Make Lemonade from Healthcare Reform Lemons
Healthcare reform makes for strange bedfellows. Wellness is a feel-good, employee engagement tool. Many employers still view wellness as a luxury. At the opposite end of the spectrum, consider new minimal health plan designs ("skinny plans") promoted to employers for healthcare reform penalty avoidance.
Where is the common ground? What is the long-range strategic benefit of combining such opposite benefit offerings? In addition, how can you use your leadership skills to make the very most of a situation, to turn it on its head? Employers in industries heavily impacted by reform (and with 50+ employees) are the most open to ideas they did not have time or money for before, including wellness.
Traditionally, business leaders have turned to wellness to infuse their workplace with dynamic energy, to create a culture of lively associates, to deliver absolute engagement to exceed customer expectations. Chief Energy Officer! Health Dynamo! Purveyor of Passionate Power! But what if motives must be less than noble?
The mission many of you have received is clear: Cut or decrease expenses relating to the health plan in the face of healthcare reform and the C-Suite knows wellness is one of the tools. Understand cost increases for the health plan overall.
At a minimum, 10%-20% of employees who previously did not elect your coverage - who likely were not even eligible - will now elect coverage. When the plan is self-funded, with the employer paying claims up to a significant dollar amount, the fear is mostly sick people will take coverage.
When a health plan is fully insured, the employer will pay the carrier significantly more in total premiums, often for people who will not use the coverage. Nevertheless, the 10% - 20% election rate may not be realistic for an insured plan; carriers often require a certain percentage of the population to elect coverage.
Moreover, carriers often require the employer to pay 75% or more of the total premium - much higher than the "affordability" rule in healthcare reform requires. Therefore, costs will be higher still. Problem identified - but do not stop there.
Make sure you follow the cardinal rule of business: Never approach your boss with a problem unless you have a proposed solution. Consider the latest solution for employers with their razor-thin profit margins that do not provide health benefits to all employees: The skinny, bare bones health plan.
These programs will be much more popular than initially thought. The plans are low cost, satisfy minimum essential coverage for the most part and help avoid the bulk of healthcare reform penalty exposures. Nevertheless, the coverage is not robust, which poses additional challenges, many of them related to employee perceptions and reactions.
An HR director or CFO will step into offering these programs knowing the benefit will not be loved, either initially or over time. The price is right, at $60 - $100 per person per month total. Your company will avoid healthcare reform's "sledgehammer" $2,000 annual penalty for each full-time employee.
The skinny plan will cover 100% of all federal task force preventive benefits, it will offer clinical trial coverage, it will satisfy the new cost sharing rules and pre-existing conditions will be covered, all in compliance with the law. That is about it. Hospitalization is not provided, for example. Skinny plans are better than nothing.
Most employers that will offer a skinny, bare bones plan already offer a health plan - usually with generous coverage - to managers and above up to the C-suite. You will continue to offer that option or something similar as a so-called "buy-up." As a practical matter, employers will need to continue to offer health coverage for the employees who already had coverage. If you eliminate their coverage, they all will be unhappy, request a raise and still be unhappy.
Let us stop here to consider the role wellness will play in your program. How do you do what you must, while doing what you can, and doing what you should? As a leader within your company, you will embrace specific best practices so everyone wins, and in this case, that includes wellness.
Chances are, your bosses and you know that under healthcare reform you can encourage employees toward overall good health by setting their premiums and providing them with a reward of up to 30% of the total premium (employer and employee shares) if they pass specific biometric testing.
In addition, you can penalize tobacco users with a 50% penalty on top of their regular premium (the total swing is only 50%, not 80%). Employers facing huge health care costs due to reform are most excited about the tobacco use penalty. In fact, shifting 50% of the total premium to smokers generates the most interest and excitement in the C-Suite in general.
Now let us go beyond the facts: Wellness can be the fabric those overlays your entire medical program, a connective mesh that ties together the continuum of your offerings. Remember, you now will be offering a very basic plan, in your case a skinny plan, as well as a buy-up option (or two). What does wellness bring to the arrangement?
- Wellness enhances the very basic plan and the higher option benefits. Wellness is an encouraging message at a time of significant changes and sends the message that the company cares.
- Wellness encourages people who select the skinny plan to remain healthy if they think (or hope) they will not get sick, including the young invincibles.
- Wellness ties high turnover employees more closely to their co-workers and your company, even if all the worker can afford is the skinny plan, possibly even if they go without any coverage. This is directly aligned with your talent management efforts, such as engagement and retention.
- Wellness enables you - through biometric screenings - to better identify current and future cost drivers for your health plan. Better information helps you in negotiations with your carriers (west coast insurers seem particularly receptive to lowering rates when wellness is in place).
- Better information helps you decide if self-funding is right for your firm.
How will you set up the multi-option plan, and how will you apply wellness to it?
Ideally, the skinny plan will be a part of the same risk pool as the traditional medical plan. Do not think of it as a single plan, it is a single source for information. Why put the programs all together? The carrier or you will be able to predict what will happen.
People in the workforce eventually will have an expected or unexpected illness or injury and they will change their plan elections over time, based on personal circumstances. What will those illnesses be - Heart? Lung? Cancer? What future claims can you expect and what can you prevent?
If you fully-insure the skinny and more traditional plan, the same carrier should want to be involved with both the skinny plan and the traditional major medical plan. Even better, you have gone through the risk analysis and have determined if your company can self-fund.
A self-funded program avoids state-mandated benefits (acupuncture anyone?); state premium taxes, and the federal insurance carrier tax (another 3-4% of premiums each year as time goes by). What is the best predictor of future costs? Often pharmacy claims will show emerging risks long before the rest of the plan information.
So, make sure the skinny plan includes a prescription drug card, even if it only provides discounts, not actual coverage. So how will you communicate the new plan benefits, and how will you layer in wellness? Even in the age of a global workforce, with teams dispersed across continents, communication does and can occur.
Identify weaknesses or barriers, list all of them -- every one -- and then address them. Your mission is to know how communication is happening now and decide how to backfill. Look for possibilities. Do employees use email or social media? Find out. Do not assume employees lack access to technology; that assumption is the number one barrier, not an actual lack of access.
Find out and then use the Internet, smartphone apps, social media, and whatever else may work. Learn how communication has and can occur, even in the informal channels. Then, build a communication approach that works for your specific workplace, from individual communication to a central portal that manages and disseminates all communication, never ruling out technology.
A wellness campaign usually aims for engaged employees; they are enthusiastic, empowered, inspired and confident, as Dale Carnegie would note. However, would you settle for focused, present, trustworthy, diligent and supportive? Maybe that is enough. (As with one wellness, director's suggestion to drink three glasses of water a day, rather than eight. Why just three? Because it is a good start.)
How do you treat employees with respect when the skinny benefit offering seems less than ideal, less than what you personally would buy? You are honest. Everyone respects honesty, and everyone deserves it. Be candid about the pros and cons of each plan option. Remember, wellness is your common thread.
The progression through the benefit plan options will become apparent. Young healthy employees may tend to embrace the skinny plan, while people in childbearing years will gravitate to better coverage as they settle down and as they age. Many employers fear that fact. However, you may consider addressing it outright.
Decide if you will tell everyone at the outset how the program will attract them to different options over the course of their lifetimes or at least during their careers with the company. Wellness usually involves weaving the thread of healthy choices and behaviors through the entire company culture.
How can you do that specifically in the context of the skinny plan? Use what you learn from your health plan and your wellness program. If your health plan is self-funded, you have first-line access to medical data you may use to administer, operate and re-design the plan.
Wellness data supplements that as you see emerging risk, future high claims, in your employee population. Even if your workforce is high turnover, the population of job applicants likely has similar medical profiles. Insured plan sponsors may get more information that is limited. Your wellness program can be the best source for gauging employee health.
Biometric testing can be used to check for cholesterol, lipids, body mass index/obesity, blood pressure, and one or two other disease/illness markers, plus tobacco use. (Tip: Separate the testing from your insurance carrier; own the data so if you change carriers you can track historical information.)
The cost is roughly $40 per test, and re-testing is required at least once annually. Encourage testing in all of your plans; some employers extend testing to the entire workforce. Sell participants on the preventive benefits to employees and to any covered family members. Really, sell them. You are paying for them anyway if your plan is insured.
Preventive care should help reduce future claims if you are self-funded. Under healthcare reform, even the most basic plan must cover a number of fundamental health screenings at 100%, so employees pay no costs at all. Encourage health in the basic plan; they may elect the high option next year.
Leverage any available wellness programs designed to help people improve their health. The federal government does not expect you to spend a lot of money, or any money, even if you apply the 30% and 50% reward/penalty rules. Healthcare reform regulations suggest the Center for Disease Control, which, in turn, recommends certain community-based wellness programs.
The American Cancer Society can support a campaign around inflammation and other causes of cancer. Most states have free tobacco quit lines and related programs, funded through tobacco lawsuits; the American Lung Association can help with tobacco cessation.
Finally, insurance carriers offer more wellness programs than ever before (it helps them with a loss ratio penalty rule under health reform). In conclusion, keep wellness in mind with all health plan designs - the new skinny plans present particular opportunities for leaders willing to use wellness not just as a healthcare reform tool, but also as a way to wrap together an emerging plan design.
About the Authors
Sibyl is responsible for creating preferable approaches in the face of business challenges involving human capital management. She shines in five-year strategic planning, cost containment, micromanagement of self-funded medical plans, federal healthcare reform, the Americans with Disabilities Act, wellness, and compliance with tax requirements.
Sibyl is a nationally-recognized speaker on the future of our current healthcare system. Sibyl received her undergraduate degree from Duke University, cum laude and her J. D. from Washington University.