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by Leila Morris
HEALTHCARE
• Large Employers Get Creative to Hold Down Costs
• Small Group Market Snapshot
• Part D Plans and PBMs Deliver Medicare Savings
• Analysis of Post Election Health Reform
• The Supreme Court’s Ruling Has Little Effect on Public Opinion
• Health Care Safety Net Coordination Grows
EVENTS
• Annuity Summit
• Webinar on Health Reform and Consumer Driven Plans
• Medical Advantage Summit in San Diego Next Week
• Webinars On the Updated Americans With Disabilities Act
FINANCIAL PLANNING
• Making Defined Contribution Plans More Successful
• Investors Show More Interest In Guaranteed Income
EMPLOYEE BENEFITS
• Medical Carriers Embrace Voluntary Products
• More Employers are Using Wellness Incentives
LIFE INSURANCE
• Life Carriers Are Catching Up on Customer Service Technology and Innovation
NEW PRODUCTS
• Clearer Statements for DC Plans
Large Employers Get Creative to Hold Down Costs
In 2013, the cost of health care benefits for large employers is expected to rise another 7%. That’s the same increase projected for 2012, but smaller than the previous three years. Employers are considering a variety of cost-control measures including asking workers to pay a greater portion of premiums. They are also boosting financial rewards to engage workers in healthy lifestyles, according to a survey by the National Business Group on Health.
Sixty percent of employers plan to increase the percentage of the premium that employees will pay in 2013. However, for the the majority, the increase is expected to be less than 5%. Forty percent will increase in-network deductibles; 33% will increase out-of-network deductibles; and 32% will increase out-of pocket maximums.
Forty-three percent say the most effective cost control tactic is to offer a consumer directed health plan; 19% say wellness plans are most effective; and 9% say employee cost-sharing is most effective.
Employers are experimenting with financial incentives in wellness programs. Forty-eight percent use incentives to encourage participation; 44% provide an incentive based on tobacco-use status; and 29% base awards on achieving certain outcomes, such as improved BMI or cholesterol levels. Twenty-two percent apply surcharges to employees for not participating in certain programs.
Among employers that offer incentives, the median amount employees can earn will jump from $300 this year to $450 next year. The median incentive amount that dependents can earn is expected to increase from $250 this year to $375 in 2013.
Employers have made the following changes in response to the Affordable Care Act:
• Annual Benefit Limits: 50% of employers no longer have annual benefit limits. Thirty-two percent did not change their annual limits this year. Among employers making changes for 2013, the most common benefits requiring annual limit adjustments were mental health and substance abuse (9%) and rehabilitative services and devices (9%).
• Grandfather Status: 57% don’t have any benefit options in grandfather status this year, compared to 49% last year. Twenty-nine percent have at least one grandfathered health plan this year.
• Health Insurance Exchanges: 51% say that some retirees may consider enrolling in health insurance exchanges; 38% say that COBRA plan participants may consider exchanges; and 35% say that part-time employees may consider exchanges.
Employers in the survey agreed that providing high quality, affordable health care remains a top priority for employers, according to the survey. “Although cost increases have stabilized somewhat, they are still on a higher base from last year and are simply not sustainable, especially when our nation’s economy and workers’ wages are virtually flat and everybody is struggling,” said Helen Darling, president and CEO of the National Business Group on Health.For more information, visit www.businessgrouphealth.org.
Small Group Market Snapshot
Enrollment in small group health insurance declined 1.5% from 2010 to 2011. However, health plans reported that the number of small employer insured groups declined 18% in 2011, according to a report by Mark Farrah Associates
Contrary to popular belief, small business owners did not pay significantly higher premiums than did larger employer groups. In fact, 2010 and 2011 data reveals that small group adjusted premiums per member/per month were $4.17 and $4.86 less, respectively, than what large groups paid.
MFA also noted that leading competitors in the small group market are UnitedHealth, WellPoint, Aetna, and Health Care Service Corporation (HCSC), which insure 41% of the total small group market. The survey was conducted in June 2012 before the Supreme Court’s announcement to uphold the health care reform law. For more information, visit www.markfarrah.com.
Part D Plans and PBMs Deliver Medicare Savings
The average monthly Medicare Part D prescription drug plan premium is expected to be $30 in 2013, which is lower than the $41 figure estimated in 2003. New data released by Health and Human Services (HHS), reveals that, with the help of pharmacy benefit managers, Part D sponsors exceed expectations in terms of savings, choice, and satisfaction in Medicare, said Pharmaceutical Care Management Association PCMA President and CEO Mark Merritt. “Part D is a rarity among federal programs in that it actually comes in under budget each year,” he added.
Analysis of Post Election Health Reform
Leavitt Partners released a graphic depicting 12 potential health reform scenarios based on the outcome of the 2012 U.S. elections. The scenarios depict what could happen to public entitlement programs, insurance market reforms, insurance distribution as well as payment and delivery reform under three distinct election scenarios: Democrat gridlock, Republican gridlock, and Republican sweep. The analysis is available at www.HealthReformBracketology.com.
The Supreme Court’s Ruling Has Little Effect on Public Opinion
The Supreme Court’s verdict upholding the constitutionality of the individual mandate has had little effect on public opinion. About 60% have an unfavorable view of the mandate whether it is described as tax or a fine. The Kaiser Family Foundation’s (KFF) tracking poll also reveals confusion over who will be subject to the tax penalty under the mandate. One in five Americans believes they will have to pay a penalty in 2014 while experts say the share will be considerably smaller.
Two in three Americans support expanding Medicaid eligibility under the Affordable Care Act. The Court’s decision to give states the option to decide whether to expand Medicaid has created a new arena for ACA controversy and partisan disagreement, according to KFF. Forty-nine percent support expanding Medicaid in their own state while 43% prefer the status quo. As with most ACA-related controversies, the public splits sharply along partisan lines on whether their state should expand Medicaid, with 75% of Democrats favoring it and 66% of Republicans opposed.
About 40% say they could still change their minds on the law. A slightly larger share than last month say they would back the law’s repeal. Just over half of Americans who were polled say they are tired of hearing lawmakers debate the health care law while 44% say it is important to continue the debate over the law’s future. For more information, visit www.kff.org.
Health Care Safety Net Coordination Grows
Safety net clinics, hospitals, and other providers that care for uninsured and low-income people are looking for ways to coordinate services to increase access, improve quality, and reduce costs, according to a study by the Center for Studying Health System Change (HSC) published in the August edition of Health Affairs.
Safety net health services have been fragmented. Hospitals, community health centers, and private physicians that provide charity care have usually operated independently of each other, with little or no coordination. Such fragmentation can result in severe gaps in services; reduce quality; lead to redundant use of services; and increase the costs to those who typically operate with limited resources and thin margins.
Funded by the Robert Wood Johnson Foundation and the National Institute for Health Care Reform, the Health Affairs study is based on HSC’s 2010 site visits to 12 nationally representative metropolitan communities including Orange County, Calif.
Researchers found a notable increase in efforts to improve the organization and delivery of care for uninsured and low-income patients. The study identified three main approaches: centralized referral networks, managed care programs for the uninsured, and care coordination across multiple providers.
Centralized referral networks provide an organized way for patients to get referrals to physicians, primarily specialists, who will treat uninsured patients for free or at reduced cost. Across the 12 communities, the number of centralized referral networks grew from zero in 2000 to four in 2010.
Managed care for the uninsured connects uninsured patients with primary care providers in hopes of reducing emergency and inpatient care. The programs typically simulate a health plan, with people enrolling and receiving a membership card to access care. In 2000, Indianapolis and Boston operated these kinds of programs, and by 2010, Cleveland had one.
Care coordination across multiple providers involves organizations working together to establish a medical home for uninsured patients. Six of the 12 communities had these kinds of programs in 2010 — Boston, Greenville/Spartanburg, Indianapolis, Lansing, Orange County and Phoenix — up from just two in 2000.
These community-based efforts could provide a foundation for improving care delivery and expanding coverage under national health reform. At the same time, some community respondents are concerned that safety-net coordination programs could lose private funding and community interest if the perception is that they are no longer needed due to greater access to affordable health insurance coverage or if the perception is that the remaining uninsured don’t deserve coverage, for example, undocumented immigrants who are ineligible for coverage expansions under the Affordable Care Act, the article states. For more information, visit http://www.hschange.org/CONTENT/1306.
Annuity Summit
The National Association for Fixed Annuities (NAFA) will host the 2012 IMO Summit October 17 to 19 at the Hyatt Regency Scottsdale Resort and Spa in Scottsdale, Ariz. For more information, visit http://www.nafa.com.
Webinar on Health Reform and Consumer Driven Plans
Rob Thurston, a noted expert in PPACA and president of HR Consulting, will host a free webinar on health reform and defined contribution health plans. It will be held Thursday, September 19 at 11:00 Pacific time. All attendees will get a free PowerPoint and white paper. For more information, visit http://ning.it/QBtiQP
Medical Advantage Summit in San Diego Next Week
The Medicare Advantage Summit will be held August 13 to 15, in San Diego. The three-day conference is designed to provide medical management tactics that health plans, hospitals, and physician groups need in a rapidly changing healthcare environment. Information on the summit can be found at www.opalevents.org/p/73/3rd-annual-medical-management-in-medicare-advantage-payerprovider-collaborative-care-summit.
Webinars On the Updated Americans With Disabilities Act
The Hartford is offering webinars in response to questions from employers and benefit brokers about amendment to the Americans With Disabilities Act (ADA). The following is the Webinar schedule:
• Tuesday, August 21,11:00 Pacific Time: Frank Alvarez of Jackson Lewis, LLP will discuss the fundamental concepts of ADA and ADAAA, which went into effect in 2011. The regulations include the definition of disability, what discrimination means, and the factors employers should consider in determining which job functions are essential.
• Tuesday, August 28, 11:00 Pacific time: Beth Loy and Linda Batiste of the Job Accommodation Network will outline guidance on workplace accommodations
• Wednesday, Sept. 12, 11:00 Pacific time: Jana Burke, a consultant who specializes in ADA compliance, will discuss the three categories of accommodations and will provide examples of the challenges that employers may face. To register for this session, click here
Making Defined Contribution Plans More Successful
Guaranteed retirement income options can help people with defined contribution plans prepare for retirement, according to a white paper from Prudential Retirement. The white paper is based on the 2011 Prudential Retirement Plan Participant Survey as well as an analysis of the company’s 2011 book of business. More than half of those surveyed say that investing in guaranteed retirement income options improves their odds of weathering market volatility.
Also, in-plan guaranteed retirement income options make people feel more prepared for retirement and produce better retirement outcomes. Many of those who already have an in-plan guaranteed retirement income option believe that it is a beneficial default investment, as long as employees can opt-out.
According to the research, American workers are concerned about market volatility, longevity, investment performance, healthcare costs, inflation, and the uncertainty of Social Security.
Those with in-plan guaranteed retirement income options are better diversified. They have contributed 38% more to their 401(k) plans. As a result, many of their retirement outcomes have improved due to better long-term investing behavior allowed them retire on time. For more information, visit http://www.news.prudential.com.
Investors Show More Interest In Guaranteed Income
In 2010, 48% of U.S. households indicated an interest in products that provide guaranteed income for life. In fact, investors are willing to accept a lower rate of return for such protection, according to a recent study by NFP Advisor Services Group
Consumer are willing to pay 4% to 6 % of assets to guarantee that they won’t run out of money in retirement. Yet advisors who are affiliated with an independent registered investment advisor only recommend guarantees 49% of the time. Financial advisors who are affiliated with an independent broker/dealer only recommend them 69% of the time for clients facing longevity risks. According to the study, offering guaranteed income solutions is a missed opportunity, which deserve serious consideration from advisors. For more information, visit www.nfpasg.com/guaranteedincome.
Medical Carriers Embrace Voluntary Products
Medical carriers are sexpanding their voluntary product portfolios and creating alliances with voluntary carriers, according to a recent Eastbridge report. Many consider voluntary to be a major benefit business, especially since healthcare reform could erode customer loyalty through health exchanges and the entrance of non-traditional carriers.
Bonnie Brazzell, vice president at Eastbridge said, “When we first looked at the involvement of medical carriers in the voluntary market in 2007, all but a few already offered some worksite products. Today, voluntary has penetrated their portfolios even more. In fact, the majority of medical carriers said that voluntary has seen double-digit growth in their company over the last five years as they add more products to their offering.”
More than half of the medical carriers participating in the recent survey offer four or more voluntary products. Many are developing strategies to maintain a connection with their customers through voluntary benefits. To purchase the report, e-mail info@eastbridge.com or call 860-676-9633.
More Employers are Using Wellness Incentives
U.S. employers are relying increasingly on incentives to drive participation in wellness programs, according to a survey by Aon Hewitt. Eighty-for percent of the nearly 2,000 U.S. employers surveyed offer incentives for participating in a health risk questionnaire and 64% offer an incentive for participating in biometric screenings. Fifty-one percent provide incentives to employees who participate in health improvement and wellness programs.
The use of monetary incentives has increased dramatically over the past year. In 2012, 59% of employers used monetary incentives to promote participation in wellness and health improvement programs, up from 37% in 2011. The use of monetary incentives for participating in disease/condition management programs almost tripled in 2012, from 17% in 2011 to 54%
Fifty-eight percent of companies with incentives have one for completing lifestyle modification programs, such as quitting smoking or losing weight. About one-quarter offer incentives for making progress or for meeting acceptable ranges for biometric measures, such as blood pressure, body mass index, blood sugar, and cholesterol.
Jim Winkler, chief innovation officer for Health & Benefits at Aon Hewitt said, “Incentives solely tied to participation tend to become entitlement programs, with employees expecting to be rewarded without any sense of accountability for better health. To truly impact employee behavior change, more and more organizations realize they need to closely tie rewards to outcomes and better results rather than just enrollment.”
Employers are also requiring more of participants to be eligible for enhanced benefits, such as value-based insurance designs. Forty-six percent have a value-based insurance design approach in their health plans. With almost 30% employers, to get the enhanced benefits, participants must complete a health-risk questionnaire or participate in a program, such as disease management program or smoking cessation program. This is a 33% increase from 2011.
Even though more employers are interested in offering incentives, the survey shows room for improvement. More than 80% of employers provide an incentive to complete a health questionnaire, yet less than 10% provide an incentive to address the results of the questionnaire. More than 60% provide an incentive to complete biometric screening, but less than 10% provide an incentive to take any action. For more information, visit www.aonhewitt.com.
Life Carriers Are Catching Up on Customer Service Technology and Innovation
Nearly half of life insurance carriers don’t have self-service Websites to support customers with policies in force, but almost all will by the end of 2013, according to a survey by iPipeline. Eighty-four percent of carriers say that improving customer experience is a top priority over reducing call volume and saving operational/back-office costs. Each year carriers get about one phone call for every two policies they have in force. For more information, visit www.ipipeline.com.
Clearer Statements for DC Plans
MassMutual’s Retirement Services Division has enhanced its defined contribution (DC) participant statements to help paint a clearer picture of participant retirement readiness. For more information, visit www.massmutual.com
