consumer-directed health plans: Premiums are lower because of the high deductible, while a health savings account allows tax-advantaged saving for health expenses. Millennial workers tend to prefer this option.1
- Added benefits such as supplemental health, legal, and financial wellness: For many candidates, these voluntary benefits complete the package.
- Well-being resources: Think health advocates, health coaches, and wellness programs. These services help your employees manage their own health.
It might come as a surprise, but comprehensive benefits solutions, like Mercer Marketplace 365+, that offer all of the features above have been developed for small to mid-sized businesses, providing more options for employers and employees alike.
SMBs: Getting A Piece Of The Action
These forward-thinking benefits solutions are no longer just the domain of large employers. They’ve become a necessity for small to mid-sized businesses. In fact, 9 out of 10 employees say receiving benefits is just as important as getting paid.
Not surprisingly, more small companies are hanging onto their health benefits. In 2013, 21% were thinking of scrapping their health benefits. In 2015, that number dropped to 7%.
SMBs are also looking for more competitive benefits to live up to the expectations of employees. Among workers ages 34 and younger, 70% want the flexibility of lowering the value of some benefits while raising the value of others. One team member might prefer to sock more money into his 401(k) rather than spend it on expensive health coverage that he might not use. Another might want a premium health plan because he has a child with special needs. A wide range of employees calls for a wide selection of benefit options.
You Win Too
It’s not just employees who come out ahead with rich benefits—it’s businesses themselves. Creative benefits packages are the future competitive edge for SMBs. When you talk to your advisor, ask for a set of solutions that attract the best talent, satisfy your employees, keep your costs contained, and protect everyone’s health in the long run.
1 Murphy B. “21 Statistics on High-deductible Health Plans.” Beckers Hospital CFO (May 21, 2016), http://www.beckershospitalreview.com/finance/21-statistics-on-high-deductible-health-plans.html
One way to improve engagement is to provide plan members with their own personal “health guide”. Mercer is helping plan sponsors do that a couple of different ways. Mercer also just announced an alliance with Accolade: Mercer Complete Care, powered by Accolade. Check out this interview with our leader of specialty consulting services, Jean Moore, and Rob Cavanaugh from Accolade as they provide their perspective on the alliance and why we think it has the potential to enhance engagement. Now is a good time to consider the tools you are providing your employees and family members to help them access the right health care, and how that is working to support smart consumerism and effective use of care.
There was an interesting study published in JAMA this week that compares the health status of low-income individuals in two states that expanded Medicaid (Arkansas and Kentucky) with a state that did not (Texas). Respondents in Arkansas and Kentucky were 5% more likely to than their peers in Texas to say they were in excellent health at the end of 2015. This is a wider gap than was seen when the same question was asked at the end of 2014, when Medicare expansion was a year old. Because it takes time for someone to benefit from having insurance – due to the time it takes to actually get care and then for the care to have a positive impact on health – we may see continued improvement in Arkansas and Kentucky relative to Texas. While the study does not prove that Medicaid expansion caused people to be healthier, it makes sense that having insurance would have a positive impact on one’s health. This made me wonder whether the ACA has also had a positive impact on the health of those in employer-sponsored plans. Certainly the mandate for 100% coverage for preventive care comes to mind, although many employers covered preventive care prior to the ACA (and utilization is still not what we would like to see). Will the individual mandate mean more individuals seek coverage in employer-sponsored group coverage, and will that in turn result in better health in the workforce? Ultimately, it may be that because so many aspects of employer-sponsored coverage have changed since the law passed, it will be difficult to attribute any change in the health status of employed Americans (good or bad) to the ACA.
Employee Benefits News posted a slideshow illustrating the differences between Clinton and Trump on the current state of healthcare in the US. Spoiler alert: there are not that many differences! The areas where they are aligned include:
- Cadillac tax – both want it repealed
- Cost – both think it needs to go down
- Prescription drug costs – both want Medicare to set drug prices
- Insurer consolidation – both oppose
- Transparency – both support
The two major differences are the ACA – Clinton supports with tweaks; Trump wants it repealed, mostly. The other is Medicare-for-all/single payer – Clinton favors the ACA; Trump wants to repeal the ACA and is “open” to some kind of free healthcare option or single payer system.
Trump has been vocal on two additional health benefit issues – purchasing insurance across state lines (check out my prior blog post) and support/expansion of consumer directed health plans and health savings accounts. Clinton has not publicly addressed these two topics so we are not sure if she is aligned on these, or not.
Likely not the last we will be hearing on this topic as the campaigns move full steam ahead.
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.
The law was passed with three goals – to provide health insurance to those without it, to bring down the cost of care, and to improve healthcare quality. Progress toward the first goal is well documented: nearly 17 million more people have coverage today as a result of the ACA. That is a clear victory. Less clear, however, is the ACA’s impact on cost, at least in employer-sponsored health plans – which still cover more than half of all Americans with insurance. The report asserts that the ACA has slowed cost growth in in private insurance, but hasn’t resulted in a higher out-of-pocket cost share for those enrolled in employer plans.
That improbable combination raised some eyebrows here at Mercer. The report mentions a few of the more popular ACA mandates – preventive care at no charge, eliminating life-time maximum benefits, and expanding dependent eligibility. Those provisions could only increase cost, while at the same time another ACA provision, the excise tax, was established to penalize health plans that cost too much! The President defended the excise tax in his article, but fact is that it has led employers to shift cost to employees, chiefly with high-deductible health plans. Our data shows that fully one-fourth of all covered employees are now in high-deductible consumer-directed health plans, and even deductibles in traditional PPOs have risen at a faster pace than healthcare cost increases. That’s not surprising, given that three years ago, nearly half of employers were on track to hit the excise track threshold in 2018, the year it was first supposed to go into effect. That number has dropped each year as employers have taken steps (often unwanted, as our recent survey found) to shift cost to employees to lower cost. We’ve maintained from the beginning that the “Cadillac tax” was going to unfairly hit plans that had high cost for reasons other than rich plan design, and were pleased to learn yesterday that more than 300 members of the House of Representatives – nearly 70% – have signed onto legislation to repeal the tax.
I will say that I wished President Obama could have given employers a little more credit! Compliance with the ACA has been a huge effort and expense to employers – new fees, communications requirements, reporting requirements and compliance costs – and in the end, they continue to cover all the same people they have always covered. That’s more than half of all Americans with health insurance.
As for the future of the ACA, so much will be determined by what happens in elections and how lawmakers can work together. Will there be a public option? Will Americans age 50+ be able to buy into Medicare? Will employees be taxed on their employer-sponsored health insurance? Time will tell. In the meantime, employers remain committed to providing healthcare benefits to their employees.
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.
A Federal Appeals Court ruled that consumers may purchase a fixed indemnity product even if they have not purchased comprehensive medical coverage that meets the ACA criteria for minimum essential coverage. It is estimated that four million Americans have purchased this type of plan and do not also have comprehensive medical coverage, bringing a “gap” in Obamacare into the spotlight. In the gap are those living in states that did not expand Medicaid whose household income is too high to qualify for Medicaid and too low to qualify for a subsidy on the public exchange. While we all agree that a plan providing a cash benefit – for example, $500 a day for hospitalization – is not a comprehensive medical benefit, these plans do play an important role in the era of high-deductible health plans. In Mercer Marketplace 365, 34% of people enrolled in a plan with a deductible of $1,500 or higher are enrolled in at least one supplemental health plan. While there are different types of products – some focused on an illness (e.g., cancer), or on a type of coverage (hospitalization), or on a circumstance (accident), these supplemental benefits do not affect HSA eligibility and provide a financial security blanket for those concerned about high deductibles. If you do not currently offer supplemental benefits alongside your high deductible health plan, it’s not too late to think about it for 2017.
I recently sat down with Lenny Sanicola from WorldatWork to discuss what’s trending in employer-sponsored health plans. We discussed telemedicine, consumer directed health plans, centers of excellence and more. Listen in to learn more about the future trends and drivers identified by Mercer’s national survey.
Consumer-directed health plans (CDHPs) have become a mainstream benefit offering. Spurred on by the need to avoid the excise tax, employers have added these low-cost plans at a fast clip over the past few years. In 2015, 29% of all employers – but 59% of those with 500 or more employees – offered an account-based CDHP, and a total of 25% of all covered employees were enrolled in one, according to Mercer’s National Survey of Employer-Sponsored Health Plans. Now more than a decade old, CDHPs were designed with the goal of holding down cost by encouraging cost-consciousness among consumers. The best CDHPs promote personal responsibility for maintaining or improving health and for choosing cost-effective, quality health care providers.
Most employers still offer a CDHP as an option alongside a traditional PPO or HMO plan. If you’re looking to increase your CDHP enrollment this year, we have a few tips to get your numbers up – whether you have a new or existing plan:
- Sweeten the deal. Offer some great features that you can advertise to your employees in your benefit communications. For instance, seed the HSA and provide funds in January to give employees a start. Our survey shows that in 2015, 37% of eligible employees enrolled in HSA-eligible CDHPs (if offered as a choice) when their employers contributed $800 or more to their HSAs, compared to just 22% when their employers didn’t contribute at all. Another idea is to pay for supplemental health policies, such as critical illness and accident coverage, to help fill gaps for employees.
- “Upset the apple cart” and disrupt current plan offerings and/or employee contributions by plan. The most effective way to get employees to migrate to HSA-eligible plans is, quite simply, to offer only these plans. But if, like most employers, you want to continue to offer a choice of a traditional plan, change up the entire array of plan offerings. Disruption can be a big motivator; without their current plans to fall back on, employees have to pause and spend time to review their options and choose a plan. Employees will be more likely to consider CDHPs under these circumstances, especially if employee contributions are favorable. Also, requiring active enrollment in this situation can translate into higher CDHP enrollment since employees can’t default into their current plan and must make an election.
- Provide decision support. Benefits enrollment isn’t exactly what most employees would call fun. You can at least make it easier by providing a tool during enrollment that allows employees to model which plan has the best cost/features for their situation. It’s also important to create a seamless enrollment experience for your employees, for electing an HSA-eligible plan and for opening the HSA at the same time. Some employees miss out on the employer’s HSA seed because they didn’t open the HSA (don’t need to add, but clarifies a bit).
And, once you’ve done all (or some) of this, make sure to get the word out to your employees. Communication is vital. Just over half of HSA plan sponsors say they provide extensive or very extensive communication to their employees, and among these employers, the average enrollment is 35%, compared to a mere 24% among those providing less extensive communication. In other words, it’s not enough just to provide tools and resources – you have to motivate your employees to use them to take control of their benefits decisions.
This post is part of our 2017 Planning Checklist series.
Often when discussing health benefit design, cost management strategy, and compliance requirements, one aspect can get lost – the patient experience. Being a patient can be incredibly time-consuming between network provider searches, making appointments, filling prescriptions and making sure your physician(s) have the appropriate referral forms, medical records and insurance information, not to mention time spent on hold or waiting for a call back from the doctor’s office. This recent article by Vox’s Sarah Kliff outlines the frustrations she encountered – and the time she wasted – in trying to access care for an injury. She calls patients “the health care system’s free labor”. Electronic medical records and data interoperability should – someday – lighten the administrative load. But right now, in the face of a fragmented health care system, how can an employer help their employees spend less time and effort getting the care they need? One option to consider is a health advocacy program. In the best programs, employees have a dedicated health advocate who can advise employees wherever they are on the health spectrum. For serious health issues, the advocate should be trained to help the member navigate the system to get to the right providers and even take on reconciling medical bills to ensure everything has been processed appropriately, which can go a long way in not only reducing frustration for the employee, but also increases the odds that they will continue to take steps to manage their health knowing they have help along the way.
Today nearly one in five Americans over the age of 65 are still working, according to recent data from the BLS, and that’s a new record. As the Baby Boomers hit retirement age, an unprecedented number are deciding to stay on the employment path. In addition, according to this article in Bloomberg (citing a Federal Reserve study), 27% of working Americans say they plan to keep working for as long as they can.
Some of the factors at play are positive – better health, greater longevity, and employment satisfaction. But one study found that almost half of retirees surveyed said they had worked longer than they wanted to because of financial concerns, and according to Mercer’s own Inside Employees’ Minds survey, having enough money to pay for health care in retirement is a top financial concern. We consistently find that the average retirement age is lower in companies that offer medical benefits to early retirees than in those that don’t (62 and 64 years, respectively, in 2014). It’s also telling that retirement age first started to fall after Medicare was established, easing concerns about paying for health care in retirement. While many employers have established HSA or HRA accounts to help employees to save for health care expenses in retirement, these tend to be underutilized. Providing education about value of these accounts, as well as support for financial and retirement planning, can help ensure that employees don’t stay in the workforce longer than they want to.
Even so, changing demographics alone are likely to keep people working longer. Speaking at Mercer’s Global Investment Forum in Singapore this March, Sarah Harper, professor of gerontology at University of Oxford and director of Oxford’s Institute for Population Ageing, raised some questions for employers to consider. “How are we going to adapt workplaces to cope with [an older workforce]?” she asked. “How are we going to ensure, in a really technologically driven world, that we keep our skills upgraded across the life course?”