It s a Brave New World

Transcription

1 It s a Brave New World IPMA HR Virginia October 17, 2013 Michael Jayner

2 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2

3 Discussion Topics State of Market Cost of Doing Nothing Action Strategies Expectations 3

4 State of the Market Rising Cost Unaffordability Affordable Care Act Employers Movement 4

5 Rising Cost 5

6 Rising Cost Total health care expense per employee per year by industry, 2013 Source: 2013 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care 6

7 ACA Inventory March 23, 2010 Patient Protection and Affordable Care Act signed into law Changes to appeal process Elimination of lifetime limits Expanded coverage for retirees Grandfather status Extending cover to children up to 26 Non-discrimination rules No pre-existing conditions for under age 19 Preventive care at no cost Regulating annual limits on essential benefits No prior authorization on emergency services 7

8 ACA Inventory Annual rate review process Medical Loss Ratio (MLR) Elimination of over-the-counter HSA use 8

9 ACA Inventory MLR rebates 2012 Dependent coverage to age 26 Patient-Centered Outcomes Research Institute (PCOR) Fee Uniform Summary of Benefits and Coverage (SBC) Extension of women s preventive services at no cost 2013 Flexible spending Account cap limit at $2,500 Form W-2 reporting requirement Notice of coverage options Medicare tax increase for high earners No employer deduction for retiree drug subsidy State based exchanges open October 1. 9

10 ACA Inventory Exclusions for pre-existing conditions prohibited Annual limits removed for preventive services Individual Mandate No waiting period beyond 90 days New Health Insurer fees (fully-insured plans) Wellness Program Requirements 10

11 ACA Inventory Small groups redefined as 1 to Employer Mandate (delayed from 2014) 40% excise tax on high-cost cadillac plans 11

12 Employer Movement Minimal Aggressive Culture Shift Benefit design changes Comply w/ ACA Consumer cost tools Consolidate carriers Contribute to HSA Wellness incentives Health management incentives Total Rewards framework Cost/coverage tier changes Value-based plan designs Dependent audits Spousal surcharge Social/gamefication rewards Network-tiering Employee contributions linked to action Benefit reward for achieved health goals Track & reward carrier outcomes 12

13 Cost of Doing Nothing Budget Impact Health Risk of Employees Productivity / Well-being 13

14 Budget Impact - Sample Minimal Aggressive Culture Shift

15 National Cities Survey 80% 70% 60% 50% 40% 30% 20% 10% Change in Health Benefits 80 % negative health benefits impact on budget 75% pension costs have negative impact on budget 22% reducing pension spending in 2013 Increased trend of reducing pension costs % No Reduction Reduced Benefits Source: Business Insurance Survey shows cities reduced health care, pension benefits in 2013 October 14,

16 Health Risk of Employees People / Cost Severely Chronic Multiple Conditions 3% / 25% 7% / 20% Significant Risk 15% / 35% Stable Health 30% / 10% Healthy / Unknown 40% / 5% 16

17 Wellness & Productivity Prevention reduces employer healthcare cost $1 of workplace wellness = $3 medical spend (1) Prevention increases productivity Indirect costs 2-3x cost of direct medical spend (2) Healthier communities attract new residents, tourism and businesses. Source: (1) Baicker, K., Cutler, D., and Song, Z. (2010). Workplace Wellness Programs Can Generate Savings. Health Affairs, 29 (2), (2) Partnership for Prevention and U.S. Chamber of Commerce. (2007). Leading by Example. Washington, DC: Partnership for Prevention. 17

18 Final Wellness Regulations Program Requirements: 1. Frequency of Opportunity to Qualify 2. Size of Reward 3. Reasonable Design 4. Uniform Availability and Reasonable Alternative Objective: Avoid discrimination based on health status 5. Provide Notice of Other Means of Qualifying Source: Departments of Labor, Health and Human Services and the Treasury (Departments) released final regulations that implement ACA s nondiscrimination requirements for wellness programs March 29, Federal Register Incentives for Nondiscriminatory Wellness Programs in Group Health Plans. 18

19 Questions How many offer a wellness program? With incentive(s)? Increased incentive over last 3 years? How many offer brand the wellness program With the health plan? With a specialty vendor? Do it in-house? How is your overall experience? 19

20 Wellness Components Program services and customization Employee education and engagement Measurement, analysis and reporting Compliance guarantee Industry accreditation 20

21 Wellness Success Seven Benchmarks: 1. Capture senior executive level support 2. Create a cohesive & diverse wellness team 3. Collect data 4. Craft an operating plan 5. Choose appropriate health promotion interventions 6. Create a supportive environment 7. Carefully evaluate outcomes 21

22 Action Strategies Product/Network Design Wellness & Health Management Programs Incentives Private Exchanges All Strategies Cost Savings Engagement Impact 22

23 Expectations Initial pushback & roadblocks 2-5 year strategy realization Loyal workforce Sustainable health benefits partnership 23

24 Conclusion Stay close to market trends Understand changing pressures on employees Establish a benefits brand & culture of health Be empowered to blaze a new trail Into a. 24

25 It s a Brave New World IPMA HR Virginia October 17, 2013 Michael Jayner