Benefit Trends Around the Globe

Employers around the world are concerned about finding and retaining skilled talent, according to a MetLife study. Recruiting is a challenge for more than half of employers, including 69% in India, 66% in China, 54% in Poland and, 53% in the United Arab Emirates. Talent shortages are a concern in Russia, China Poland, UK, United Arab Emirates, and India. Employers in countries that don’t have as much of a talent crunch have different staffing problems. For example, only 8% of Egyptian employers say they’re affected by a talent shortage, but 37% of workers say they would like to be working elsewhere within a year.

Nearly one-third of workers say that a better benefit package could persuade them to stay with their employer, including 58% in China, 57% in the UK, 53% in the United Arab Emirates, and 51% in India. In fact, 47% of Egyptian workers who are looking to change jobs in the next year said that a better benefit package would be a reason to stay. It’s the second most important motivator. Benefits are an even bigger recruitment and retention tool for multi-national companies operating in developing markets:

  • India – A larger percentage of multi-national companies think highly of benefits, such as health, life and accidental insurance and financial planning compared to non-multi-national companies, with 88% of all Indian employers surveyed saying they provided benefit offerings to attract workers away from competitors.
  • Russia – Seventy-seven percent of workers from multi-national companies say they value their benefits, versus 58% of workers from non-multi-national companies.
  • Egypt – The promise of better benefits is as important as a higher salary is for workers in multi-national companies.

Maria Morris of MetLife Global Employee Benefits said, “As demand for employee benefits grows, we’ll see more and more local companies implementing total rewards packages.” Voluntary benefits are growing rapidly in the U.S. and around the world, says Morris. Fifty-five percent of workers want their employer to provide more non-medical benefits to purchase and pay for on their own. Similar to the U.S. results, nearly 50% of all workers where the study is conducted are seeking a wider array of voluntary benefits, except in Australia and the UK. Eighty-three percent of employers who offer voluntary benefits do so because it’s cost effective, and 64% do so because it is convenient. “Particularly for voluntary benefits like life insurance, we’ve seen a lot of interest coming from employers for more coverage, which has been driven by employee demand,” says Hemant Khera at PNB MetLife India. In response to this demand, MetLife created an online portal for voluntary life insurance products, which launched in the spring of 2016 and has enjoyed initial success.

Covered California Announces Contract Changes with Carriers


ContractCovered California adopted significant changes to its contracts with health insurers. The contract provisions were developed over the past year with consumer advocates, health plans, clinicians, other stakeholders, and subject matter experts. Plans must do the following for years 2017 to 2019:

• Ensure that all consumers select or are provisionally assigned a primary care clinician within 30 days of when their plan goes into effect.
• Exchange data with providers. This will enable physicians to be notified if their patients are hospitalized and track trends and improve performance on chronic conditions, such as hypertension or diabetes.
• Identify hospitals and providers that deliver poor-quality care or unwarranted high-cost care. Health plans will be expected to work with them to improve their care or lower their costs. Hospitals that don’t improve and don’t provide justification will be excluded from Covered California networks as early as 2019. Covered California will adopt a payment system for hospitals, such as the one employed by the Centers for Medicare and Medicaid Services (CMS). Over time, it will put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance.
• Manage high-cost pharmaceuticals and help consumers understand the effectiveness and costs of their drug treatments as well as any alternatives.
• Track health disparities, identify trends in disparities, and reduce disparities, beginning with four major conditions: diabetes, hypertension, asthma, and depression.
• Develop programs to identify and manage at-risk enrollees with requirements to improve in targeted areas.
• Provide tools to help consumers understand their diagnosis and treatment options and understand their share of costs based on the contracted costs of their plan.

Covered California will encourage plans to promote advanced models of primary care including patient-centered medical homes and integrated health care models, such as accountable care organizations. Also, Covered California is improving its patient-centered benefit design for 2017 plans. Outpatient care in Silver, Gold, and Platinum plans will not be subject to a deductible. Bronze plan consumers would get three outpatient visits that are not subject to the deductible, in addition to the free preventive visits. For 2017, Covered California is proposing to lower out-of-pocket costs for primary care and urgent care.

 

Study Reveals Leading Healthcare Benefit Trends

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The Healthcare Treds Institute issued a massive survey of employee benefit trends. The good news is that employers are looking to insurance brokers and benefit consultants to help them evaluate health benefit designs and distribution models. Forty percent of employers say they will depend on insurance brokers to learn about new health benefit models, such as defined contribution plans and private exchanges, and 31% will depend on benefit consultants. Nearly 40% rely on insurance brokers to learn about health benefit designs and platforms.

“The ACA has created a dynamic marketplace in which brokers have a front row seat navigating in this new era,” according to the study. Human resource professionals have new responsibilities due to the ACA. Thirty percent are looking for help from benefit consultants. However, 30% are researching independently compared to 26% in the previous year. Employers gave the following answers to this question, “What partners would you depend on to help you learn about new health benefit designs and distribution models?”

  • Insurance broker 39.7%
  • Will research independently 30.8%
  • Benefit consultant 30.8%
  • Insurance carrier 24.4%
  • TPA 19.2%
  • None 15.4%
  • Trade Association 11.5%
  • Payroll company 10.3%
  • Other 5.1%

What Benefits Employers Are Offering

About 40% of employers offer three or more health plan options, which are usually a PPO, an HDHP, and an HMO. Employees are choosing HDHPs (39%) over HMOs (35%). The following is a breakdown of benefits that employers offer:

  • PPO 59.5%
  • Flexible spending account (FSA)59.5%
  • Health savings account (HSA) 52.1%
  • High deductible health plan (HDHP) 38.8%
  • HMO 34.7%
  • Self-insured plan 22.3%
  • Health-reimbursement arrangement (HRA) 15.7%
  • Catastrophic insurance 8.3%
  • Dental plan 73.6%
  • Vision plan 67.8%
  • Prescription drug coverage 67.8%
  • Mental health coverage 52.1%

How Healthcare Reform Has Affected Employee Benefit Packages

Forty-nine percent say that healthcare reform will increase employee cost-sharing; 39.6% say it will increase premium contributions, and 3.6% say it will shift their company towards a defined contribution plan. Employee cost-sharing has risen every year for 10 years. Employers and the medical industry have had to deal with other ACA implications, such as the employer mandate and new compliance, which has caused an increase in capital and human resources. Employers have done the following in response to health reform:

  • Increased employee cost sharing 49%
  • Has had no effect 30%
  • Enhanced wellness/preventive health programs 23%
  • Increased employee engagement in their health 19%
  • Increased employee engagement in reducing healthcare costs 18%
  • Adopted new wellness/preventive health programs 17%
  • Reduced covered benefits 15%
  • Added HDHPs/CDHPs 14%
  • Stopped offering healthcare benefits 9%
  • Shifted to a defined-contribution plan

The Cadillac Tax

The impending 2018 Cadillac Tax is a prevalent challenge for employers. The ACA 40% excise tax will be imposed on the portion of group health plan premiums that exceed specified thresholds. The concern may be more regional since it could be triggered in parts of the country where healthcare costs are high and less likely to be triggered in parts of the U.S. with below average healthcare costs. Thirty-five percent of employers are very concerned about the 2018 Cadillac Tax; 25% are somewhat concerned; and 30% are not concerned. Sixty-one percent are making no changes to their benefits in light of the impending Cadillac tax while 18% have changed plans to avoid the Cadillac Tax. Recent news reports along with lobbying efforts may be influencing the 61% of companies who have a wait and see approach about the Cadillac Tax.

Defined Contribution Plans

Employers continue to learn more about defined contribution plans and private exchanges with about 35% saying they are familiar with them. This is an increase of about 5% over last year. Twenty-eight percent say that exchanges help employees understand the value of their benefits. Twenty-five percent say that a defined-contribution plan would help employees understand the value of their benefits and make more cost-conscious benefit decisions.

Five percent of employers offer defined-contribution plans (not on a private exchange) while same offer defined-contribution plans on a private exchange. Also, 7% are considering offering a defined contribution plans on a private exchange while 53% have not explored defined contribution plans.

Fifty-five percent of employers who are considering a defined-contribution plan, say they would explore the option for 2017 or 2018. This suggests that near-term adoption will be gradual. But the adoption curve may steepen as the benefits of defined-contribution plans become better known.

Private Exchanges

Employers want private exchanges to provide many solutions including health spending accounts (62%), carrier integration (58%), COBRA compliance (56%), automation of premium payments (51%), and payroll integration (50%). Employers choose private exchanges to control costs and increase employee choices, which is why employers say, most often, that they are looking for health spending accounts. Incorporating consumer directed healthcare coverage, such as HDHPs, HSAs and HRAs, helps private exchanges create a competitive marketplace that promotes cost-savings for employees and employers.

To succeed a private exchange needs to provide broad choices and help participants in the selection process. Sixty-two percent of employers say that it is somewhat important to very important to have health-spending accounts in an insurance exchange. Also considered somewhat important to very important are carrier integration (59%), COBRA compliance (56.4%), and premium payment automation (53%). Employers say they would choose the following offerings in an exchange:

  • Plan and cost comparison tools 80%
  • Online capabilities 69%
  • Combined benefit enrollment 47%
  • A help line 47%
  • Transparency solutions for treatment cost comparisons 45%
  • Mobile applications 45%
  • Progressive cost tracking tools 35%
  • Consolidated employer billing 35%
  • Integrated consumer healthcare accounts 30%
  • Financial account options 28%

Employers rank several exchange features as important, such as being a private exchange instead of a public exchange (83%), having a large selection of plan choices at targeted benefit levels (58%), and being provided by their broker or benefit consultant (55%). These findings indicate that broad choice is more important than who runs the exchange (broker versus carrier).

Wellness

Wellness programs continue to gain interest as 35% of employers have initiatives in place compared to 30% last year. Another 22% are considering implementing a program. Sixty-five percent are considering adopting a wellness program in 2017, and 16% are considering adopting one by the end of 2016.

Fifty-five percent of those offering wellness programs, offer an employee-assistance program (EAP); 53% offer flu shots or vaccinations; and 37% offer a smoking cessation program. The disease management tools that most employers offer are for diabetes (30%) and depression or other mental health (30%). Fifty-four percent of employees are not offering disease management tools. But 30% are providing services for diabetes and mental health conditions. To promote positive health outcomes, 44% of employers offer at least one wellness program; 31% offer biometric screening; and 20% offer a disease management program.

Forty-four percent have at least one wellness initiative in their workplace. Employers that are interested in offering wellness plans should consider how it would affect productivity, absenteeism, turnover, retention, and recruitment, according to the survey authors. Including these factors in the ROI discussion can help demonstrate additional savings a company could achieve.

When it comes to wellness incentives, HSA and HRA contributions (18%) and premium reductions (16%) are most popular. Companies are split on whether to offer wellness incentives with 58% not providing rewards to employees and 42% offering some type of incentive in varying monetary amounts to participate. The value of the incentives remains relatively modest. Companies interested in wellness incentives can use the ACA as a guide. Eighteen percent offer $250 or more of incentives to employees for health-related tasks. Common values of incentives are $101 to 250 and $1 to $50. For more information, visit www.HealthcareTrendsInstitute.

ACA Enrollment Trends

ACA Enrollment Trends
The ACA has had a substantial effect on health insurance enrollment, product mix, and company focus over the past 18 months, according to a report by Mark Farrah Associates (MFA). MFA focused on the fourth quarter of 2013 to the second quarter of 2015. The survey reveals the following:

  • Blue plans gained over 2.3 million commercial members from the fourth quarter of 2013 to the second quarter of 2015.
  • Commercial enrollment for non-Blue plans dropped .3%. Medicare membership increased for Blue plans and non-Blue plans.
  • Non-Blue plans increased their Medicare membership by 35.9% from December 2013 to June 2015 while the Blues saw a 13.3% decline.
  • Medicaid membership experienced the largest gains. As of June 2015, CMS reported 71.9 million Medicaid members, an increase of 13.1 million, since October 2013. For June 30, 2015, health insurance companies that file NAIC statutory statements reported Medicaid membership of 43.8 million, up 13.8 million, since December 2013. It is important to note Medicaid plans that are not regulated by state insurance departments generally account for differences between NAIC and CMS reporting.
  • The top five leaders with Medicaid business include Anthem, UnitedHealth, Centene, Molina, and WellCare. Collectively, they added approximately 5.8 million members to their books, accounting for a 44% share of the growth in Medicaid enrollment over the 18-month period. Anthem had the greatest change in product mix with a shift toward Medicaid. As of June 2015, its Medicaid mix was 15.4%, up from 11.8% at the end of 2013.

Enrollment Trends a Key Risk to Health Insurers

The difference between the age distribution assumptions made when insurers set premium rates on their exchange products and the actual age distribution will be a key determinant of the products’ financial results, according to Fitch. The more these pricing assumptions skew younger than actual experience, the greater the potential is for health insurers to experience adverse financial results from exchange-sourced business. It also increases the importance of risk sharing programs built into the ACA. This is especially true for insurers offering individual and small group products on state or Health and Human Services Department (HHS) managed health insurance exchanges.
According to HHS, as off Dec. 28, 2013, 24% of exchange enrollees were 18 to 34 years old. A Kaiser Foundation Family report estimates that number at 40%. Fitch says that healthy 18-34-year-olds who are eligible for exchange enrollment are more likely to delay their enrollment compared to older, less healthy people. The 2014 enrollment period remains open until March 31, 2014.
The HHS report indicates that eight times as many 18 to 34 year olds enrolled in an exchange-sponsored health insurance plan in December than in October and November. For more information, visitwww.fitchratings.com.

More People Will Get Drug Coverage, But at Higher Costs

Based on early health insurance rate filings, consumers who choose the lower cost Bronze and Silver plans are likely to pay more for prescription drugs. If trends continue, consumers with prescription drug coverage can expect to pay an average of 34% more out-of-pocket for their prescriptions, according to a report by HealthPocket.

The good news is that drug coverage will be considered an essential health benefit in all health plans. The bad news is that out-of-pocket prescription costs are likely to rise substantially from the average annual per capita expenditure of $758.

“Americans are going to need to pay very, very close attention to what plans offer to minimize out-of-pocket increases for medications. When it comes to drug costs and changes in our newly reformed health care system, the fine print really matters,” said Kev Coleman, head of Research & Data at HealthPocket.

The analysis also finds that, in most cases, the higher-end Gold and Platinum plans have lower drug cost sharing. However, experts expect the less expensive Bronze and Silver plans with higher out-of- pocket drug costs to be the most popular for cost-conscious consumers. Coinsurance rates for higher cost medications, which are typically injected, will vary widely under each metal plan. For more information, visit www.HealthPocket.com.

Trends in Health Coverage

Researchers at the Commonwealth Fund reveal why they feel that it is critical for ACA implementation to continue on schedule. Forty-six percent of adults 19 to 64 did not have insurance for the full year in 2012 or were underinsured and unprotected from high out-of-pocket costs; 41% had problems paying medical bills or were paying off medical debt; and 43% had cost-related problems getting needed health care.

The major health coverage provisions of the Affordable Care Act go into effect in January 2014. The Congressional Budget Office projects that the combination of new subsidies for health insurance and consumer protections will enable 14 million uninsured people to gain coverage in 2014, and 27 million by 2021. Seventy-nine percent of young adults were insured in 2012, up from 69% in 2010. This trend reverses a decade-long upward climb in the number of uninsured young adults.

In 2012, 46% of U.S. adults 19 to 64 did not have insurance for the full year or had inadequate protection from health care costs. Thirty percent were uninsured at the time of the survey or had spent some time uninsured in the past year. An additional 16% were underinsured due high out-of-pocket medical costs in relation to their income.

Many Americans with low or moderate incomes are uninsured or have coverage with high cost-sharing requirements, whether copayments or coinsurance. People with incomes under 250% of poverty comprised 72% of the total number of Americans who were uninsured or poorly insured in 2012. Three-quarters of working-age adults with incomes under 133% of the federal poverty level were uninsured for a period in 2012 or were underinsured. The same is true for 59% of adults earning 133% to 249% of the federal poverty level.

Gaps in health insurance, inadequate coverage, and large medical bills leave millions of U.S. adults burdened with debt. In 2012, 41% of adults 19 to 64 had problems paying medical bills or were paying off medical debt. Forty-two percent of those who said they had difficulties paying medical bills or paying off medical debt also said they got a lower credit rating as result of unpaid medical bills.

In 2012, 43% of adults faced financial barriers to getting needed health care – up from 37% in 2003. That includes 67% of those who were uninsured at any time and more than 51% of those who were underinsured. People who were uninsured were significantly less likely to have a regular source of care or to be up-to-date on recommended cholesterol, blood pressure, and colon cancer screenings, and mammograms.

Eighty-seven percent of those who had a gap in coverage in 2012 would be eligible for subsidized health insurance under the ACA. In addition, 85% of underinsured adults in 2012 would be eligible for Medicaid or subsidized health plans, with reduced out-of-pocket spending.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology, has estimated that about 5 million undocumented immigrants will remain uninsured in 2016. Gruber also predicts that many Americans will not be insured, even though they are eligible for the new coverage options because they are not aware of their eligibility; they are unable to find an affordable premium; or they chose not to enroll. For more information, visit www.commonwealthfund.org

Last Updated 10/20/2021

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