Rising Health Care Costs Contribute To Wage Stagnation

Rising Health Care Costs Contribute To Wage Stagnation

Rapidly rising health care costs have been eating into the take-home pay of U.S. workers, contributing to the concentration of income among the wealthiest Americans, and making it more difficult for lower-income workers to achieve the American Dream, an analysis published on September 4 by the Council for Affordable Health Coverage and Willis Towers Watson warned.

The report, “Health Care USA: A Cancer on the American Dream,” was written by health care consultant Sylvester Schieber and Steven A. Nyce of Willis Towers Watson’s Research and Innovation Center. The estimates presented in the study are based on an analytical framework developed by the authors using data from the U.S. Census Bureau from 1980 through 2015.

The study highlighted the significant and increasing role rising health premiums have played in skewing net earnings toward higher earners. The analysis showed, for example, that over the 1999-2015 study period, workers in the 90th to 99th percentile of earnings had average pre-health premium compensation increases 7.6 times those of workers in the 40th to 49th percentile; and that after deducting employer and employee premiums for single coverage, individuals in the higher earnings group had, on average, remaining disposable wage increases 26.2 times those of workers in the lower earnings group. Meanwhile, the analysis showed that average workers in the bottom 40 percentiles of the earnings distribution saw their disposable earnings decrease over the 1999-2015 period.

The report also indicated that the average U.S. health expenditures rose to $10,348 per person in 2016; and that in constant dollars, annual employee premiums for full-time, full-year workers rose from $415 in 1999 to $1,068 in 2015 for individuals, and from $2,127 to $4,956 for families. The authors pointed out that while the Affordable Care Act promised to moderate health cost inflation, average premiums for coverage under an employer plan increased 18.25% for individuals and 21.6% for families in constant dollars between 2010 and 2017—a period when compensation and wage growth was flat or negative for a large share of the workforce.

Moreover, the analysis showed that health care costs are reducing the share of employer-provided benefits devoted to retirement: whereas in 2001 employer allocations to health and retirement bene-fits were 41.9% and 58.1%, respectively; by 2015, the allocation was in the other direction, at 63.5% for health benefits and 36.5% for retirement benefits.

The report also mentioned specific ways the organization and delivery of health services in the U.S. sustain abnormally high health costs. Among the examples the authors cited are the questionable development of clinical guidance for coronary artery bypass grafting surgery, and the inertia a hospital leader in value-based care had to overcome to reduce reliance on C-sections.

Finally, Schieber and Nyce offered several practical solutions for lowering costs and encouraging evidence-based best practices. Among the developments, trends, and practices the authors said call for a “new public health response” from policymakers, care providers, and employers are the market concentration of hospitals and other health care providers, as well as the uneven and often irrational pricing of medical goods and services, including drugs. They also pointed to the need to reform the inadequate medical management of treatments, which can lead to inefficiencies and waste; the insufficient testing of the efficacy of medical procedures and drugs, followed by the failure to curtail those found to be ineffective; and the failure to incorporate study results and best practices into physicians’ treatment patterns.

From Benefit Trends Newsletter, Volume 61, Issue 10

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Employers Seek To Manage High Cost Health Plan Claimants

Employers Seek To Manage High Cost Health Plan Claimants

As a relatively small number of employees or their family members with intensive medical needs can drive up the costs of a workplace health plan, managing and monitoring high cost claimants is the top health benefits strategy U.S. employers will be focusing on for the next five years, according to the results of an analysis of survey data published by human resources consultancy Mercer on July 15.

The study’s findings are based in part on responses to the Mercer National Survey of Employer-Sponsored Health Plans, 2017, which was conducted in 2017 with a sample of 2,481 employers. When asked to identify their main strategies for keeping health care costs under control, 77% of the large U.S. employers (500 or more employees) surveyed identified as important or very important the strategy of monitoring or managing high-cost claimants. Among the other strategies these large employers rated as important were taking focused action to manage specialty pharmacy costs (72%), and having a focused strategy for creating a culture of health (70%).

According to researchers, the rapid rise in high cost claims is most likely a key driving force behind this strategic prioritization by employers. Based on an analysis of information from a database containing approximately 1.6 million health plan members, the study found that a relatively small number of plan members drive a large majority of the costs. The analysis showed that, on average, the sickest 6% of an employer’s population represent 47% of the total allowed medical and pharmacy spend.

The study also examined carrier claims data from Mercer Health Advantages (MHA), a program offered through select insurance carriers that features high-intensity care management for the sickest employees. Researchers emphasized that high-intensity care management programs differ from standard health advocacy programs, as the care manager works directly with the care team as well as with the patient and family, staying in contact with the patient after discharge to provide support and performing a supportive role in ensuring that the patient complies with treatment plans.

The data showed that the percentage of claims classified by the participating carriers as “high cost” (>$50K/claimant) has been increasing rapidly, but that MHA achieved a 3.3:1 return on investment for plan years 2015 and 2016, while also improving patient outcomes. Researchers observed that these results suggest that “high touch, nurse-centered care coordination can often produce the best possible health outcomes and as cost-efficiently as possible.”

From Benefit Trends Newsletter, Volume 61, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Action Called For To Provide Gig Economy Workers with Access to Benefits

Action Called For To Provide Gig Economy Workers with Access to Benefits

Noting that employees in the U.S. are entitled to a long list of legally mandated benefits and protections whereas independent contractors are not, a recently published law and policy article argued that many gig economy workers occupy an ambiguous area between employee status and independent contractor status that demands legal clarification, as well as action by legislators and businesses to ensure that these workers are not left with little bargaining power or access to important benefits like health care and retirement savings plans.

“Workers, Protections, and Benefits in the U.S. Gig Economy,” by Seth D. Harris, an attorney and visiting professor at the Cornell Institute for Public Affairs, was posted online on July 12, and will be included in the forthcoming Global Law Review (September 2018). Harris observed that under existing U.S. labor, employment, and tax laws, a worker in any one work relationship is either an “employee” or an “independent contractor;” but that this binary classification of workers has been called into question by “gig economy” or “online platform” companies that provide personal labor services through smartphone apps, such as ride-hailing, food delivery, and home cleaning and handyman/woman services.

According to Harris, while independent contractors are presumed to have sufficient individual bargaining power to secure their own individual contracts with contracting partners, online platform companies’ relationships with their “independent workers” force these workers into a gray area between employee status and independent contractor status. He pointed out that U.S. law does not currently offer a clear and broadly applicable rule for resolving the resulting ambiguities and ensuring consistent and predictable decisions by adjudicators, which could lead to serious social and economic problems.

The article outlined several potential policy solutions to address these gaps, including the amendment of labor, employment, antitrust, and tax laws by Congress and state legislatures to allow independent workers and other workers in similar relationships with companies to organize and bargain collectively, secure protection from labor market and workplace discrimination, and benefit from companies withholding their income taxes and contributing to payroll taxes and health insurance at the same levels they contribute to employees.

A second potential strategy described in the article calls for the enactment of new laws or policies permitting or facilitating the creation of “portable benefits” systems, in which benefits are easily transferable for workers engaged with multiple companies. Such systems could be offered by the government, online platform companies in partnership with third-party providers, or third-party entities.

Finally, Harris suggested that Congress and state legislatures consider establishing or expanding public benefits systems to provide benefits and protections to all independent and similar workers, explaining that “as with non-governmental portable benefits systems, some benefits and protections could be included in these public systems—retirement savings, health insurance and other forms of insurance, paid leave systems—while others that are inextricably bound up with a particular work relationship, especially minimum labor standards, could not be included.”

From Benefit Trends Newsletter, Volume 61, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Employees Want Benefits With a Personal Touch

Employees Want Benefits With a Personal Touch

Regardless of whether they are younger or older, employees who feel personally supported by their employer’s benefit package are significantly more likely to stay with the organization, the findings of a global study conducted by Thomsons Online Benefits indicate.

Drawing on a survey of more than 2,200 employees of multinational companies, the “Global Employee Benefits Watch” study, released on May 22, reported that respondents who said they feel that their benefit scheme has a positive impact on their lives were more than 40% more likely to classify themselves as loyal towards their employer than those who did not.

The findings indicated, however, that global employers are struggling to provide the range of benefit options needed to support today’s diverse workforce. For example, the survey showed that almost 60% of employees want to improve their mental well-being and get fit and healthy, but only 23% of employees feel fully supported in such efforts by their employer.

Researchers also observed that employees who currently have a vast array of choices in how they manage information in their personal lives now seek to have this level of choice replicated in their workplace. When respondents were asked which platforms they would like to use in managing their benefits, 45% cited their desktop and 35% said their mobile device, while 46% indicated they still want face-to-face communication. Noting that the desire to have a range of communication types was found across age groups, researchers advised employers looking to win the loyalty of their employees to focus on supporting their individual needs, and stop thinking in generational stereotypes.

In addition, the analysis shed light on regional discrepancies, with employees based in the Asia-Pacific countries (APAC) displaying higher expectations of employer support around life events than workers in other parts of the world. For example, the survey found that 42% of respondents in APAC countries, but just 19% of respondents in European, Middle Eastern, and African countries (EMEA) said they would appreciate support from their employer when starting a family. Similarly, 47% of APAC respondents, but only 19% of EMEA respondents, said they would like help from their employer when getting married.

From Benefit Trends Newsletter, Volume 61, Issue 7

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Health and Other Workplace Benefits Continue To Be Valued By Employees

Health and Other Workplace Benefits Continue To Be Valued By Employees

The health plans and other employee benefits provided by employers in 2017 remained similar to those offered in previous years, and these benefits continue to be valued by employees, according to a study published on April 10 by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.

The results of a survey of 1,518 U.S. workers aged 21-64 conducted June 13-22, 2017, are reported the issue brief “The State of Employee Benefits: Findings from the 2017 Health and Workplace Benefits Survey.” The annual survey covered a wide array of topics related to employee benefits, including employees’ knowledge of their benefits, their confidence in making benefit decisions, and their satisfaction with their benefits package.

The findings indicated that the benefit offerings of employers generally held steady between 2013 and 2017, with the most frequently offered benefits in 2017 being health insurance (67%), dental insurance (59%), and retirement savings plans (57%). The study also noted, however, that the shares of employees with access to certain types of benefits declined between 2013 and 2017. For example, 29% of respondents in 2017, down from 32% in 2013, said they are offered long-term disability insurance; while 26% of respondents in 2017, compared to 29% in 2013, said they have access to a traditional or defined benefit pension plan.

The 2017 survey also showed that most employees reported having access to some paid sick and/or vacation leave in the workplace: 84% of respondents said they receive paid vacation time, and 71% indicated they receive sick leave. Moreover, 45% of respondents reported that their employer offers paid maternity leave, and 26% said their employer provides paid paternity leave.

In addition, 52% of employees surveyed in 2017 reported that they understand their health benefits, though only 43% indicated they understand their non-health benefits very/extremely well. The study’s authors pointed out that both of these shares had declined from 2016, when 61% of respondents indicated they understand their health benefits and 48% said they understand their non-health benefits very/extremely well.

The 2017 results also showed, however, that most employees are satisfied with their benefits: 48% of respondents indicated they are very or extremely satisfied with their benefits, while another 36% said they are somewhat satisfied. Moreover, the survey found that employee satisfaction with their benefits appears to be related to overall job satisfaction, as respondents who said they are very/extremely satisfied with their benefits were more likely to report feeling very/extremely satisfied with their job.

In addition, the 2017 survey showed that benefits continue to be valued by employees: 83% of respondents said health insurance is a very or extremely important consideration for them when deciding whether to stay in or change jobs, while 73% said a retirement savings plan is an extremely or very important factor for them in assessing whether to stay in or switch jobs. At the same time, however, just 49% of the employees surveyed said are very or extremely confident that in three years’ time their employer will provide benefits similar to those offered today.

From Benefit Trends Newsletter, Volume 61, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Voluntary Benefits Integral to Employee Benefit Strategy

Voluntary Benefits Integral to Employee Benefit Strategy

Though long dismissed as “something nice to offer,” a growing share of U.S. employers now see voluntary benefits as an integral component of their core employee benefit strategy, and are expanding the range of voluntary benefits and services they offer to help workers improve their overall financial well-being and security, the results of a survey released on April 10 by human resources consultancy Willis Towers Watson indicate.

Conducted in November 2017, the survey includes responses from 336 U.S. employers representing more than 4.3 million employees and a wide range of industries. The survey showed that just 5% of the employers polled say voluntary benefits have little importance to their employee value proposition and total rewards strategy. Researchers noted that this finding represents a considerable shift in attitudes from five years ago when 41% of the employers surveyed said voluntary benefits have little importance.

The findings also indicated that while just 36% of respondents see voluntary benefits as an important component of their current employee value proposition, more than two-thirds (69%) believe voluntary benefits will become an important component of their employee value proposition within three to five years.

Moreover, the survey showed that education benefits that address rising student loan debts and support parents saving for their children’s future college cost are becoming increasingly important financial well-being benefits. While 8% of the employers surveyed said they currently offer student loan consolidation programs, 34% expect to have such programs by 2021. Similarly, whereas 10% of respondents said they currently offer student loan refinancing arrangements, 35% anticipate providing such arrangements by 2021.

When asked about other voluntary benefits they currently offer and might offer within the next three to five years, 36% of respondents said they currently provide identity theft protection, and 63% said they anticipate offering it by 2021; and 34% of respondents reported that they currently offer pet insurance, and 57% said they expect to offer it by 2021.

The survey also showed that growing shares of employers are offering health care-related voluntary benefits. For example, 16% of respondents said they currently provide long-term care insurance, and 33% said they expect to offer it by 2021; 43% of respondents reported that they currently offer critical-illness insurance, and 71% said they anticipate providing it by 2021, and 24% of respondents indicated that they currently offer hospital indemnity, and 50% said they anticipate offering it by 2021.

From Benefit Trends Newsletter, Volume 61, Issue 5

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.