Does the employer mandate matter?
Originally posted June 27, 2014 by Kathryn Mayer on www.benefitspro.com.
Over the past few years, the Patient Protection and Affordable Care Act has had no shortage of scrutiny.
But the employer mandate, perhaps more than any provision, has become a lightning rod for criticism of the law. The provision — once thought of as a key, if not essential, part of PPACA — since its inception has been vehemently attacked by employer groups and business owners. Originally scheduled to go into effect in 2014, the mandate has twice been delayed by the administration, which says it needs more time to implement the provision.
Under the latest delay, announced in February of this year, employers with between 50 and 99 employees have until January 2016 to offer health insurance or pay a fine, and employers with more than 100 employees must offer insurance or pay a fine of $2,000 per worker by January 2015. Companies with fewer than 50 employees are exempt.
Attention to the mandate hit a new high at the Benefits Selling Expo back in April, when Robert Gibbs predicted during a keynote address that the mandate would never be put into effect.
“I don’t think the employer mandate will go into effect. It’s a small part of the law. I think it will be one of the first things to go,” he said to a notably surprised audience.
Gibbs, a former longtime advisor to President Barack Obama, noted there aren’t many employers who fall into the mandate window. He said the delays point to the fact that the mandate “will never happen.”
Media outlets quickly ran with the news, prompting the White House to respond.
House Minority Leader Nancy Pelosi, D-Calif., maintained that PPACA’s employer mandate will — and must — remain part of the law.
Appearing on CNN’s “State of the Union,” Pelosi said that the “employer mandate, the individual mandate, are an integral part” of PPACA, “This is an initiative that has strong pillars in it that relate to each other.”
Even if it’s nothing more than political fodder over the often controversial law, the latest debate raises the question: Will PPACA’s employer mandate really go into effect? And perhaps more importantly, does it matter?
Mandate doesn’t matter
Experts at the Urban Institute researched this very idea. Their overall consensus? Eliminating the mandate “certainly wouldn’t spell disaster.”
Overall, the Washington, D.C., based think tank said, eliminating the mandate would have little effect on employer-sponsored coverage, would “remove labor market distortions” in the law, and might even squash some of the political opposition.
First of all, it would “scarcely affect the total number of Americans who have coverage.” Even without the mandate, 250.9 million people will have coverage, compared to 251.1 million — only 200,000 more — if the mandate remains intact, researchers said.
“So many people have coverage through their employer now, and no one is requiring them to do,” says Linda Blumberg, a health economist and senior fellow at The Urban Institute. “But there are still incentives for [employers] to do it. It’s a way for them to retain and attract the kinds of workers they want. What we did [in our report] was analyze the tradeoff — firm by firm, worker by worker — and look at how employers make these decisions. And for most of them, they will continue to do this to keep employees happy.”
Frankly, Blumberg says, the employer mandate isn’t central to PPACA’s overarching goals.
“The employer mandate isn’t what’s driving the increase of health insurancecoverage; the individual mandate is,” she says. “And also the subsidies. You don’t want to think about the employer and the individual mandate in the same breath. They are very different. One is really essential to it achieving its goal, and one really isn’t.”
Another advantage of eliminating the employer mandate is simply to please employers. Groups such as the U.S. Chamber of Commerce and the National Retail Federation have been asking for the mandate to be repealed all along. They’ve argued over detrimental effects: that numerous companies would downsize or cut hours for their employees to dodge the rule. So not only will killing the mandate subdue those concerns, but, Blumberg says, it could get employers to focus on more important issues — and potentially get them on board with supporting the controversial law.
By taking away those requirements for employers, Blumberg says, “you lessen, significantly, the political resistance to the law from employers.”
“If we could get employers more involved with making sure that the workers have coverage, instead of them worrying about how to avoid [the mandate] or being angry about a requirement that might not even affect them, this could be more successful,” she says. “You take away that friction that the employer community has felt, and I think that’s an advantage for broad-based implementation of the law.”
The mandate matters
Still, there are reasons to be cautious about repealing the mandate. One significant one is funding.
By eliminating the employer penalties and the expenses for employee subsidies, the repeal would open a giant hole in PPACA’s financing. The Congressional Budget Office has estimated that gap at $140 billion through 2023, while the Urban Institute places it lower, at about $46 billion.
“What we found was smaller than what the CBO estimated, but still, penalties make the revenue,” Blumberg says. “That helps support the cost of the program. I would expect it would have to be replaced by another revenue source.”
Of course, there is the issue of what’s best for employees and employers. Without the requirement of offering employees coverage, will employers simply dump their employees into the exchanges? That’s the fear — one that’s been supported by various studies and reports.
The CBO has predicted that as many as 1 million more people may be uninsured in the absence of the employer mandate, though others argue the number will be much smaller. And those dropped from employer-sponsored coverage would likely face paying more for coverage on the exchanges, some argue.
Tim Jost, a professor at Washington and Lee Law School who supports the law, outlined some issues in a post in Health Affairs.
“The end of the employer mandate, and the reporting requirements that accompany it, would also make the exchanges’ job of determining eligibility for premium tax credits and for exemptions from the individual mandate more difficult,” Jost said. “Eligibility for tax credits and for the individual mandate exemption turns on employee coverage offers and enrollment. If employer reporting were eliminated together with the mandate, precise verification of whether an employee is eligible for coverage and the extent and cost of that coverage might not be possible.”
Killing the mandate, too, many industry insiders say, wouldn’t quash political wrangling. Killing it may bring up legal questions—the government could face lawsuits over not implementing the law, for example--and it might also be an admission from the administration that Obamacare is failing. Democrats may suffer in the next election cycle. PPACA opponents may call for more repeals in the law. Arguments are endless.
Other alternatives
Of course, because of the revenue hole, there needs to be an alternative if the employer mandate is repealed.
Jost suggested one way: to not just repeal the mandate, but replace it—by requiring employers to spend a certain percentage of their payroll on health benefits. He noted that the House passed a similar version of the employer mandate in 2009.
“The House bill required all employers to spend at least 8 percent of payroll on health benefits,” Jost wrote for Health Affairs. “Small employers were required to pay a smaller percentage of payroll, which rose as total payroll increased. Employers who spent less than the minimum paid the difference between what they actually spent and 8 percent of payroll to the federal treasury as a tax.”
The new version of the mandate, Jost said, would “dramatically” reduce the complexity of the current approach.
“Employers would only need to know two numbers: the amount of their payroll and the amount they spent on health benefits,” Jost said.
Of course, it’s not easy to simply repeal and replace.
Still, even without the employer mandate, industry insiders note, employers would need help from brokers on other areas of PPACA compliance, including market reforms and notice requirements.
And, of course, the political environment might not allow for any changes.
“There are certainly a lot of revenue sources, like a payroll tax assessment,” Blumberg says. “There are lots of options for revenue; the problem is you’re going to have political agreement to do that. But that puts us back in the place of, can we get folks to reach across the aisle and say, ‘this isn’t an essential component of this law; it’s a revenue-raising tool causing enough grief and concern among employers that we’d like to find a different revenue source.’ I think the chances are low because of the political reactions these days.”
Looking forward
Whatever the decision, industry folks want to know it — and soon.
Delaying the mandate — though praised by some — has caused more anxiety in the community, because no one knows when, or if, the requirement will really go into effect. And the mandate, whether in place or not, can have an effect on future premiums under the law.
“There’s a real fear, there’s a lack of understanding and there’s confusion — it’s a complicated law,” Blumberg says. “You take a complicated law and you layer on top of it delays and implementing pieces of it — it creates more confusion and angst.”
Glenn Dunehew, director of health and benefits at the Barrow Group in Atlanta, agrees.
“We need to know, now, that the law is either going to be implemented or postponed,” he says. “The longer that the administration waits on starting it, the more money it costs companies and brokers.”
Most newly insured Americans covered by employers, study finds
Originally posted April 8, 2014 on www.modernhealthcare.com by Virgil Dickson.
More than 9 million Americans obtained health insurance between September and mid-March, but most did so through employer-sponsored plans rather than through HealthCare.gov or the state exchanges, a survey by the RAND American Life Panel found.
Only 1.4 million of the 3.9 million individuals who enrolled in Patient Protection and Affordable Care Act-related exchange plans through mid-March were previously uninsured, researchers found. The survey concluded before the final enrollment surge that pushed overall marketplace enrollment past 7 million, RAND noted.
Of the 40.7 million estimated uninsured Americans in 2013, 14.5 million gained coverage, but 5.2 million of the insured lost coverage, for a net coverage gain of approximately 9.3 million. That means the share of the population that was uninsured fell from 20.5% to 15.8%, according to RAND.
Less than 1 million citizens who previously had individual market coverage became uninsured, researchers found. RAND was unable to deduce if those people lost their insurance due to cancellation, or because coverage costs were too high. People in this category represented less than 1% of those between the ages of 18 and 64.
Overall, the ACA did not change health coverage choices for most insured Americans, as 80% of those surveyed still had the same type of coverage in March 2014 as in September 2013, according to RAND.
The RAND figures comprised not only signups under the new ACA-established marketplaces, but also new enrollments in employer coverage and Medicaid. Results were extrapolated from a survey of 2,425 adults between the ages of 18 and 64, who responded to the RAND survey in both March 2014 and September 2013.
Look Beyond Health Care Financing to Workforce Health
Originally posted February 26, 2014 by Thomas Parry on https://ebn.benefitnews.com
Employer focus on employee health care will expand in 2014 beyond financing health coverage to managing employee health. We expect to see employers focusing more strategically on workforce heath — in particular, how to build business impacts such as lost work time and performance into their overall assessment of best practices — and how to connect investments in health back to business goals.
However employers’ decisions have been determined by the Affordable Care Act, the reasons to continue investing in employee health and productivity remain, given their impact on employers’ bottom-line costs and top-line job performance. The evidence is clear: poor workforce health has a profound impact on companies, regardless of their industry or size.
Research by our organization, the Integrated Benefits Institute, has investigated financial productivity losses due to worker illnesses including depression, diabetes, low back pain, stress and metabolic conditions. Our findings highlight the necessity for employers to think beyond how health issues impact medical costs. Our research shows:
- Depression costs employers approximately $62,000 annually per 100 employees in lost work time and medical treatments.
- Employees with diabetes are 47% more likely to miss at least one day of work per month than workers with normal fasting blood glucose.
- Low-back pain costs employers $51,400 annually per 100 employees in lost productivity and medical treatments.
- Employees with metabolic syndromeare three times more likely to have a work-disabling event such as a heart attack or stroke.
- Stress at work contributes more to poor job performance than either stress at home or financial worries.
Over the course of the year, I’ll be sharing more of our findings related to these illnesses, and the benefits to organizations with a strong commitment to employee health and performance. Our research reveals that employees in organizations with a strong health culture report that they spend more time working, work more carefully and concentrate better than employees at organizations with poor cultures of health.
Workers with better work environments — such as favorable workloads, work-life balance, good relations with managers and fewer demands on their time — also report fewer sick days than those in less healthy workplaces.
Employers can take several steps to acting more strategically about investing in employee health:
1. Assess where you are. Use key metrics to know where your organization currently is and what you have achieved to date regarding employee health. Work with your benefits supplier partners to obtain data and determine your company’s performance relative to organizations, especially organizations within your industry.
2. Use comparisons to identify the greatest opportunities to improve employee health. Since organizations have limited resources, start by focusing on the biggest problems — and the biggest opportunities — facing your company.
3. Measure outcomes. Determine beforehand how you will track results — and track them beyond health care costs alone. Simply saying a program is successful isn’t enough to convince the CFO of the business case for health improvement — results must be measured quantitatively. Senior management is more responsive to requests for investment when HR professionals are able to demonstrate the value of programs in business-relevant terms with metrics demonstrating changes over time.
Employers will find that their investments in workforce health and performance will be most effective when integrated with a broader strategy that includes an understanding of how their organizations can positively or negatively influence workers’ health.
Employers aren’t doing reform math
Source: https://www.benefitspro.com
By Denis Storey
For as cost-conscious as most employers are, a new study reveals more than half of them haven’t even worked out the math when it comes to how much health reform is going to cost them.
But among those who have started doing the math, the survey, just released from Willis Human Capital Practice, shows two-thirds of them have already seen compliance-based cost increases stemming from the reform law. And this makes for a strange dichotomy, since the experts at Willis insist employers are relying on some misguided perceptions as the plan for life after reform, which is why, they say, so many employers haven’t done anything yet.
In fact, the study shows that only 20 percent of employers expect to adjust their benefits plans as a result of increased compliance costs. But perhaps most damning—or embarrassing—is this revelation: “Consequently, the vast majority of employers still hope to comply with health care More than half of employers haven’t even worked out the math when it comes to healthcare reform.reform and expand their health coverage as necessary—without reducing other benefits,” lifted straight from the Willis press release.
“Employers are still coming to terms with the impact of health care reform, and many employers still seem to function in a ‘shock mode.’ While few employers consciously manage their group medical benefits as a component of their total rewards perspective, survey responses indicate the very beginning of an employer trend in this direction,” said Jay Kirschbaum, practice leader, national legal and research group, Willis Human Capital Practice.
The Check is NOT in the Mail
Source: https://analytics.ubabenefits.comBy Lesa Caputo, Benefit Advisor
The Reality of Health Care Budgeting Shortfalls and the Impact on Employers Now and in the Future
I can’t remember the last time that I went out to my mailbox to check for new mail on a Saturday afternoon but, nonetheless, I was shocked when I heard it announced on the morning news recently that Saturday mail delivery would be ending in order to help the U.S. Postal Service find some relief to its serious budgetary issues. However, my shock was not that the good old “snail mail” service was struggling or even that it needed the $2 billion it estimates it will save annually by ceasing Saturday mail delivery.1 My shock was that this new “savings” would not achieve even 50 percent of the pennies in the couch needing to be found to pay the $5.6 billion annual retiree health care fund that the USPS was unable to pay in 2012, despite federal law that they fund this benefit in advance for future retirees.2 So aside from the “benefits” of a tan and the great calf muscles received from many years of mail delivery, does this mean that those who have devoted their entire careers to a government entity with the expectation of certain other benefits (namely that their health care benefits will be paid as promised upon retirement and until death) just isn’t going to happen? The envelope please...
What will happen to the burgeoning population of retirees in future decades who find not only their retirement underfunded but also their health care? And what will the impact of the difficult decisions that these generations will have to make be on Medicare, Medicaid, long-term care costs and the commercial health care insurance industry that already does a fair amount of subsidization for shortfalls that already exist in these programs now? Read on about the real date-sensitive material enclosed…
As America ages, U.S. employers face an emerging business challenge due to the impacts to both corporate health care costs and employee productivity resulting from the eldercare and caregiving crises. A recent study shows that eldercare costs U.S. businesses more than $33 billion in lost productivity annually through absenteeism, distraction, replacement, reduced hours and more. 1
The business disruption breaks down like this -- 12 percent take leaves of absences, 36 percent miss workdays and 40 percent rearrange their schedule. 2 And millions more fall into the category of presenteeism -- physically at work but mentally dealing with distractions that impair productivity. Employees who’ve faced caregiving issues are increasingly concerned about their own long-term care. With the average cost for a skilled nursing facility topping $79,935 per year, skyrocketing care costs are the No. 1 risk to a secure retirement for baby boomers.3 Not only is long-term care more costly than most people realize, but also (contrary to popular belief) health insurance, disability plans, even Medicare and Medicaid, don’t cover many of the care options most people would choose.
So what can employers do today to address these issues and reduce the amount of junk mail invading their employees mental inboxes? There are several solutions:
- Health and Wellness Initiatives: Whether your organization already embraces the investment in a truly integrated wellness program that rewards and incentivizes healthy behaviors or you are in the initial stages of investigating the true return on investment (ROI) in such a program, make sure that your wellness program includes mechanisms to help identify, address and provide resources for employees suffering the negative effects of stress -- including being a member of the “sandwich generation.
- Core Long-Term Care Benefits with “Buy Up” option: Although there has been a significant exodus of carriers from the long-term care insurance industry of late, there are still a couple of well-established carriers offering “true group” coverage, whereby the employer can purchase a basic group long-term care program to fund for their employees and allow employees to “buy up” to a higher level of benefits at their own cost on a voluntary basis. No matter how long-term care benefits are offered to employees, it is essential that caregiving awareness and education be coupled with the introduction, enrollment and implementation of a successful long-term care plan.
- Group Retiree Health Plans: More and more employers are finding that their current provider of medical benefits for their active employees and retirees under age 65 is not interested in insuring their retiree population of those age 65+ in coordination with Medicare. In response to this need, UBA’s Strategic Allies such as The Hartford are offering stand-alone group policies to employers that may be funded by the employer or paid by the retiree to fill the gaps in their Medicare medical and pharmacy benefits. Large employers that are self-funding their medical benefits may especially want to inquire with a UBA Partner advisor about the potential reduction to their claims liability from implementing an insured group retiree health plan.
- FMLA Absence Management: There is no doubt that larger employers experiencing a high volume of FMLA-related leaves of absence appreciate the peace of mind and convenience of outsourcing this labor-intensive and very complicated HR responsibility. But convenience aside, there is also a very quantifiable potential cost saving reason for employers to consider investing in a FMLA absence management program. When maternity is excluded, caregiving accounts for 40 percent of all FMLA leaves and those who are on FMLA leave for caregiving are four times as likely to file an LTD claim. LTD claims are typically coupled with high medical costs. And so thecirculation continues until the final notice arrives C.O.D.
The Megro Benefits Company has access to discounted premiums, fees and administration for all of these solutions and more. Contact us to discuss these ideas in more detail.
Employers who make it a priority to deliver a well-intentioned employee benefits package to ensure their employees peace of mind about their futures will find the return on their investment in the form of first-class employees reporting for work every day of the week -- and maybe even on Saturdays!
References:
- Washington Post: Mandate Pushed Postal Service into the red for first quarter, February 2013
- The MetLife Caregiving Cost Study: Productivity Losses to U.S. Business, June 2006
- The MetLife Market Survey of Nursing Home & Home Care Costs, September 2009
- Caregiving in the United States, National Alliance for Caregiving and AARP, 2004
Top 5 issues facing physicians, patients in 2013
Source: https://www.benefitspro.com
By Kathryn Mayer
As health reform continues to changes the landscape of our country’s health system, what’s to watch in this new year? A lot, industry insiders say.
Lou Goodman, president of The Physicians Foundation and CEO of the Texas Medical Association, says 2013 will be “a watershed year” for the U.S. health care system. Most of those changes will have a big impact on both patients and the physicians caring for them.
“It’s clear that lawmakers need to work closely with physicians to ensure we're well prepared to meet the demands of 30 million new patients in the health care system and to effectively address the impending doctor shortage and growing patient access crisis.”
The Physicians Foundation identified five issues that are likely to have a significant impact on patients and physicians in 2013.
1. Ongoing uncertainty over PPACA
Despite the Supreme Court decision upholding most of the provisions in the Patient Protection and Affordable Care Act and the re-election of President Obama, considerable uncertainty persists among patients and physicians regarding actual implementation of the act. Much of the law has yet to be fully defined and a number of key areas within PPACA—including accountable care organizations, health insurance exchanges, Medicare physician fee schedule and the independent payment advisory board—remain nebulous, the foundation says. Their research found that uncertainty surrounding health reform was among the key factors contributing to 77 percent of physicians being pessimistic about the future of medicine. In 2013, physicians will need to closely monitor developments around the implementation of these critical provisions, to understand how they will directly affect their patients and ability to practice medicine.
2. More consolidation
Consolidation means bigger, but is bigger better? Large hospital systems and medical groups continue to acquire smaller/solo private practices at a steady rate. According to the foundation's report pertaining to the future of U.S. medical practices, many physicians are seeking employment with hospital systems for income security and relief from administrative burdens. But increased consolidation may potentially lead to monopolistic concerns, raise cost of care, and reduce the viability and competitiveness of solo/private practice. As the trend toward greater medical consolidation continues across 2013, it will be vital to monitor for possible unintended consequences related to patient access and overall cost of care.
3. A scramble to fix the doctor shortage
In 2014, PPACA will introduce more than 30 million new patients to the U.S. health care system, a provision that has considerable implications relative to patient access to care and physician shortages. According to the Foundation’s Biennial Physician Survey, Americans are likely to experience significant challenges in accessing care if current physician practice patterns continue. If physicians continue to work fewer hours, more than 47,000 full-time-equivalent physicians will be lost from the workforce in the next four years. Moreover, 52 percent of physicians have limited the access of Medicare patients to their practices or are planning to do so. As the 12-month countdown to 30 million continues across 2013, physicians and policy makers will need to identify measures to help ensure a sufficient number of doctors are available to treat these millions of new patients – while also ensuring the quality of care provided to all patients is in no way compromised.
4. Erosion of physician autonomy
The Physicians Foundation believes that physician autonomy – particularly related to a doctor’s ability to exercise independent medical judgments without non-clinical personnel interfering with these decisions – is markedly deteriorating. Many of the factors contributing to a loss of physician autonomy include problematic and decreasing reimbursements, liability/defensive medicine pressures and an increasingly burdensome regulatory environment. In 2013, physicians will need to identify ways to streamline these processes and challenges, to help maintain the autonomy required to make the clinical decisions that are best for their patients.
5. Growing administrative burdens
Increasing administrative and government regulations were cited as one of the chief factors contributing to pervasive physician discontentment, according to the Foundation’s 2012 Biennial Physician Survey. Excessive “red tape” regulations are forcing many physicians to decrease their time spent with patients in order to deal with non-clinical paper work and other administrative burdens. In 2013, physicians and policy makers will need to work closely together to determine steps that will effectively reduce gratuitous regulations that negatively affect physician–patient relationships. According to a recent Foundation report, the creation of a Federal Commission for Administrative Simplification in Medicine could help reduce these regulations by evaluating and reducing cumbersome physician reporting requirements that do not result in cost savings or measurable reductions in patient risk.
Younger workers fear rising health care costs
By Donald Jay Korn
Source: eba.benefitnews.com
Workers in Generations X, Y and beyond may be decades from retirement but they already have multiple concerns about their future finances.
In a Harris Interactive online survey for T. Rowe Price, more than half of respondents listed seven different retirement worries:
1. Health care costs (76%).
2. Rising taxes (67%).
3. Viability of Social Security (63%).
4. Inflation (61%).
5. Long-term care (58%).
6. Outliving their savings (52%).
7. Housing values (52%).
“Investors are concerned about rising health care costs, and they should be,” says Stuart Ritter, senior financial planner with T. Rowe Price. “According to the Employee Benefits Research Institute, health care costs are the second-biggest expense for those aged 65 and older, behind housing, and it’s the only spending category that steadily increases with age.”
To raise the necessary cash, working longer may or may not be an option, but saving and investing more is often indicated. “One of the perennial lessons younger investors can learn from current retirees is to save at least 15% of their earnings and begin as early as possible,” Ritter stated. “The ones who do are the ones more likely to enjoy the retirement flexibility and lifestyle that financial independence can provide.”
Donald Jay Korn writes for Financial Planning, a SourceMedia publication.
A prescription for healthier retirement savings through wellness
Source: https://www.benefitspro.com
BY TIM MINARD
For years, most people looked at their physical health and their financial situation as two very different issues. But that’s changing. Today, the overwhelming majority of American workers recognize the link between health and wealth. Our recent survey found 84 percent of workers see physical health as an investment in their financial future.
Employers are also beginning to see employee wellness as an investment in the financial condition of the business. Healthier employees can lead to a healthier bottom line due to increased productivity, decreased absenteeism and—most significantly—reduced healthcare costs for the business.
There is another side benefit from wellness in the workplace that is gaining attention. Wellness programs may just be what the doctor ordered to boost retirement savings. Employees with fewer health problems logically would potentially have more money available to save for retirement. And down the road, healthier retirees could potentially spend less of their nest egg on medical expenses.
Because it is getting harder to separate health from ultimate wealth at the employer and employee level, discussions about benefits will likely focus more and more on the idea of total wellness. No matter what kind of benefits you sell, having a good understanding of the intersection between wellness benefits and retirement plans helps position you as being on the leading edge of this burgeoning trend.
Fortunately, the body of research proving the connection between physical and financial wellness and the positive impact on both employee and employer is growing.
Here’s a closer look at some compelling proof points that demonstrate the overall benefits of a total wellness approach:
Financial benefits to employees
- The short- and long-term costs of chronic diseases. Diabetes, for instance, has a known cost. The American Diabetes Association says for every dollar a healthy person spends on healthcare, a diabetic employee will spend $2.30. Obesity is also known to raise medical costs by 41 percent and boost prescription drug costs by 80 percent. In fact, the U.S. Centers for Disease Control says almost 10 percent of U.S. medical costs are attributed to obesity.
- Wellness programs reduce health risks. A brand new study conducted by Principal Wellness Company of 12,000 adults, found that participants in comprehensive workplace wellness programs achieve a significant reduction in health risks in as little as 18 months. For individuals participating in one-on-one health coaching, more than one in three (34 percent) moved from a high risk status to a lower risk category. This shift significantly decreases their likelihood to develop diabetes, heart attack or stroke. The percent of participants considered low-risk increased by more than 11 percent.
- How wellness can help employees free up funds for additional savings. By spending less on healthcare today, employees have more money to set aside for retirement. Take, for example, the case of someone who smokes 10 cigarettes a day. Using the calculator at www.smokefree.gov, if he quits and diverts what he had been spending on cigarettes ($5.73 a pack) to a retirement account, that savings would amount to an estimated $12,773 in additional retirement savings over the course of 10 years.
- Ways improved health can help to reduce healthcare expenses duringretirement. Those reduced costs can help make retirees’ savings last longer. That’s a huge benefit in light of the Employee Benefit Research Council’s estimate that a typical, moderately healthy retired couple will need to have saved over $250,000 just to address unreimbursed healthcare expenses (and premiums) throughout an average retirement.
Financial benefits to employers
- For every dollar an employer spends on a wellness program, its medical costs are improved by approximately $3.27 — and another $2.73 in savings is realized in lower absenteeism costs, according to the Health Management Research Center at the University of Michigan.
- Healthier employees can also lead to soft cost savings, such as higher-energy employees and increased levels of engagement in their jobs.
There is one other way that wellness programs can help retirement programs. The wellness folks have learned that when it comes to motivating participation, incentives work.
It’s not surprising that the number of employers offering wellness programs continues to increase. The Society for Human Resources reports that in 2012 just over 60 percent of American workers have access to wellness programs that also offer incentives if they participate.
A new white paper, Wellness = Retirement Savings, offers insights into how wellness programs and retirement plans can work together and can help you be prepared for the inevitable total wellness discussion.
Rise of medical costs tops projections
Source: Bloomberg News Service
Medical prices accelerated faster than some projections last year and the number of uninsured is rising, according to data that show the U.S. goal of expanding health care is veering onto a more difficult road.
Costs for people with employer-sponsored insurance plans jumped 4.6% in 2011, more than the government’s 3.9% estimate for the entire health system, the Health Care Cost Institute, which analyzed claims from UnitedHealth Group Inc., Aetna Inc. and Humana Inc., said Tuesday. A study by the U.S. Centers for Disease Control and Prevention found the number of people without insurance climbed 1.7% in the first quarter of 2012.
The data pose a challenge for the Obama administration as it carries out the 2010 Patient Protection and Affordable Care Act, which promises to expand coverage to 30 million Americans starting in 2014 and trim health costs. The CDC reported that 47.3 million people lacked insurance, and the health institute said hospitals and doctors raised prices at a clip that outstripped demand.
“If you don’t bend the cost curve, ultimately insurance gets more expensive,” said Douglas Holtz-Eakin, the president of the American Action Forum, a Washington-based advocacy group that opposes the health law. “It’s a big problem for the Affordable Care Act.”
The overhaul law may be contributing to higher costs, said Martin Gaynor, an economics professor at Carnegie Mellon University and chairman of the Washington-based Health Care Cost Institute. The act tries to limit insurers’ administrative expenses and profits by requiring companies to spend at least 80% of their premium revenue on medical services. To meet that threshold, they may be letting prices rise, he said.
‘Unintended consequences’
“Like anything else, sometimes these things can have unintended consequences,” Gaynor said in a telephone interview.
Health care costs for 40 million workers covered by UnitedHealth, Aetna and Humana – three of the four largest U.S. health insurers by revenue – increased to $4,547 a person, from $4,349 a year earlier, according to the institute. The group, created last year to analyze claims data from major insurers, found that charges for hospital emergency rooms rose 9.1% in 2011, after adjusting for a reduction in the intensity of care they delivered.
That means emergency rooms “did less for more money,” said David Newman, executive director of the institute.
The law also has encouraged consolidation among hospitals and doctors, which may lead to greater pricing power, said Holtz-Eakin, who once who ran the nonpartisan Congressional Budget Office after leaving the Bush administration in 2003.
A White House spokesman, Nick Papas, referred questions to the Department of Health and Human Services.
Incomplete picture
Erin Shields, a spokeswoman for the department, said the institute’s report looked at a segment of the health care system. “In recent years, overall health care cost growth has reached record lows and the health care law drives costs down,” she said in an e-mail.
Rising costs in 2011 may have been a one-time phenomenon, said Charles Roehrig, director of the Altarum Institute’s Center for Sustainable Health Spending in Ann Arbor, Mich. His group calculates that spending for the health system increased 5.2% in 2011, and this year will rise about 4%, similar to the rates in 2010 and 2009.
“I might be dismayed if the data for 2012 showed it was going up even faster still,” Roehrig said by telephone.
More uninsured
The report from the Atlanta-based CDC showed the number of people without health insurance rose to 47.3 million in the first quarter, from 46.5 million a year earlier. The finding contrasts with a Sept. 12 Census Bureau report that said the number of uninsured Americans declined by more than 1 million in 2011 from 2010.
The CDC data, collected from a survey of about 35,000 households conducted throughout the year, is considered “preliminary” and the first-quarter sample has “larger variances” than full-year data, Karen Hunter, a CDC spokeswoman, said in an e-mail.
While the two federal agencies use different methodology to gather their data, both documented a decrease in the number of people ages 19 to 25 who lack insurance. The CDC said that 27.5% of people in that age group were uninsured in the first quarter.
Costs Continue to Rise for Employee Health Benefits
Source: BusinessWire
Wells Fargo Insurance survey finds medical costs projected to increase in the high single digits in 2013
SAN FRANCISCO--(BUSINESS WIRE)-- In a finding that will likely not surprise many businesses in the U.S., the cost of claims in employer-sponsored health plans continues to rise, according to a survey from Wells Fargo Insurance. Although rates remain consistent compared to six months ago, the survey of more than 70 insurance companies nationwide found that overall claim costs will continue to increase in the high single digits next year. The Wells Fargo Insurance Employee Benefits Survey was conducted between July and August 2012.
“Despite ongoing efforts to control healthcare expenses the survey found that insurers are not expecting a drop in claim costs for 2013,” said Dan Gowen, senior vice president of Wells Fargo Insurance’s national Employee Benefits Practice. “This means that employer premiums will likely rise, and it’s also likely consumers may pay more for their share of employer-sponsored healthcare plans. Employers seeking to minimize cost increases should explore more sophisticated ways to maintain and improve the health risk of employees and maximize their benefit investment.”
The survey also found that dental cost trends are lower than medical trends due to lack of cost shifting from public to private plans, and a negative cost impact from improvements in the dental technology field. Finally, survey results indicate prescription costs are down slightly, due to greater availability and the use of generic drugs.
Wells Fargo Insurance has been conducting this biannual survey since 2008 to measure national healthcare trends. Reflecting claim activity over a six-month period, projected increases in the national average cost of claims include the following:
- Health maintenance organizations (HMO) – 8.5 percent
- Point-of-sale (POS) – 8.7 percent
- Preferred provider organizations (PPO) and consumer driver health plans – 9.3 percent
- Exclusive provider organizations (EPO) – 9.4 percent
- Indemnity plans – 10.2 percent
- Prescription plans – 7.6 percent
In addition to healthcare reform provisions, claim trends are influenced by price inflation or deflation (changes in unit prices for the same services), increased or decreased use of services, population age, leveraging effect on benefit design, changes in provider treatment patterns, improvements in technology and drug therapies, and cost shifting.