Employers face a multitude of challenges under the Affordable Care Act (ACA). The ACA fundamentally changes the landscape for employer sponsored health insurance, forcing businesses to understand, navigate, and adapt to a quickly changing, highly complex, and still uncertain marketplace for health benefits. To illustrate this, here are 10 pain points employers face in dealing with Obamacare:
1. Explaining ACA to Employees, Dependents, and Retirees:
Effective internal communications is a strong indicator of a firm’s financial performance. Indeed, internal communications is an essential ingredient for an engaged, productive workforce with low turnover. This is all the more important under the dynamics and complexities of the ACA.
Every employer must be prepared to explain the ACA. Like it or not, employees will look to their employer to explain the Affordable Care Act, even if the employer is not changing benefits. Employees have friends and family who will need help understanding Obamacare. The airwaves, mail boxes, and street corners will be packed with messaging from all angles and interests – some pro, some con, some partisan, some factually wrong, some even fraudulent, much of it confusing, and all of it mind numbingly complex.
This is an enormous new opportunity for employers to beef up their internal communications, demonstrate leadership, and support employees and their families. This will also serve to boost a company’s external reputation since the help and information provided to employees and retirees will be shared by them with a much wider audience - their parents, children, spouses, siblings, friends, and neighbors.
However, when communicating and educating, given the dynamics and contentious nature of Obamacare, employers must also take into consideration the political leanings of most employees and other key stakeholders, such as the board of directors and state and local leaders. This is not a factor in most employer benefit issues but the ACA is entirely different.
2. Making Tough Decisions on Coverage and Benefits:
While making tough decisions on benefits is nothing new for employers, the ACA presents a new set of decision points. Every business has their own starting point – what, if anything, they were already offering, who they were covering, and how much they were contributing financially to the cost of coverage.
For those employers that were not providing full-time workers with health coverage before, the ACA creates a new pay-or-play decision for those with more than 50 full-time workers. For every employer, the ACA creates a strong financial incentive to either drop coverage, dial-down employer contributions, or move to defined contribution.
Continue reading “What Your Employer Is Secretly Thinking As Obamacare Goes Live”
Filed Under: OP-ED, THCB, The Business of Health Care
Tagged: Employees, Employers, Health Insurance Exchanges, Kip Piper, The ACA
Sep 25, 2013
Last month, the Obama Administration announced that it would delay enforcement of the employer mandate component of the Affordable Care Act (ACA) in part due to opposition from the business community. Opponents of the ACA cited the delay as evidence that the law was collapsing under its own weight, while ACA proponents downplayed the importance of the employer mandate in realizing the primary objective of the law – extending affordable coverage to millions of uninsured Americans.
Will delaying the employer mandate lead to the ACA’s demise?
Using economic modeling, we have found that the primary goals of the ACA will not be impacted by the delay, but the delay may impact one of the law’s key revenue sources designed to offset the costs of the coverage provisions.
Under the ACA, only firms with 50 or more full-time employees can be assessed penalties for not offering coverage under the employer mandate; small businesses with fewer than 50 employees are exempt. Furthermore, more than 95% of large firms already offer insurance, implying that only a small pool of firms would need to alter their current benefit offerings to comply with the employer mandate. Our model estimates that less than 1% of firms, employing about 2% of the workforce, would be penalized for not offering insurance to their workers if the employer mandate is enforced.
In fact, only about 300,000 workers (approximately 0.2% of the workforce) would lose their employer’s health insurance as a result of the employer mandate delay, according to our economic analysis. And many of those losing coverage would be able to get affordable coverage through a spouse, the newly created health insurance exchanges, or Medicaid. Hence, delaying the employer mandate will have only a nominal impact on the ability of workers and their dependents to obtain health coverage.
Continue reading “Data Points: Why Delay of the Employer Mandate May Not Actually Mean That Much”
Filed Under: THCB
Tagged: Carter Price, Employees, Employers, Evan Saltzman, RAND study, The ACA
Aug 29, 2013
It’s one thing to lead by example and quite another to be made an example of. The executive leaders of Penn State University, who have managed to generate quite enough terrible publicity over the past couple of years, have now gone boldly where no employer has gone before. By implementing a coercive, intrusive, and wasteful “wellness” program during the academic year’s summer doldrums and miscalculating that it would go unnoticed, they have invited the wrath of their own faculty.
The PSU wellness initiative like so many before it relies on the hydra of preventive medical care, which is both clinically and fiscally ineffective; a personally intrusive health risk appraisal; and, a whopping incentive/penalty of up to $1,200 per year if you don’t play ball, which is double the national average. Penn State faculty, led by political science professor Matthew Woessner of their Harrisburg campus, have responded with outrage and a petition for withdrawal of the program, which now has 1,500 digital signatures. Penn State’s HR team, led by VP Susan Basso, has doubled down on its own ignorance claiming that the opposition is “unfortunate and sad.” What’s unfortunate and sad is that employees of a college can’t do math or read .
Penn State faculty are right to oppose the wellness program on both ethical grounds and economic grounds. Their creativity on how affected faculty and staff should respond is applause-worthy. Entering bogus data on the HRAs (both legal and harmless to employees because HRAs are anonymous) and refusing to get any of the preventive care recommended are useful guerilla steps. They are also discussing a blanket refusal to participate, which means either everyone gets hit with the penalty or no one does.
Continue reading “The Other Penn State Scandal”
Filed Under: OP-ED, THCB
Tagged: Al Lewis, Employees, Employers, PSU Wellness Initiative, The ACA, Vik Khanna, Wellness
Aug 12, 2013
In a recent New York Times blog, Uwe Reinhardt places much of the blame for high and rising medical prices on passive employers. He argues that employers should work just as hard to reduce healthcare benefit costs as they work to reduce other input costs. But he then observes:
“One reason for the employers’ passivity in paying health care bills may be that they know, or should know, that the fringe benefits they purchase for their employees ultimately come out of the employees’ total pay package. In a sense, employers behave like pickpockets who take from their employees’ wallets and with the money lifted purchase goodies for their employees.”
I think that Reinhardt gets the economics wrong here and, in the process, he puts too much of the blame on employers. Reinhardt is right in one respect – employees care about their entire wage/benefit packages. If benefits deteriorate, employers will have to increase wages to retain workers. Thus, it seems that if an employer reduces benefit costs, it must increase wages by an equal amount. If that is true, we can understand why employers are passive.
The correct economic argument is a bit more nuanced. Employees do not care about the cost of their benefits; they care about the benefits. If an employer can procure the same benefits at a lower cost, the employer need not increase wages one iota. In this regard, there is nothing special about health benefits. Suppose an employer offers employees the use of company cars. Workers don’t care what the employer paid for the cars, and if the employer can purchase cars at a deep discount, it will pocket the savings.
Continue reading “Are Employers to Blame For Our High Medical Prices?”
Filed Under: Economics, OP-ED, THCB, The Business of Health Care
Tagged: Benefits, Costs, David Dranove, Economics, Employees, Employers, Health Plans
Jun 17, 2013
Eat your vegetables. Turn off the TV. Go outside and play. Go to bed on time. These four imperatives were once amongst the core messages delivered to children by their parents and neighbors, a setting of behavioral parameters that people intuitively expected would help to produce healthy, well-balanced kids. We’re not so good at this anymore. Like so many other behaviors that animate the phrase “personal responsibility”, in the face of economic and demographic tumult we have decided to pass the buck on them in our homes, neighborhoods, schools, and churches. We now want employers to handle them, and health-contingent wellness is the final step in the ascendancy of the employer as the new parent.
Employers find themselves teaching employees how to read and write effectively, do math, be polite, how to eat in the presence of others, and even how to sleep better. Why not throw at their feet the notion that employers should coerce workers into intrusive and dubious health-contingent workplace wellness strategies that are easy as pie for the healthiest, but far more difficult for the less fortunate who are, ostensibly, the ones who need the most help? This is not why most people start businesses (unless, of course, you’re a wellness vendor). It certainly is not why people devote themselves to work, which is supposed to be for securing (hopefully) individual and familial prosperity and experiencing the unique contribution to personal dignity that comes from purposeful endeavors.
US employers are not responsible for the chronic disease crisis; truth be told, their sufferance of the costs of many wellness-sensitive events is limited because the majority of the medical catastrophes that health-contingent wellness programs promise to prevent (such as heart attacks, strokes, and many cancers) happen predominantly in older people who have mostly left the work force. Employers have been caught up in the maelstrom of demographic, industrial, and technological changes just like the rest of us. Yet, not only do we actively seek their participation in fishing expeditions such as health-contingent workplace wellness programs, some of them jump in with both feet. This should help to remind you that your CEO might just be the one who graduated at the bottom of his class.
Continue reading “The Wellness Game: The Employer As the New Parent”
Filed Under: THCB, The Business of Health Care
Tagged: Employees, Employers, Health Care Reform, The ACA, Vik Khanna, Wellness, workplace wellness programs
Jun 11, 2013
Health-contingent workplace wellness, the two-time darling of federal legislation codified in both the Health Insurance Portability and Affordability Act (HIPAA) and the Affordable Care Act (ACA), is now plagued by doubts about effectiveness and validity that are inexorably grinding away its legitimacy. This puts employers, particularly large employers who have committed to it so vocally and visibly, in an awkward spot. In the style of politicians nervously trying to change the terms of debate, wellness advocates are now walking back the assertions that have undergirded their entire construct for more than a decade. While some business leaders are apparently either unwilling or unable to back away from this self-inflicted wound, staying the present course is neither inevitable nor required. A course correction might actually prove quite liberating, especially for leaders of smaller and mid-sized businesses who must scratch their heads wondering how they’re supposed to reproduce a big-company style workplace wellness program or even why they should, given the dearth of data on effectiveness.
As a case in point, we offer GE, an iconic American multinational with 305,000 employees, $147BN in revenues, and $16.1BN in earnings worldwide in 2012. The company offers its employees a much-lauded wellness program, saluted by the National Business Group on Health (NBGH) in a fawning 2009 case study. GE’s wellness program has several things to recommend it:
- A top line focus on environmental change
- An emphasis on strong and consistent positive health messaging to employees
- The “Health By The Numbers” strategy that asks employees to commit to essential behavior changes (don’t smoke, eat more produce, walk more, and maintain a healthy body mass index [BMI]; there is wisdom in these choices, as they are the baseline activities for good health)
Beyond these obviously beneficial wellness program components, the GE wellness program veers off into a compendium of wellness convention, with encouragement for employees to take HRAs and get screenings, in particular, mammography, colonoscopy, cholesterol, and blood pressure. Some of the affection for diagnostics springs, of course, from GE’s corporate commitment to health care, which includes selling a broad variety of diagnostic devices to medical care providers who must, in turn, induce demand in order to pay for their contribution to GE Healthcare’s $18.2BN revenue stream.
As far as is discernible from publicly available documents, the wellness program targets GE worksites with over 100 employees, and GE claims in the NBGH case report that over 90% of employees worldwide participate. Beyond these data, however, it is remarkably difficult to understand what results GE gets and at what cost. The only publicly available insight on expense comes from GE wellness leader Rachel Becker in an essay published online by EHS Journal, in which she reports $100,000 per site as the wellness startup cost. Extrapolating this figure to GE’s more than 600 global worksites produces a wellness capitalization expense of about $60M, which presumably does not include annual wellness program operating costs. This might be why GE makes absolutely no mention of the cost or results of its wellness program in either its annual report or its 10K filing, although the NBGH quotes GE as saying the implementation was “inexpensive”. Even though $60M is equal to only 0.38% of GE’s 2012 earnings, it nonetheless might seem an untidy sum to skeptical shareholders.
Continue reading “GE’s Wellness Program: Bright Shining Light or Dim Bulb?”
Filed Under: THCB, The Business of Health Care
Tagged: Costs, Employees, Employers, General Electric, prevention, Screening, The ACA, workplace wellness programs
May 26, 2013
“The Effect of Price Reduction on Salad Bar Purchases at a Corporate Cafeteria.” An excellent peek at the kind of steps that employers ought to take to improve eating habits in their work forces: subsidize the purchase of healthy foods. In this CDC study, reducing the price of salads drove up consumption by 300%. If this was a stock, we would all rush out to buy it.
Influencing behavior through both choice architecture and pricing differentials challenges many employers, however. There is a fear factor in play (“some of my people will be unhappy”), as well as financial issues, because the corporate managers responsible for food services often have their compensation linked to the division’s profitability. You make a lot more money selling soda than you do selling romaine. The same perverse financial conundrum appears when corporate food service companies run cafeterias. The on-site chef and managers typically operate on a tightly managed budget that leaves them little flexibility to seek out and provide healthier options.
A chef employed by one of the largest corporate food service providers in the country told me last year that he could not substitute higher protein Greek yogurt for the sugar-soaked, low-protein yogurt in his breakfast bar. When I asked why, he told me that Greek yogurt was not on his ordering guide, and he was not allowed to buy it from a local club warehouse and bring it in. In this same company, beverage coolers were stuffed to overflowing with sugar-sweetened drinks, all of which were front and center (and cheap), while waters and low-fat milk were shunted to the side coolers. In another scenario, health system leaders I met with last year all raised their hands when I asked if they had wellness programs and kept them up when I asked if they also sold sugar-sweetened beverages in their cafeterias at highly profitable prices. The irony was completely lost on them. They had to be walked through the inconsistency of telling their employees to take (worthless) HRAs and biometrics, but then facilitating access to $0.69 22 oz fountain sodas.
Continue reading “The Salad Bar That Turned Around a Fortune 500 Company …”
Filed Under: THCB, The Business of Health Care
Tagged: employee benefits, Employees, Employers, healthy food subsidies, prevention, The ACA, Vik Khanna, Wellness
Apr 23, 2013
You’d be forgiven if, after reading last month’s Health Affairs, you came to the conclusion that all manner of wellness programs simply will not work; in it, a spate of articles documented myriad failures to make patients healthier, save money, or both.
Which is a shame, because – let’s face it – we need wellness programs to work and, in theory, they should. So I’d rather we figure out how to make wellness work. It seems that a combination of behavioral economics, technology, and networking theory provide a framework for creating, implementing, and sustaining programs to do just that.
Let’s define what we’re talking about. “Wellness program” is an umbrella term for a wide variety of initiatives – from paying for smoking cessation, to smartphone apps to track how much you walk or how well you comply with your plan of care, and everything in between. The term is almost too broad to be useful, but let’s go with it for now.
When we say “Wellness programs don’t work,” the word work does a lot of, well, work. If a wellness program makes people healthier but doesn’t save lives, is it “working”? What if it saves money but doesn’t make people healthier?
Continue reading “Wellness Programs Aren’t Working. Three Ideas That Could Help.”
Filed Under: THCB, The Business of Health Care
Tagged: automated hovering, Employees, Employers, gamification, Health Affairs, Mike Miesen, Population Health, prevention, Quantified Self, Readmissions, The ACA, Wellness
Apr 1, 2013
On March 20, 2013, the media picked up a story about CVS Caremark’s latest wellness program. In summary, CVS will be requiring all of its employees to complete a health screening in order to qualify for a reduction in their health insurance premium. For those employees who participate, the employee’s screening data goes to a third party, and CVS never sees it.
Such wellness financial incentives are commonplace and have been around a long time. And if that is how the media had described the CVS program, it’s doubtful anyone would have even paid any attention to it. Unfortunately, that’s not how the media ran with the story. Let’s look at how the media sent the wrong message – using ABC News as an example – and why it matters to get the message right.
Sending the Wrong Message
ABC’s Good Morning America segment was emblazoned with the headline, “Who’s Watching Your Weight – CVS Employees Required to Disclose Weight.” Their website ran a similar headline, “CVS Pharmacy Wants Workers’ Health Information, or They’ll Pay a Fine.”
Continue reading “How the Media Portrayed the CVS Wellness Program-and Got It Wrong”
Filed Under: OP-ED, THCB, The Vault
Tagged: ABC News, beBetter Health, CVS, CVS Caremark, Employees, Employers, Greg Juhn, Media, preventive health, The ACA, Wellness, workplace wellness programs
Mar 22, 2013
Say “employee benefits” and pensions and health care will jump to most people’s minds. Maybe life and disability insurance will pop up as well. But employers in Silicon Valley are going way beyond that. They’re providing housekeeping, cooking, babysitting and a host of other services as perks for their employees. According to The New York Times, here is what some California companies are doing:
At Evernote, a software company, 250 employees — every full-time worker, from receptionist to top executive — have their homes cleaned twice a month, free.
Stanford School of Medicine is piloting a project to provide doctors with housecleaning and in-home dinner delivery.
Genentech offers take-home dinners and helps employees find last-minute babysitters when a child is too sick to go to school.
To hear the employer representatives tell it, companies are providing their workers with services that make it easier to balance home and family life in an age when there are few stay-at-home spouses and work is stressful.
But a more likely explanation is economics.
Continue reading “Employee Benefits Gone Wild”
Filed Under: The Business of Health Care
Tagged: California, employee benefits, Employees, Employers, flat tax, John Goodman, Laurence Kotlikoff, marginal tax rates, Silicon Valley
Feb 26, 2013