If you're like me, you've pondered moving to high-deductible plans at some point in the last five years. Whether you made the move or not, this much is certain: Companies that started with a traditional PPO plan have generally kept those plans in place, bringing in the high-deductible/consumer-driven plans as an option, then attempted to draw employees into those plans with premium cuts and funding of health-care accounts (HCAs).
"It's been a hard year to work at General Electric (GE). Salary freezes have hit its famously performance-driven employees, with some managers taking pay cuts. And now GE is making changes that could deal another blow to morale. The company is forcing its 75,000 salaried U.S. employees and 8,000 retirees under the age of 65 to choose what's known as a consumer-directed health plan, which includes deductibles that run as high as $4,000 a year. Traditional plans, where employees pay higher premiums in exchange for predictable co-pays up front, are no longer available for salaried workers. One employee says his colleagues "are looking at this as a cut in pay."
That's what's called a BOLD move people. Like so much else in today's world, it all comes down to money:
"GE says the plan is being rolled out to make employees better health-care consumers and to coincide with its new "Healthymagination" strategy, a companywide initiative for health-care innovation. While GE says its future cost savings are unclear, people with knowledge of the situation estimate it could save $1 billion over the next decade or so. With three tiers of premiums and deductibles, GE spokesperson Sue Bishop notes, employees still have options. "It's not that different from their car insurance," she says. "You get to choose the amount of your premium, and that determines the amount of your deductible."
Moving from PPO to high-deductible only. That's the nuclear option. Will the bold move by GE spawn a bunch of similar "me-too" moves? I suspect only after the move looks to be on track to save 1 billion with limited downside in terms of retention, etc.
Shawn Tully provides some interesting proposals to reform health care in this country in an article published by Fortune Magazine on-line this week. His proposals involve taking a market based approach to reform. Here are some highlights:
Eliminate the tax break provided to employees who get health care through their employer.
Encourage employers to stop offering health coverage altogether and, instead, increase employee wages by an amount equal to what they pay on behalf of employees for that coverage.
Give tax breaks directly to consumers to purchase health insurance on their own.
Promote high deductible health plans (or other consumer focused coverage) for consumers on the open market so that consumers of health care begin acting just like that: consumers.
Deregulate the “three big inflators” of health care costs: the standard benefits package, community rating, and guaranteed issue.
Permit consumers to purchase health insurance across state lines.
In theory, I agree with Tully. Take the money employers pay for health insurance and give it directly to employees. Give tax breaks directly to consumers to purchase health insurance on their own. Encourage (or incentivize) people to purchase only the health insurance they need and use the remainder of what they don’t spend on insurance itself to cover other health care expenses. And implement reforms that encourage competition and innovation in a free market.
However, I see some issues with this approach. First, I have little confidence that all employers will raise employees’ salaries by an amount equal to what they’re paying for health insurance. Some employers will reduce total compensation to employees by raising salaries by an amount less than what they’re paying for health coverage hoping those employees will simply be appreciative for the nominal salary increase. That said, one can argue that the labor market will correct this in the long term. But there will be some period of time during which employees’ overall compensation may be materially reduced.
Second, employees don’t know how to buy health insurance on their own. For sixty years, employers in the US have spoon-fed health insurance to 170 million Americans, who very rarely read their Summary Plan Descriptions. Pushing this responsibility to employees will, no doubt, result in analysis paralysis on the part of many consumers. In a worst case scenario, consumers will purchase coverage that is far too rich or far too poor, simply because they don’t know what they’re buying. And I don’t think that consumers will earmark what they don’t spend on a Cadillac health care policy for other health care expenses. Prior to the current economic situation, Americans showed that, under normal circumstances, they will spend everything they bring in and then some. The personal savings rate in the US was negative 1% in 2006 and negative 0.4% in 2005.
I am supportive of market based solutions to the health care dilemma this country is currently facing. I worry that relying on employers to replace health care benefits with additional compensation will not work out in favor of employees (at least in the near term). I’m not sure that consumers are ready for the responsibility involved in purchasing their own health insurance. (Why do you think universal national health care has the support it does?) I also think that Tully’s proposals work fine in a bubble. But there are too many interests groups (including the insurance industry, unions, employers, local, state, and federal government, etc.) that will throw up innumerable roadblocks to any and all of these proposals. The health care industry makes up one sixth of our national GDP. Navigating the political landscape to implement such market based solutions would be almost as difficult as, well, navigating the political landscape to implement a public option to compete with private health insurers.
Editor's Note - Greg Dagley is a Benefits Consultant for a
large multinational employer in Houston, TX. While his company has employees all
over the globe, his job keeps him focused on US benefits and spending a lot
of his time managing external vendors. Is there any doubt his Excel skills are
more advanced than yours?
If you saw President Obama's speech on 9.9.09, you heard him reference the medical insurance situation in the state of Alabama. Here's a rundown of what Obama said with a little analysis from WAAYtv.com:
"One paragraph in President Obama's health reform speech Wednesday night really perked up a lot of ears here in Alabama.
Here
is the quote : "Unfortunately, in 34 states, 75% of the insurance
market is controlled by five or fewer companies. In Alabama, almost 90%
is controlled by just one company. Without competition, the price of
insurance goes up and the quality goes down."
So what company was the president talking about? And is it true?
According
to a report this year from the Government Accountability Office this
year, 9 out of 10 insurance holders in Alabama use Blue Cross, Blue
Shield. The same report shows less than 10 companies are legally
allowed to sell health insurance in Alabama.
But is that a bad thing, as the President implies?
Alabama's
Deputy Insurance Commissioner David Parsons doesn't think so. In an
interview with insurance industry news site "InsuranceNewsNet.com" last
month, Parsons compared BCBS to Wal-Mart, saying "Over time, it's kind
of like the Wal-Mart syndrome," "They offer good products at lower
prices, and people gravitate to it. They out-competed everybody."
I'm not a healthcare policy wonk. I'm just a VP of HR trying to offer great benefits and keep costs in line. But here are a couple of points for those not familiar with how healthcare works behind the scenes from providers like Blue Cross Blue Shield of Alabama:
-Because BCBS of Alabama owns the market, they are able to get huge price cuts from hospitals and doctors. When I took my first company to self-insured status (for those of you unfamiliar, that means the company pays its own healthcare bills, dollar for dollar, with BCBS serving as the administrator and earning its money through an 8-10% administrative fee), I was shocked to see BCBS paying 40-50% of the retail sticker price for both office visits and procedures. Hospitals and Doctors have to accept BCBS cutting costs in this fashion since they own the market. (Much like WalMart forcing vendors to cut costs that get passed along to consumers in some fashion). If they don't agree, 90% of Alabama won't use them.
-The main grind in this situation is for fully-insured companies (meaning they pay set premiums on behalf of their employees, then face rate renewals annually), especially those with fewer than 500 employees. BCBS uses a pool formula to determine increases, which means you could pay more in premiums than BCBS paid out in claims for your company and still get a hefty increase. Like the doctors and hospitals, you have to take it because there's no one else in the market.
Again, I'm not a heathcare policy wonk, so I don't have the answer for you. I know that those who advocate a single payer healthcare system dream, in part, of having the market power that BCBS enjoys. The scary part? When the system as a whole pays out more than it takes in, someone has to pay. Can that be anyone other than the taxpayer, or the federal deficit if healthcare was nationalized? My experience with BCBS of Alabama, both in a self-insured and a fully-insured environment, says "no".
The alternative is real competition. I'd love to see some real research on what happens to pricing power related to hospital and doctor payment when 50 or more insurance companies are allowed to do business in a single state.
Editor's Note: By day, Kris Dunn is the VP of
People at DAXKO, a cool software firm dedicated to providing solutions
to the best membership-driven organizations in America. At night, he
morphs into a blogger at The HR Capitalist and the Founder and
Executive Editor of Fistful of Talent. That makes him a career VP of
HR, a blogger, a dad and a hoops junkie, the order of which changes
based on his mood. Tweet him @kris_dunn...
I have a confession to make. I get my groceries at Wally-World. There’s one near my house, their prices are lower than another nearby grocery store, and I don’t mind the inevitable overcrowding on Sunday afternoon. Some of you will count this against me since, for years, this establishment was known to have had a less than stellar track record in the way it treated its workers, and it may be single-handedly responsible for ending the age of mom-and-pop stores of all varieties (grocery, specialty, you name it). To the first issue, I would say that Wal-Mart heard your concerns and has made efforts to improve relations with its employees. And to the second, if it hadn’t been Wal-Mart, it would’ve been someone else putting mom-and-pop out of business. It’s called capitalism.
My second confession is that I don’t eat anything organic (unless by accident). Only God (and perhaps the FDA) knows what sorts of chemicals I’m ingesting when I eat the food purchased at my local Wally-World. It hasn’t killed me, yet, so I’m not terribly worried. So, who would’ve thought I’d come down on the side of Whole Foods CEO John Mackey in the debate over health reform.
In a recent op-ed in the Wall Street Journal, Mackey makes his proposals for health reform, and I agree with most of them. What I admire about him is that he puts his money where his mouth is. Whole Foods rolled out a Consumer Driven Health Plan (CDHP) with a Health Savings Account (HSA) several years back and has been serious about promoting it with employees and teaching them how to use it. Employees are educating themselves about the plan and are, in fact, doing what CDHPs are designed to encourage them to do: shopping for health care services.
To be sure, I’m not certain CDHPs are going to save our health care industry. But I do think they encourage people to think more carefully about their health care decisions. I think that CDHPs should be carefully designed to cover preventative things like regular checkups at low or no cost (i.e., not subject to the deductible). Otherwise, some people will be inclined to avoid checkups in order to preserve their HSA balance. That said, putting more responsibility on consumers seems like something else I remember that made this country great. Oh yeah -- now I remember. It’s called capitalism.
Mackey’s other proposals?
Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits.
Repeal all state laws which prevent insurance companies from competing across state lines.
Repeal government mandates regarding what insurance companies must cover.
Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year.
Make costs transparent so that consumers understand what health-care treatments cost.
Enact Medicare reform.
Revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.
Enacting any one of these changes would be challenging (an understatement?) given the interests that would be affected. Nevertheless, to me, these are reasonable proposals for health reform that would encourage market-based solutions and deserve as much discussion as the options currently being debated.
Editor's Note - Greg Dagley is a Benefits Consultant for a large multinational employer in Houston, TX. While his company has employees all over the globe, his job keeps him focused on US benefits and spending a lot of his time managing external vendors. Is there any doubt his Excel skills are more advanced than yours?
In an interview on June 28, David Axlerod, political advisor to President Obama, commented on ABC’s “This Week” that the President would not “…rule out the possibility that the White House might agree to a tax hike on health insurance plans that would hit middle-income Americans.” This follows a campaign during which then candidate Obama promised not to raise taxes for American’s making more than $250,000 (a threshold that was subsequently lowered to $200,000). Furthermore, he ridiculed John McCain for making just such a proposal: "For the first time in American history, he wants to tax your health benefits. Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too." I’m reminded of a former president whose hopes for a second term came to an end when he reneged on a promise made during his first run for office: “Read my lips -- no new taxes.”
The latest estimates from the Congressional Budget Office and Max Baucus, Chairman of the Senate Finance Committee, put the expense for a public insurance option somewhere between $1 trillion and $1.6 trillion over 10 years. So the trillion dollar question left unanswered is where to find the funding to pay for this public option. If the federal government is looking for a stash of cash that hasn’t been tapped, employees’ pre-tax contributions for health care coverage is a logical place to look. Estimates are that these tax savings to Americans cost the federal government nearly $200 billion per year in tax revenue.
The dot that most Americans haven’t yet connected is that this loss of tax savings will result in an increase in their personal tax burden. A change of this nature will hit 170 million Americans like a ton of bricks when they see their tax liability increase the year after the tax savings is eliminated. I’m no accountant, so I’ll use simple math. An employee paying $250/month in health care coverage through his/her employer will see an increase in taxable earnings of $3,000/year. Assuming a 28% tax bracket, that’s an additional $840/year s/he will owe Uncle Sam. This doesn’t include imputed income that could be added for employees covered by employer sponsored health plans that provide coverage over and above some actuarial threshold defined by the government, nor the potential loss of tax exempt status for flexible spending accounts.
The next few months will be interesting. Opposition has been building and will continue to build against the public option being proposed. There are more than a few lobbyists with their hands full in Washington these days. But the President wants to sign something by the end of this year, even if that “something” lacks detail. Whether he’ll be able to garner enough support from both sides of the aisle is yet to be seen. Failure to do so could spell political suicide (if taxing employee benefits alone doesn’t do it). Keep your eyes peeled -- things will be moving fast this summer.
Editor's Note - Greg Dagley is a Benefits Consultant for a large multinational employer in Houston, TX. While his company has employees all over the globe, his job keeps him focused on US benefits and spending a lot of his time managing external vendors. Is there any doubt his Excel skills are more advanced than yours?
There's no shortage of discussion about the risk of rising health care costs and tightening budgets discouraging people from taking important prescription drugs. It is a problem for both those with insurance (but high copays for brand name drugs) and those without insurance who can't fork out the cash for pricey prescriptions every month. And, it is a short-term personal budget fix that has awful long-term health implications (which, of course, means long-term health expenses too -- for the individual, their employer, really all of us).
So, this Pfizer program caught my eye. MAINTAIN is a program that lets unemployed individuals (and their families) who are in financial need and lack prescription coverage continue to get their Pfizer medicines free-of-charge for up to one year (or until they become insured, whichever comes first).
This is right from the official Pfizer info:
Through MAINTAIN, more than 70 Pfizer medicines are offered that treat a range of chronic health conditions. It is easy to learn if you may be eligible, by visiting www.PfizerHelpfulAnswers.com or calling 866-706-2400. The program is user-friendly, with a one-page application that Pfizer will typically process within two to three weeks. The program is expected to accept applications through December 31, 2009.
There are four eligibility requirements for MAINTAIN:
Applicants must be able to demonstrate loss of employment since January 1, 2009;
Lack prescription coverage;
Attest to financial need; and,
Be on their Pfizer medicine for at least three months prior to unemployment and enrolling in the program.
Uninsured patients who need a Pfizer medicine but who do not qualify for MAINTAIN may qualify for Pfizer’s other Patient Assistance Programs.
No matter what you think of big pharma, you can't complain about this program. And, what I like even more is this nifty little tool on their website to help you find Assistance Programs that are right for you (available in Spanish too). Medical plans can be super confusing, and prescription drug programs are notorious for being anything but user friendly (my favorite being the all-too-common labels "preferred" and "non-preferred" for brand name drugs--usually the "non-preferred" is the higher copay, meaning "not preferred by your PBM--we don't really care about your perspective.") So, it is really nice to see the extra step taken to make these programs accessible, not just out there for the good-guy status.
Also, I'm often asked what employers can do to "soften the blow" of layoffs. There's not really any way to make getting laid off seem like good news, but employers can provide departing employees with helpful resources like this program and other assistance programs. That's a simple step that shows real concern for your workforce--even after they leave.
Editor's Note - Jennifer Benz is founder and chief strategist at Benz Communications, a boutique consulting firm that focuses on employee benefits communication.
I've always been amazed that the USA always shows up in the mid-teens regarding outcomes/effectiveness of care when compared to other industrialized nations. All the money we spend, and we trail Europe?
One reason might be a over-reliance on surgery, which we've been trained is the path to take when you're serious about getting healthy. A recent BusinessWeek article focuses on this tendency in the USA using heart disease and prostate cancer as examples:
"Each year, more than 1.3 million Americans have their clogged arteries widened with a tiny balloon and then kept open with slender mesh tubes called stents, made by companies like Johnson & Johnson (JNJ) and Boston Scientific (BSX). The total bill for these angioplasties is more than $21 billion a year. But while many patients and doctors firmly believe that angioplasties prevent heart attacks, the data say otherwise. A series of studies—the newest published in the June 11 issue of The New England Journal of Medicine—finds that stable patients with chronic heart disease who have the procedure get little benefit compared with similar patients treated just with drugs, such as Pfizer's (PFE) cholesterol-lowering Lipitor and other statins, and aspirin. "There are still many patients who undergo angioplasty without really understanding that it will not reduce chances of heart attacks or death—though it will reduce symptoms," says Dr. Judith S. Hochman, director of the Cardiovascular Clinical Research Center at the New York University School of Medicine.
That's why there's a growing effort, led by physicians, health insurers, and even state legislatures, to make sure patients truly understand the medical evidence about angioplasty and other treatments and procedures. Once informed, the patients are encouraged to make their own choices. This idea goes by the somewhat clunky name of shared, or informed, decision-making. Instead of being routinely whisked in for a prostate screening PSA test, for instance, men would first be told that major studies have failed to show the test saves lives. What's more, the test increases the chances a patient will undergo surgery or treatments that cause incontinence, impotence, and other problems. "The fact that PSA screening is more likely to cause mischief than save a life is not intuitive to patients or even physicians," says Dr. Paul J. Wallace, medical director for health and productivity management programs at health-care provider Kaiser Permanente, which is testing this approach.
Studies show this process, using comprehensive videos and other materials prepared by groups such as the nonprofit Foundation for Informed Medical Decision Making (FIMDM), leads patients to choose conservative options more often. It reduces rates of angioplasty or prostate surgery, for instance, by 15% to 30%. Put into widespread use, the approach has the potential to trim hundreds of billions of dollars from the nation's $2.4 trillion health-care bill. Yet patients do as well or better than if they had opted for the procedures. Surveys done after the decision also show patients to be more satisfied, no matter which choice they made. "That's the kind of win that doesn't fall into your lap very often," says Washington State Senator Cheryl Pflug, a Republican.
Hundreds of Billions. Kinda catches your eye, although the specter of making decisions in terms of who gets surgery and who doesn't would be a rallying cry for those who claim nationalized health care will take the decision out of the hands of the patient/doctor.
It'll be interesting to see this play out in the scope of nationalizing health care...
That's right. Our kids have been fat so long that our expectation of what fat is has started to shift. See this research abstract from Burke, Heiland and Nadler and exhale:
"We test for differences across the two most recent NHANES survey periods (1988–1994 and 1999–2004) in self-perception of weight status. We find that the probability of self-classifying as overweight is significantly lower on average in the more recent survey, for both men and women, controlling for objective weight status and other factors. Among women, the decline in the tendency to self-classify as overweight is concentrated in the 17–35 age range, and, within this range, is more pronounced among women with normal BMI than among those with overweight BMI. Among men, the shift away from feeling overweight is roughly equal across age groups, except that the oldest group (56–74) exhibits no difference between surveys. In addition, overweight men exhibit a sharper decline in feeling overweight than normal-weight men.
Despite the declines in feeling overweight between surveys, weight misperception did not increase significantly for men and decreased by a sizable margin among women. The shifts in selfclassification are not explained by differences between surveys in body fatness or waist circumference, nor by shifting demographics. We interpret the findings as evidence of a generational shift in social norms related to body weight, and propose various mechanisms to explain such a shift, including: (1) higher average adult BMI and adult obesity rates in the later survey cohort, (2) higher childhood obesity rates in the later survey cohort, and (3) public education campaigns promoting healthy body image. The welfare implications of the observed trends in self-classification are mixed.
Here are some snippets from an email I received from the US Department of Health and Human Services today:
"We know that the health care crisis impacts every American, but our mothers, daughters and sisters are paying a particularly heavy price. Today, 21 million women and girls are uninsured. Women who try to purchase insurance find that the private market is often stacked against them. Premiums in the private market for young women are often higher than they are for men. In some states, insurance companies can legally discriminate against women, and leave them with higher health care bills or inadequate coverage.
We know America's women can't afford to wait for comprehensive health reform. Roadblocks to Health Care reports:
In the individual insurance market, women are often charged higher premiums than men during their reproductive years. Holding other factors constant, a 22 year old woman can be charged one and a half times the premium of a 22 year old man.
In a recent national survey, more than half of women (52%) reported delaying or avoiding needed care because of cost, compared with 39% of men."
Why are women charged more? Among other things, because we can get pregnant and pregnancy in the US is very expensive. We therefore use more health care and are charged more or denied insurance coverage. But here is the crazy part, folks: women cannot self-impregnate!
Not long ago, I received a very personal lesson on the wacky state of preventative health care for maternity. As an otherwise extremely healthy person with a good track record for taking care of myself and little in the way of worrisome health risks, I'd gone the way of financial prudence. I purchased a health plan with a high deductible, but with inexpensive co-pays on doctor's visits and alternative medicine as well as discounts on pharmaceuticals, should I need them.
This was all working out very well. I continued to do my part for the team by taking good care of myself, paying my insurance company dutifully and not using any medical care! I was mentally prepared should a catastrophe befall me. I figured, should that happen, my piddly $5k deductible would seem like chump change in comparison to what I would otherwise have had to spend out of pocket for catastrophic care. All those years of paying unused premiums to my carrier would have been put to good use!
Then, about 6 months ago I developed a small "medical" problem. That's right. I got pregnant. Ok, so this is no catastrophic illness or disease condition, right? I mean, there are more than 6 billion people on earth and, unless I am mistaken, pregnancy is the way we all got here. As a scientist, I will grudgingly agree that pregnancy looks suspiciously like a highly evolved parasitic infection. Yet, unlike malaria - for instance - my health plan wasn't ponying up any cash for pregnancy vaccines or other preventative measures against this "disease."
So, it was one $20 co pay with my primary care doc, the cost of a pregnancy confirmation test, and then I was on my own. At that point my options were to start clocking maternity care against my catastrophic deductible. After meeting that limit I'd pay 30-70%. After doing the math, I realized that if I ended up in a hospital for a routine, healthy birth, with no serious complications, that I would most likely end up paying $7,500+ out of pocket for my "disease." Compare this to a $2000-2500 bill if I pay cash for a home birth with a certified nurse/midwife, including all prenatal scans and labs and two months of well baby care, and it left me scratching my head. Now if there were complications (need for surgery, premature birth, gestational diabetes, preclampsia, etc.) that led to a need for emergency medical intervention then, as I said, there is not much room to gripe over the deductible when so many dollars and someone's life are on the line. Yet when all signs in my case (and in the case of nearly 75% of pregnancies that come full term) point to a completely normal, healthy pregnancy and birth, I am perplexed about how this situation serves any sort of greater good.
In my case, I simply opted to pay the midwife out of pocket and should an emergency arise, well, it's an emergency - deductible be damned. Yet I think about all of the women whose partners may have left them; women whose partners lost their jobs; women who have lost their own job and are not sure how to afford COBRA, but would be denied individual coverage due to their "pre-existing condition"; women who are short on the cash to be able to afford the relatively less expensive but still cost prohibitive bill for good prenatal care and who end up with very costly bills later on down the line due to having delayed or avoided care.
And these mothers who were impregnated by partners who - in most cases - will not be denied coverage or see rate increases due to their partners' "disease," are left unable to pay and to pass on the costs to the remaining payers in the current insurance system - thus becoming contributors to the astronomical rise is insurance rates. These are not some handful of bad people "out there." If you are reading this blog, breathing and have a pulse right now then you have a pregnant woman to thank.
People are not going to stop making more people, people. It just isn't going to happen. So what are our options when it comes to taking pregnant women off of the bad apple list with regards to health care costs?
Provide safe, effective and affordable contraception and family planning services to women of reproductive age (yes, this means after menarche) .
Ensure that health plans rapidly identify and direct high risk pregnancies to maternity care and coaching programs that help manage behavioral risk factors and more closely monitor pregnancy through birth.
If you are an employer providing maternity benefits and health insurance for your employees and spouses, make sure you emphasize prental care and maternity benefits offered by your health plan. Consider setting aside lactation rooms to encourage breastfeeding mothers to pump so that they can continue to feed their babies breastmilk (which has health benefits for the mother and child).
Support legislation that accomplishes all of the above and funds community health education centers that provide outreach, education and services to uninsured populations - eliminating a cost barrier which might keep pregnant women from seeking care until it is too late.
If altruism isn't your bag, then consider that early prenatal care helps all payers in the health insurance game by lowering costs shared by the pool. And if you are still feeling the glow from that gift that had your mom in tears last weekend, then - hey - do it for the lady who loved you enough to endure nausea, swollen feet, ill-fitting clothes and a whole lot more to bring you into this world.
Editor's Note - It's hard to be humble when you're bloggin' straight out of Portland, Oregon. Tanya Barham is the Founder and CEO of Recess Wellness, a company where all the staff works like little elves at Christmastime to transform their client's workplaces into healthy, happy, productive places akin to Santa's workshop at the North Pole. Seriously. Of course, Santa's fat, so they still have work to do.
Chances are, given current economic conditions, you aren’t rolling out many new benefits this year. In fact, you’ve probably received direction from your e-suite to “cut costs” without much direction regarding where those savings should come from. There’s a fine line that folks who work in benefits are walking these days. On one hand, we’re looking for opportunities to control or cut costs. On the other, we want to continue offering benefits programs that help attract and retain talent. The challenge is finding ways to balance these competing interests.
If you believe the media, the easy cut for many employers is the employer match on 401k contributions. Others are making changes to what they contribute toward medical coverage or changing medical plan design. Still, others are moving away from traditional health coverage altogether toward consumer driven health plans (CDHP). In a recent survey, Watson Wyatt found that 51% of employers responding currently have a CDHP in place -- up 9% from the prior year.
While it may feel like every employer is reducing benefits, the results of a recent Tower Perrin survey seem to indicate otherwise. The survey found that few respondents were planning to make dramatic changes to their benefits during the next year. Many employers are taking this opportunity to communicate with employees about their concerns and take a harder look at their benefits strategies. Here’s an excerpt from their press release:
“Amid worries about their 2009 performance (56% of respondents expect to see revenues decline, in some cases by as much as 20% or more), a fair number of respondents see the economic crisis as a catalyst for constructive action. For instance:
70% are increasing communication to address employee concerns, and more than 57% said they were not cutting back on investments in benefit communication or education.
53% are trying or considering new benefit strategies they would not have considered otherwise.
47% reported they are taking a more holistic approach to reward management.”
The argument against making drastic cuts today is that employees tend to have long memories. While they may not walk out your door in the current economic environment, they’ll remember how you treat them today when the environment improves. There are certainly employers making changes to their benefits programs just to survive. If a choice has to be made between reducing benefits and closing your doors, obviously a reduction in benefits makes more sense.
Let’s face it -- benefits are offered as part of a total compensation package to attract and retain talented employees. Benefits managers around the country will be faced with tough decisions this year. Over the next 6-18 months, they’ll need to be strategic about decisions they make. Looking for opportunities to control or cut costs will be imperative. But employers should think twice before taking an axe to their benefits programs at will. If they do, their employees will remember it when times aren’t quite so tough.
Editor's Note - Greg Dagley is a Benefits Consultant for a large multinational employer in Houston, TX. While his company has employees all over the globe, his job keeps him focused on US benefits and spending a lot of his time managing external vendors. Is there any doubt his Excel skills are more advanced than yours?
I'm increasingly becoming convinced that the best way to win the wellness game is to go "all-in" with on-site staff, etc. That's bad news for small companies that can't afford those types of services.
A recent case study indicates the FTE count necessary for a big on-site wellness team might work forcompanies with far less than 1,000 employees - especially if they are primarily blue collar, manufacturing/production line environments with lots of worker's compensation risk.
"Lincoln Industries looks like a typical blue-collar plant: workers cutting, bending, plating and polishing steel for products such as motorcycle tailpipes and truck exhausts amid the din of machinery.
But the 565-employee Nebraska company is different.
Lincoln Industries has three full-time employees devoted to "wellness" and offers on-site massages and pre-shift stretching.Most unusual of all: The company requires all employees to undergo quarterly checkups measuring weight, body fat and flexibility. It also conducts annual blood, vision and hearing tests.
The company ranks workers on their fitness, from platinum, gold and silver down to "non-medal." To achieve platinum, they must reach fitness goals and be nonsmokers -- and the company offers smoking cessation classes.
For the company, the payoff is significantly lower health-care costs. The company pays less than $4,000 per employee, about half the regional average and a savings of more than $2 million. That makes the $400,000 Lincoln Industries spends each year on wellness a bargain.
The investment in "wellness" pays other dividends, according to Orme. He says fitter workers are more productive, have better morale and are safer. As evidence, he points to worker's compensation claims. Ongoing safety training and an increasingly fit work force have pushed worker's comp costs down from $500,000 five years ago to less than $10,000 so far this year."
In reading about this plant, I can't get an old Michael Keaton movie named "Gung Ho" out of my mind, where a Japanese company buys a plant and tries to get hard-core blue collar workers like George Wendt to pick up exercising before the start of their shift.
While the prospect of stretching Carl from the drill press team out before the start of his shift is a little daunting, I'd gladly get out of my comfort zone for a 50% reduction in medical costs.
There has been more excitement surrounding the election of Barack Obama as President than any president that I remember, and my memory goes back to Nixon in 1972. President Obama seems to have an ability to inspire people and bring them together at a time when we are all desperately in need of that.
We all know that one of President Obama’s passions is <health care—specifically, the idea that everyone should have access to affordable, high quality health care coverage. And we also know that there have been many failed attempts to reform a system that everyone already admits is broken.
So why is this so hard? And what really needs to happen?
It’s hard, frankly, because a lot of people spend a lot of time pointing fingers at other people. And a lot of people’s livelihoods are attached to the current system not changing very much.
At Hewitt, we’ve identified the key elements that we think are necessary for successful health care reform. It’s a long list. But I think two things are really important—critical to the whole effort. If Congress can get away from the financial crisis and spend some time on health care, two “must haves” are keeping employers at the center of the system (at least for now), and helping them to be more aggressive in improving health.
Employers should >Still Drivethe Bus
.
Even though it is an accident of history, employers have been in the health care game for a long time. If we were building a brand new system, would we put the employer at the center of it? Maybe not. But let’s face it—there is no easy way to pick up the health care coverage of over 150 million Americans without breaking the bank. Employers providing health care may not be ideal, but it works pretty well right now. In fact, group purchasing lowers health care costs and enables those who are less healthy to secure affordable coverage for themselves and their families. Additionally, the system has encouraged employers to be innovators of health care solutions through things like wellness and disease management programs.
Let’s Expect More of Employees, and Their Families
One good reason to have employers continue to provide health care is that they are direct beneficiaries of a healthy, productive work force. And they have tremendous opportunities to improve the health of their employees and their families.
We should quit smoking, lose weight, exercise more. In fact, the Centers for Disease Controlrecently revised their exercise guidelines which should make it easier for everyone to meet the recommendations. And yet we do not do it. We need to have a better understanding on what motivates people to change. We need to give employers the flexibility and support to try new and different approaches that are aimed at improving the health of their populations. So long as they are not punishing the sick, employers should be given broad flexibility to try new health improvement programs and techniques—including rewarding the healthy.
By agreeing to support just these two elements we can go a long way toward ensuring effective and robust reform.
In addition to funding an expansion of state Medicaid and the State Children's Health Insurance Program, the Washington Post has reported there are plans to allocate upward of $10 billion to implement a nationwide, interoperable electronic medical records (EMR) system. The investment could jump-start a flurry of spending on health information technology (IT).
This sounds ideal, but it's an expensive proposition. Campaign for America's Future, a liberal think tank based in Washington, D.C., expects a nationwide electronic medical records system to cost $7.6 billion a year over 15 years.
The high cost is due partly to the fact that few providers currently use health IT. By 2006, only 12% of America's physicians and 11% of its hospitals had adopted computer applications to help modernize their record keeping, according to the Congressional Budget Office.
But there's a potential return on the high cost. Last week, the CBO released a study estimating that the implementation of health information technology, including EMRs, could save $7 billion in the first five years."
I work for a Veteran's Health Research organization so naturally we get November 11th off each year as a holiday. Not so for me this year. Instead I attended a "Wells Fargo Health Solutions Seminar with Dr. John Abramson".
In 2004 Dr. Abramson wrote a book called "Overdo$ed America The Broken Promise Of American Medicine--How The Pharmaceutical Companies Are Corrupting Science, Misleading Doctors, And Threatening Your Health (And up in the left hand corner there is a little balloon that says "The Truth About Vioxx, Celebrex, Statins, and More). OK, that's all you need to know--end of POST--just READ THE BOOK... In it he totally busts Big Pharma and a lot of the so-called research findings that come out of studies funded by Pharmaceutical companies. I know this isn't necessarily news to many of us, however the facts and statistics he lays out, and analysis he uses to derive his conclusions are very compelling. In person he is an impassioned speaker on behalf of reasonable, sane, effective health-care reform. Do away with the expensive drugs and procedures as routine, matter of course
From the book, pg 209-210...
"Pretending to care about our health is often just part of the drug and other medical industries' overall strategy to increase their sales. They dominate the medical journals, airwaves, newspapers, and magazines with "information" designed to convince doctors and patients that their products are essential for good health. They focus attention on the health problems and solutions that are the most commercially advantageous rather than most beneficial for our health." ...
"The truth, as we have seen, is that the benefits of medical care are real but limited, and more is not always better, and is often worse. These awkward facts get shoved into the background of our common wisdom buy the bright lights of advertising and medical news that shine incessantly on the "breakthroughs" in medical progress and the drugs you should "talk to your doctor about." By saturating our sources of information, the medical industry has convinced most Americans that the answer to almost every health problem can be found in a brand-name pill or high-priced medical procedure.
That's the bad news. And it's very bad, costing Americans hundreds of billions of dollars a year, and even worse, compromising our health and quality of life. But there is good news too--and it's enormously good: the evidence from study after study, including gold-standard randomized clinical trials, shows that we can usually do a great deal more to maintain our own health than the medical industry, particularly the drug industry, promises it can do for us."
In subsequent posts I'll discuss what Dr. Abramson suggests we can we can do, from the inside, as Benefits Professionals, to begin to make an impact and change how things are now to how they could possibly be in the future.
Editor's Note - Joan Gibson is a Benefits Analyst for NCIRE, which is the non-profit organization charted by congress back in the 80's to manage all the government funding/grants/contracts for the medical research projects happening at the SF VA Medical Center. When she's not attending a conference, you'll find her on the phone trying to squeeze usage stats out of unsuspecting targets like the NCIRE EAP vendor....
Bought a new car recently? If so, you know sticker price is for suckers... Do two things - wait for the juicy rebates always offered by Detroit automakers, then head to the lot and try to dicker the sales people down even further. That's right, the marketing machine of US automakers has conditioned us not to move until there's a $5K rebate involved off the top.
Health care is similar in some ways, but different in some critical aspects. First up, there's a sticker price that hospital facilities quote to the general public related to what different procedures cost. Think of that as their "sticker price". Here's the big difference - rebates aren't available to everyone, just to the folks with quality health care plans. The Blue Cross networks (as well as other big insurance providers) are able to extract HUGE discounts from doctors and facilities alike through the power of their network. If doctors/hospitals want BCBS patients, they've got to be a part of the network, and to be part of the network they've got to agree to the fee schedule touted by BCBS.
That's where the discounts/rebates come into play. The rebates can be huge when compared to the sticker prices touted by hospitals. Here's a new record in my world I just came across. Employee goes in for a procedure, with the company billed 19K for the entire bill. Sticker price from the hospital before BCBS got ahold of the claim and went all Tony Soprano on it? $152K. That's right - the sticker price was over 7 times the actual cost ultimately allowed by BCBS.
Which makes me think two things. First, I'm glad we have a good provider that can extract deep discounts off of sticker price. Second, the common guy out there who's not covered by a plan like ours and is trying to go without insurance is a car wreck away from a lifetime of bills he can't pay and a probable personal bankruptcy.
There's something wrong with health care when sticker price on medical procedures makes buying a car look like a "one price, no haggle" experience...
Hey dude... The light at the end of the tunnel? It's a freaking train, and it's coming to run you over....
Seriously, can there be a more desperate situation than the state of US Healthcare? The population is aging, the mostly good capitalist society creates drug companies that create billion dollar markets out of vapor, and you are in the middle of the fray, trying to be the Daddy Warbucks of healthcare by providing medical and Rx to your workforce. That's what you're supposed to do as an employer, right?
Sure, that's been part of the employer role. But, it's getting ready to be very painful. From the Associated Press:
"By 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends, the federal government projects.
The 6.7 percent annual increase in spending — nearly three times the rate of inflation_ will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011."
That means total health-care spending in the year 2017 will average out to $13,101 per person. By contrast, that spending in 2006 worked out to an average of $7,026 per person.
WOW... 6.7% actually sounded OK to me, until I realized that compounding, which is good for my 401k, really hurts when it impacts the expense side of the P&L.
If it were a division, you'd shut it down tomorrow. But it's not...
Employees saved more than $1,700 per year in gasoline and wear and tear on their vehicles byworking at home an average of 2.5 days a week.
Office equipment energy consumption rate at a Sun office was two times that of home office equipment energy consumption, from approximately 64 watts per hour at home to 130 watts per hour at a Sun office.
Commuting was more than 98% of each employee’s carbon footprint for work, compared to less than 1.7% of total carbon emissions to power office equipment.
By eliminating commuting just 2.5 days per week, an employee reduces energy used for work by the equivalent of 5,400 Kilowatt hours/year.
Working from home 2.5 days per week saved the employees in the study an average of 2.5 weeks of commute time (8 hours/day, 5 days/week).
Through this program, Sun has nearly 19,000 employees around the world work from home or in a flexible office, representing more than 56% of Sun’s employee population.
WOW. Compelling stuff. Add to that tally, as I'm reminded by Kevin, the increase that can occur in productivity if employees treat the arrangement professionally, and the business case is strong.
While we have some telecommuters, I've been working on something to help institutionalize the approach. I need to wrap that up and get it to market, ASAP...
Before I get started on this post, let me do some self-disclosure. I'm a relatively healthy (knock on wood) individual who is blessed with pretty good genetics when it comes to weight. I come in at 6'2", 170 lbs., which rings me up a BMI of about 22. All my health care metrics are in good shape (again, knock on wood)...
But, I work at it. I run, on average, 4 times a week, and I don't eat much high fat or fried food. Without the exercise and diet habits, I probably track like some of my friends, which would probably put me in the neighborhood of 190 with a little pouch in the middle. My family is like me, and physical activity is at the core of how we spend a lot of leisure time. A healthy family diet is part of the deal too.
Personal situation aside, I'm sympathetic when I hear about people struggling with weight issues. I'm never more sympathetic than when I read or hear about kids struggling with weight issues early in their lives. That's why I had an interest in the recent New York Times article talking about the lack of insurance covering weight loss camp for kids.
"There are nine million overweight or obese children in the United States. And although the prevalence of childhood obesity has tripled since 1980, there are few comprehensive or affordable programs to treat them. Summer weight loss camps are usually profit-making and can cost more than $1,000 a week. Most insurance does not cover that cost.
For Dr. Walter J. Pories, a well-known gastric bypass surgeon, the dearth of government and insurance financing for such comprehensive weight-loss programs is “the single most frustrating problem in dealing with childhood obesity.”
Several national groups are pressing for government financing or insurance reimbursement for more intensive weight loss treatment for children, including weight loss camps. In the meantime, many children mostly have to follow Tiffany King’s lead. She submitted a personal essay that was well written, sad and compelling. “If I could get on my knees and beg for this campership, I would, because I want to feel good about my life,” she wrote. “Sometimes, if I’m walking down the street, I can hear people talking about me and staring at me.”
I'm not the guy who's ordinarily going to run to the insurance industry's defense. I get frustrated, just like my employees, when red tape holds up needed treatment. But there's an obvious point the folks, who will shout out the need for weight loss camps, aren't sharing at the appropriate volume.
Here's the reality - A kid can go to weight loss camp, lose 10% of their body weight and pick up some great ideas how to live their lives with proper diet and exercise. Unfortunately, if their parents are obese, sedentary or fond of fried foods, the kid generally won't keep the weight off. The NYT was kind enough to balance the story out with the following:
"The big challenge comes later, when children resume their normal routines and confront the smorgasbord that is America — food in their own kitchens and at friends’ homes, fast-food restaurants and school cafeterias.
Dr. Pories, who also heads the Metabolic Institute at East Carolina University, found that children lost an average of about 8 percent of their body weight in a program he studied over three years; but two-thirds regained all or part of their weight.
Even Dr. Pories, who has been involved in promoting weight loss camp scholarships for underprivileged children in eastern North Carolina, says, “A two-thirds failure rate is not acceptable.”
It's all about the support system you are going back into. If a kid has family and friends who don't exercise and eat healthy, there's no way the kid keeps the weight off. To be fair, this is a story that transcends analysis from any single perspective. There are cultural, socio-economic, educational and other issues at play. The availability of weight loss camps is the least of the challenges.
Weight loss camp for the kid isn't fixing the issue. Perhaps weight loss camp for the family?
If you've been in HR for more than 5 years, you've been a part of what I'll call the "Great Benefits Crunch", which has forced your company to reduce overall benefit levels and/or pass along greater costs to employees.
You don't have to explain it to me. I've had to explain those decisions to employees, and I'm aware that you didn't create the economic problem that is the "state of health care". Sadly though, if you're in HR, you're left to explain the realities to a set of employees that doesn't feel great about costs being shifted their way.
You and I can understand that, because we're employees too. Just because you manage the plan doesn't mean your health insurance is free.
But being in HR means you take ownership of the employee relations side of the business, which means at times you're going to feel the laser on your back when employees vent their frustrations.
Watch the whole video below, which is one of the hardest rants about cost shifting I've ever seen captured on video...
"Convinced that the county no longer can afford spiraling health insurance premiums, Sonoma County (CA) supervisors told thousands of retirees and employees Tuesday that they will have to pay an increasing share of the cost. Supervisors conceded their vote would be unpopular with the 2,500 retirees and 650 non-union workers who will be affected by the cost restructuring beginning in June.
Currently, the county provides non-union workers 85 percent of the premium for any plan selected, and gives retirees 85 percent of the lowest-cost premium, either for an individual or couple. Under the adopted recommendations, there will be a gradual reduction of 20 percent annually over the next five years in the county's contribution to retiree and non-union health benefits to $500 a month.
Nearly two-thirds of the 2,400 retirees would experience a drop in county contributions to their medical premiums. Those who insure dependents or who retired before age 65 are likely to see the biggest reductions. For example, an early retiree insuring a dependent under age 65 on the least expensive PPO plan is now getting $1,043 a month. That amount would be reduced by 20 percent each year until 2013 when the $500 monthly level would be reached."
I suspect retiree benefits will continue to be under pressure based on the economics of health care, as will the plans for active employees.
I don't have the answers, but I do know this. If you're an HR pro with 20 years left, you're going be a part of transitions and cost-shifting that spur reactions like what you see in the video above. Brace yourself for a bumpy ride.
The employee relations portion of the HR Manager's role - it's the toughest job you'll ever love...
So, the economy is in the pits, you just took a fully-insured renewal from your medical insurance provider that gives you a company-wide 12% increase when the national trend is 6%, and you keep hearing that China is going to put the USA out of business.
Plus, you watched the Olympics, and the Chinese sure look modern.
"China's economic boom has resulted in stark health inequity between its urban and rural populations and health experts urged the Chinese government to work harder at providing healthcare for everyone. Infant mortality in China's countryside stands at 123 for every 1,000 live births compared with 26 in the richest counties, the experts wrote in a paper published in The Lancet medical journal.
Of every 1,000 children, 64 in the countryside will not live beyond their fifth birthday, compared with 10 in the cities.
The report, by researchers in China, the United States and Britain as well as from the World Health Organisation, is part of a special series on China's health reforms.
Another paper highlighted how healthcare was taking up the bulk of household incomes, or a whopping 50 percent in 2006 (over 18 times that in 1990) because of inadequate health insurance. This compares with 45 percent in South Korea, 16 percent in Sweden, 15 percent in Japan and 11 percent in France."
Why this post on a Benefits blog? Like you, I read a lot about our country's competitiveness in the global labor pool, and it hurts to see jobs lost to a cheaper labor market overseas. That being said, I can't help but to be proud to live in a country, for all its challenges, that tries to do the right thing and actively has conversations about topics, like finding a way to ensure healthcare for all of our citizens.
You think serious conversations are going on in that regard in China? Perhaps, but I suspect the context is for the ruling party to stay in control, not a drive for equality, fairness and doing what's right.
The USA - imperfect, but I like it compared to that.
Going through Medical Plan renewal in our company, so living healthy, and the cost of not living healthy, is kind of on my mind. Then I got the latest issue of Time, which confirms that the unhealthy trend is a lot bigger than what I can influence with Consumerism in my medical plan...
"We're not only programmed to eat a lot," says Sharman Apt Russell, author of Hunger: An Unnatural History, "but to prefer foods that are high in calories." What's more, the better we got at producing food, the easier it became. If you're a settler, you eat a lot of buffalo in part because you need a lot of buffalo — at least after burning so many calories hunting and killing it. But what happens when eating requires no sweat equity at all, when the grocery store is always nearby and always full?
What happens is, you get fat, and that's precisely what we've done. In 1900 the average weight of a college-age male in the U.S. was 133 lb. (60 kg); the average woman was 122 lb. (55 kg). By 2000, men had plumped up to 166 lb. (75 kg) and women to 144 lb. (65 kg). And while the small increase in average height for men (women have remained the same) accounts for a bit of that, our eating habits are clearly responsible for most. Over the past 20 years in particular, we've stuffed ourselves like pâté geese. In 1985 there were only eight states in which more than 10% of the adult population was obese — though the data collection then was admittedly spottier than it is now. By 2006, there were no states left in which the obesity rates were that low, and in 23 states, the number exceeded 25%. Even those figures don't tell the whole story, since they include only full-blown obesity. Overall, about two-thirds of all Americans weigh more than they should."
The first thing I thought of after reading that is what a muscle-bound cat I would have been in college back in 1900. 6"2", 170, and I would have looked HUGE!!!
Second thing I thought of was that not many cats went to college back in 1900. No Internet either...
Third thing, and the most sobering thought, is that I'm limited in my ability to control the lifestyles of employees via adjustments to our Medical plan. It's a society thing, and the most progressive of programs are going to struggle against that. Even with the headline focused on the guy losing 80 pounds eating nothing but McDonalds....
Dave Ulrich said it best in the most recent issue of Workforce when he said the following about his own weight loss - "Those who have not seen me for five or six years almost always remark that I have lost a lot of weight. They want to know how I did it, and are suprised when I tell them that I have in fact discovered the secrets of losing weight. With bated breath, they listen to my secrets: Eat less, eat right and exercise more". As the reality of these "insights" sinks in, they are disappointed".
Everyone's looking for the gimick. Ulrich's advice sounds simple, but it's hard to implement for so many people. For a variety of reasons.
So take your double digit trend increases to your Medical plan, and sit down... There's not a big turnaround in sight....
With health care costs rising 7-9% each year, any HR person who thinks like a business owner is looking for ways to manage costs, if to do nothing but attempt to minimize the annual trend increase in costs.
Big ideas from past years to help you do that. Carve out your Rx plan to gain deeper discounts, wellness programs, call-in services like Tele-Doc to minimize the need for a primary care visit and the lost productivity that is part of that visit, etc. What did I miss? There are only a few tools, a few good ideas that can help you control costs without a drop in care.
So, what's next? Would you believe the on-site doctor? The situation with medical costs has now escalated to the point where it now makes sense to bring the doctor back on the campus of big companies. Warning - if you don't have at least 1,000 employees at a location or in your company, this one isn't for you.
"When a company unveils a new plan to rein in health-care costs, workers usually groan. Yet Toyota Motor (TM) is getting rave reviews for the on-site medical center it built at its truck factory in San Antonio. Ask line worker Louis Aguillon. He went to the clinic in May with nagging back pain, and paid just $5 for the visit. "I saw the doctor for 20 minutes," Aguillon beams. "You're not just a number there."
A recent study by benefits-consulting firm Watson Wyatt Worldwide (WW) found that 32% of all employers with more than 1,000 workers either have an on-site medical center or plan to build one by 2009. "We're talking about a microcosm of health-care reform," says Hal Rosenbluth, president of Walgreen's health and wellness division. "Companies can take control and understand their health-care costs."
Managers of on-site centers such as Toyota's make a variety of bold claims. Rosenbluth says every dollar invested in setting up a clinic will return $3 to $5, even though on-site doctors spend an average of 20 minutes with each patient—more than double the national average for primary-care physicians. Some of the biggest savings are on referrals to specialists and visits to emergency rooms, where the financial burden falls mainly on the worker's employer. Peter Hotz, president of Take Care Employer Solutions, the on-site medical division of Walgreen, says the clinic-management companies Walgreen acquired refer 40% fewer patients to specialists, compared to the primary-care physicians who treated the workers previously. And emergency room visits are down 72% at companies where Take Care is managing medical facilities."
So that's the big trend for 2009. If you're a small company? Best you can do is a service like Tele-Doc, where your employees can phone in for a diagnosis, then get medication prescribed over the phone for about 80% of the things that ail them.
I'm taking a guess here - but maybe the next trend will be real estate owners, who lease space in big office parks, jumping on this model as a benefit for their tenets. Anywhere you can aggregate 1,000 employees might be a match for the model...
I always celebrate the Hewitt Annual Health Care Cost Survey by going down to Circuit City to buy a new pocket protector. Seems like no one is around to help me these days, but if someone is available, they haven't worked there long. Go figure... I jest, but the Hewitt Annual Health Care Cost Survey (I'm calling it the HAHCCS for short.. kinda like TPS reports) is always chock full of benchmarks that matter. How much healthcare costs, what companies are paying on average on behalf of their employees, how much the same level of coverage is expected to increase in the next year, etc. Good stuff, good times. We'll get the party started with the data below from Hewitt, who's putting the annual trend (that's increases for you who don't talk to brokers) at 6% for 2008, and projected much of the same for 2009 at 6.4%. On the employee side, employee contributions (what employees pay out of their paycheck) increased from 2007 to 2008 by just under 10%, showing on average some cost shifting to employees. It's a sick world when a 6% cost increase feels good, but all you have to do is look at the chart below, and see the period from 2001 to 2004 to understand why most of us will take 6%. Couple of notes - all data below is from Hewitt, click here for the full summary. National cost per employee indicates what the total cost is for the company based on the average number of covered participants for each employee (including the employee themselves), which I would estimate nationally in the 2.1 to 2.2 range. Total Plan Costs Year National – Percentage Increase National – Cost Per Employee 2009* 6.4 percent $8,863* 2008 6.0 percent $8,331 2007 5.3 percent $7,857 2006 7.9 percent $7,464 2005 9.2 percent $6,915 2004 12.3 percent $6,334 2003 14.7 percent $5,639 2002 15.2 percent $4,914 2001 10.2 percent $4,268 *Projected *Costs are plan costs (premium or budget rate) on a per employee basis. It includes employee contribution, but not their co-pays. Average Employee Contribution for Coverage According to Hewitt data, the average employee contribution in 2008 was $1,806, representing 22 percent of the overall health care premium and up from $1,645 in 2007. Employees’ contributions have more than doubled since 2002. Year National Average Employee Cost 2009* $1,946* 2008 $1,806 2007 $1,645 2006 $1,433 2005 $1,268 2004 $1,127 2003 $943 2002 $770 2001 $641 *This represents the employee contribution to the overall health plan premium and does not represent out-of-pocket costs (i.e. co-payments, co-insurance). So, compare and contrast, my friends, and sleep tight knowing you are doing what you can to keep coverage affordable for your employees. Even if it means taking tough medicine like mandatory mail order, etc. Sometimes you have to roll like that, to keep the benefit levels for all, where they are...
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