Prescription for a Cure: How to Manage Rising Health Insurance Costs

Featuring The Partners Group, Harsch Investment Properties and SAIF Corporation


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Oregon Business Magazine hosts monthly panel discussions on topical issues. These forums provide another platform to engage with readers. They bring people in the community together to network and share insights and experiences about business and public policy issues.

This forum focused on exploring concrete strategies for employers looking to contain costs and improve care. According to Linda Baker, Editor of Oregon Business Magazine, “The business of healthcare is notoriously complex. It is also steeped in uncertainty, especially now as we wait to see what happens with the latest healthcare bill, the revamped American Healthcare and Recovery Act.”

Read a review of the forum published by the Oregon Business Magazine by clicking here.

Outline:

Moderator:
Linda Baker, Editor of Oregon Business Magazine

Panelists:
Rojita Raghubansh, Senior Vice President of Human Resources and Risk Management at Harsch Investment Properties. Prior to joining Harsch, Rojita was the director of human resources for a senior housing company focused on independent living, assisted living, and memory care. Rojita has extensive experience in healthcare, wellness programs, strategic planning, leadership development, succession planning and employee relations.

Sarah Friend, Executive Vice President at The Partners Group, has over 20 years of experience working as an Employee Benefits Consultant with the Partners Group and from working with a health carrier in a variety of roles. The Partners Group is a financial and insurance services firm, their largest division being Employee Benefits. Sarah has a wealth of healthcare experience working with large, complex employers.

Renae Combs, Human Resources Manager with the SAIF Corporation, a workers’ compensation company. At SAIF Renae has implemented a wellness program that has a 98 percent participation rate. SAIF’s wellness programs include activity tracking devices, annual biometrics screenings, health assessment and an on site health clinic. Renae has also created a networking group with 300 other Oregon employers, consulting and working with them to try to make Oregon a healthier state.

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Latest updates to the Affordable Care Act and how the law affects employers’ abilities to manage healthcare pricing-

Linda: The elephant in the living room, or maybe the better metaphor is the 800 pound gorilla– the revamped healthcare bill… Earlier this month (May 2017), the House passed a revamped version of the healthcare bill that would repeal and replace major parts of the Affordable Care Act. The Senate is currently hashing out its own version.

Linda: What should businesses be paying attention to as the Senate moves forward with its own version of this healthcare bill?

Sarah: As a quick recap, on May 4th the House narrowly passed the AHCA by two votes. There were some last‑minute changes that allowed the House to get enough votes onboard to pass the AHCA. As Linda Baker said, “It’s now in the Senate’s hands.”

We’re trying to give good advice to employers amidst the complexity of not knowing what’s going to come out of the Senate. The AHCA could be changed pretty dramatically in the Senate, then the bill is expected to go to a vote by the end of July. Afterward, it gets returned to the House. If the House doesn’t like what the Senate did, they must get together and try to hash out their differences.

In terms of concrete strategies for employers, we’re in a difficult wait‑and‑see spot, because we don’t know exactly what is going to come out of this bill, and what’s going to be finally passed if the House and Senate come to terms, or come to an agreement on what this bill is. Having said that, I’ll give you a high-level perspective of what it most likely will mean to employers. First, for the majority of Americans who get their healthcare through employers, not a lot has changed in terms of what employer health plans actually look like.

There was a lot of administrative work that went into making sure plans were compliant, ticking off all the requirements to make sure health plans met all the ACA mandates, and then a lot of work went into tracking the full‑time status of employees to make sure employers were offering the appropriate health plans to those who met eligibility standards. In terms of what the plans looked like to employees, there were not many changes around that. There’s not a lot of changes in AHCA specifically related to employers.

Not a lot of changes on the surface, but long‑term cost pressures for sure. On the surface, employers may think, “This doesn’t apply to me, because my employees don’t get their insurance through Medicaid or through the individual market where subsidies are going to look differently, potentially under the AHCA.” While that may be true, we are encouraging our employers to look at the market more holistically and understand that in the event those people who are getting coverage today lose that coverage, that underfunded care that ends up in the emergency room and in hospitals is ultimately paid by employers.

Hospitals must raise rates to cover that under‑reimbursed care, and insurance carriers can’t negotiate the best of terms any more. It’s important for all of us to stay very connected to the conversation. On the surface, again, the ACA didn’t make a lot of changes to employer sponsored health plans, just some minor things here and there, and a lot of administrative complexities.

Renae Combs: I think we’ve just gotten used to healthcare being a part of legislation and something that we’re watching and unsure of. There’s a lot of stop-and-go along the way, so having a consultant you can count on helps. I call Sarah and say, “Do I need to pay attention to this?” You can’t act too soon, and then you’re caught if you act too late. It’s a tough spot but something we’ve gotten used to over the last couple of years.

Rojita Raghubansh: When the ACA was first coming on the horizon, I was with a different employer. Our work force was primarily low‑income, hourly employees. ACA was going to impact us tremendously financially. We jumped on board and created strategies, but it seemed like we were always creating strategies based on the unknowns quite a bit. Regardless of what strategies we’d put in place, we’d find out something else that changed, so it was very frustrating at the time. At Harsch our workforce is not impacted as much. The administrative piece is a headache. I’m not going to deny that, but right now we’re in the wait and watch situation.

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Self-Funded Employer Health Plans

Linda: Let’s talk about the knowns then, instead of the unknowns, starting with moving to self funded plans.

Rojita: I wasn’t at Harsch when they made the decision to move to self funded plans, and I asked quite a few people, “So, why did we decide to move to a self funded plan?” I also explored it with a previous employment asking, “Does it make sense?” With my previous employer, I had a population of about 2,000 employees back then. The premiums were such that we wanted to look at what self funded could save us. For the majority of employers, the primary reason we look at self funding is to save on administrative costs and to have a little more control.

With the previous employer, I did not have a stable work force. Our work force was transient, with a lot of turnover happening when it came to care staff, CNAs and caregivers. It was not a stable environment for us to predict what the future loss ratios for health insurance was going to be, so we chose not to do self‑funding care. With Harsch, our premiums would hike up 20 percent on something that was being brought to us at the time. That led to the decision of saying, “OK, let’s do self‑funded.”

At Harsch our work force is very stable, which is one of the things that you absolutely must look at. Can you predict what your work force loss ratio’s going to be in the future? If you can, it’s a good thing to review. It definitely lowered our administrative cost, and it also gave us a little bit more control on what we can do with our benefits.

Renae: At SAIF we have a self‑funded plan, with about 80 percent of our employees in it, and then we have a fully‑funded plan that has about 20 percent of our employees. I was there when we moved to self‑funded and we had to make sure we could handle the volatility of the claims coming in. Honestly, high renewals are really tough, but it’s easier to budget. We’re a public agency so we budget on an annual basis. It stinks to get a 20 percent renewal, but then in your next year you’re always 100 percent on budget, barring a few FTE changes. Now we’ve been self‑insured for four years. The claims volatility takes getting used to, as well as getting those weekly batches in. You have a gut check and overreact over small changes. You must look at it in the long run.

Linda: Beyond the volatility, what other risks are involved in moving to a self funded plan?

Sarah: I’ll back up a little and talk about the whole basis of being fully insured versus self funded. If you buy a fully insured plan, the insurance carrier is the one taking all the risk. They set the premium. They set the price of milk. You negotiate. You fight every year over whether that renewal is 15 percent or 13.5 percent, and you feel good about shaving off a point or two here or there. That annual exercise can be exhausting for a group and make you feel a little bit out of control, because ultimately it’s the insurance carrier who decides what that final rate is going to be for the next year. That rate, for a group that has 100 or more employees, is 100 percent developed by that group’s experience. You are at risk, but it’s just catching up to you by the time you get the renewal if you’ve had a bad year.

A group who chooses to go self‑funded agrees to pay their costs as they incur them through the year. Instead of paying a fixed known premium to an insurance carrier, that carrier gets to keep the rewards and take the risks. The employer is taking those immediate risks so the volatility of claims is a risk. You might have a year where your expenses are higher than you expected for that year, but generally, that risk is mitigated by an insurance product called stop loss. The most risk that an employer is generally taking is 25 percent above what they would otherwise expect to pay. It would be very rare that you would have a group with expenses that are that much higher than expected. I think with SAIF, the big budget concern is that we’re under budget again, right?

Renae: For the second year in a row, the accounting department is having a hard time with the fact that they’re under budget. What do we do with this extra money? It’s not what we predicted. That is a much better conversation to have with accounting and having to figure out what to do with the extra reserves rather than fighting annually with renewal increases and the ensuing two‑month battle to get it down to a reasonable rate.

Sarah: The other risk is acting as your own insurance company so the liability is on the employer. You can’t point to the insurance company.

There’s a lot of upside with self‑funding. The rewards of self‑funding are strong for a group who has good reserves, is in a good financial position, has a stable work force and a reasonable health profile. The average savings for an employer is around eight percent annually when you add up the avoided taxes. If you buy an insurance product, that insurance carrier must pay the state of Oregon and the feds an extra insurance premium tax. If you’re self‑funded, you avoid all those taxes. That’s about three percent off the top. Then you don’t pay the margin to the insurance carrier. They want to make a profit and they’re taking risks, so they want to earn some money off that risk taking. Your administrative fees are higher when you’re fully insured versus self‑funded. All of that adds up to about an eight percent average savings year over year, over year. When you’re talking about such a big line item for that employer’s cost, eight percent is hard to say no to.

Linda: If the only additional risk is additional risk…Why aren’t we seeing more employers move to self funded accounts?

Sarah: We are seeing more employers move to self funded. In fact, as the tax burden on insured plans increases and has increased through the Affordable Care Act, we’re seeing more and more employers and smaller and smaller employers saying, “I want to be self funded, but I’m not quite big enough to.”

It’s the law of large numbers. For a group of 100 or more employees, it seems to suddenly make sense. More than half of all employers are self funded who have 200 plus employees. That population is growing. That 50 to 199 employee size market has been growing. We’re seeing a lot more employers look for ways they can limit their risk but still be self funded, to get all the advantages that Harsh and SAIF have received as larger employers.

There’s a couple tools out there for groups that are in that 50 to 199 employee market. Carriers often have what’s called level funded products, where it feels more like a fully insured plan, but technically it’s self funded to the employer purchasing the product. You still avoid those taxes. You still get the savings, and you earn positive rewards at the end of the year.

There’s also captive arrangements. Those are basically purchasing groups where small, like minded employers can band together, acting like a larger employer to get the benefits of self funding. We’re seeing a lot more employers considering moving to self funded as that tax burden continues to increase and employers want more control over their own health plan.

Linda: The captive product sounds like a good product for Oregon businesses where the majority are 50 employees or under.

Sarah: Absolutely.

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Wellness Programs

Linda: Let’s look at wellness programs, the benefits and the costs associated with them.

Renae: I could talk all day on both of those things. We have had an on site clinic for about 27 years. That was probably where wellness started at SAIF Corporation, when we started offering free healthcare to our employees and their covered family members. Our employees can go right on site. They don’t have to pay any co pays, deductible or anything. We’re trying to break down barriers to care and have them go to the doctor right there on site. The biggest reason people say they don’t go to the doctor is cost and time. We’ve eliminated both of those barriers. In 2007, we also started revamping our wellness program to add a lot of other additional tools.

We’ve had a pedometer‑like tracking program for almost six years now, in which we’ve seen a steady 99 percent participation of all our employees. They do get incentivized through a healthcare discount, as well as cash for walking. It’s compliant with ADA and temporary or permanent disability. We felt like it was a good match for what we’re all about at SAIF, i.e. workers’ comp injuries. Employees love it, and new employees are probably the most excited about it. Trying to keep something exciting that you’ve had around for six years is my challenge, making sure that it’s still engaging and still fun.

We’ve seen it move quite a bit. When pedometers first came out, you had to plug them in. They were maybe digital if you were lucky. Now, they’re all Bluetooth. It works with almost any Apple Watch, Fitbit, what have you. That’s been pretty popular and is unique in Oregon. There’s only one other employer I know of that uses a program like this. It’s been fun.

We do an annual screening biometric health assessment as well because of our on‑site clinic. I’m actually not a huge fan of doing annual biometrics. I think it can be overly cost‑burdensome, especially for employers who have to pay for the biometrics, as well as pay their employees who do a health assessment.  We prove our results through our clinic where we’re trying to drive that care and have early engagement.

We use something that talks about your readiness to change in the health assessment. It lets the clinic staff know who to engage, who’s ready to talk about smoking or weight loss, as opposed to just looking at an employee and trying to figure out what the right message is to them. They can actually see through their results what they’re ready for. We have great participation in that. Again, it gets you a healthcare discount.

If our employees and spouses participate in that annual event, then they also get a discount on their premium share or deductible. Those are probably the biggest things we do. We do a lot of small things as well because you need to have a constant presence when it comes to wellness. Employees want a lot. We do a lot around financial health, mindfulness and lots of daily programs to help supplement the larger ones.

Linda: I want to circle back and talk a little bit more about the costs associated with wellness programs

Rojita: The wellness program in Harsch, I think, started with The Partners Group around 2004. We’ve done something very similar as Harsch. The walking contest has been in place for about 13 years, which covers multiple states. It’s still very popular. People are very competitive and they still want that cash reward at the end of the day. We do use the pedometer as well. This year, we’re trying to see if we want to do something different, because people like the pedometer and can shake it and change the numbers. It’s fun. It brings out the competitiveness as well as teamwork, which is the other added benefit of being in a wellness program in a company.

We also do financial wellness. We have people from our 401(k) programs come in and do lunch and learns, etc. We have seen a direct impact with our employees, where they do increase their participation in 401(k). We’ve seen it for the last two years. We also have different programs, such as having a volunteer month. We encourage people to go out and volunteer, where we pay our employees to volunteer for four to six hours. That’s been a very popular program for us as well. It’s part of the Harsch culture. I think it engages people. It helps us attract new employees, retain new employees and team build. It’s been really good for us. This year we are trying to revamp the wellness program, freshening it up.

I keep on calling on The Partners Group and other people saying, “Hey, what are other employers doing?” Yes, we do the walking contest. What are some other things that we can do to add onto it so that it has a direct impact on not just employee morale, but also on the cost of our health benefits, as well as turnover.

Linda: Is there anything else you could say about the direct impact on costs? A comprehensive program like the ones at both Harsch and SAIF cost a lot of money. How do you justify the bottom line?

Renae: That’s a question I think every wellness professional wants an answer to, “what can I use my dollars towards where I can guarantee what we’ll get back?” We’re not asked that of any other programs for employees. I don’t think you’re really guaranteed to get money back on most of the things you do. For some reason with wellness, we need to make sure that we’re at least getting our dollar for dollar back. It’s tough to prove.

I feel like our healthcare costs have been really low for many years. I’d like to blame wellness for that, but the truth is that it’s a lot of reasons. It’s a lot of factors that are going into those healthcare costs. It just takes a large motor vehicle accident, premature babies, or something like that before your healthcare costs can change in a hurry. Is that a result of the wellness program? Could we have done something about that?

We’ve looked at our costs a lot to try to show that we are making a difference. What I can tell you from just a high‑level view is that we have seen positive improvements in the health of our employees. Because we do that annual biometric screening, we have lots of data that actually tracks the same individual over time. We have definitely seen those biometrics improve, especially with the top 20 percent of our unhealthy employees. They actually have made the greatest changes. This is promising because as wellness people, we’re told not to concentrate on those people. We have seen a positive difference in that area.

Our employees also participate in employer surveys. I can tell you that our employees have completely changed their responses, how they feel about work/life balance, and what motivates them to come into work for the day. It’s a huge thing that new employees are looking for, as Rojita said. You need to have something if you want to be competitive and to help retain people. People want to go to work where they have a fun culture, where they have friends at work, and where they get to participate in good activities. We have really low turnover. I’d like to take credit for that as well.

There’s a lot of things where I think you don’t necessarily go out looking to measure the ROI, but there’s such an overwhelming difference at SAIF in the last ten years that any employee who’s been with us for that period of time can tell you it’s been drastic, like a light switch went on. There’s a difference of what we believe and who we are as an employer. We have lots of analytic tools we’ve looked at. We’ve looked at those hard ROI studies. We haven’t purchased one yet, but we have a lot of other stories that we can tell, and data that we can look at that tells us we are moving in the right direction.

Linda: Sarah, is there anything you can add about latest trends in wellness programs?

Sarah: Just to add on a little bit to the ROI discussion, it is difficult to track and to tie to your actual health plan cost. For both Rojita and Renae, with cultures that believe wellness is the right thing to do, and for most of our clients, they would agree that it makes such a shift in their overall meaning of what it means to be an employee for that organization.

You get some people in the room who say, “OK, prove it. What’s your ROI?” Measurement is really tricky, however when we get to the heart of the discussion. Most employers are really doing it for cultural reasons and the belief that wellness is the right thing to do. We see a lot more employers, just like Rojita and Renae, doing those annual biometric screenings and the HRAs.

We have new wellness vendors in our marketplace. It feels like the marketplace has exploded in the last five years in terms of available partnerships, with some very creative Oregon companies who are doing fun things around wellness, trying to reach employees in different ways. I feel like it’s a different conversation now than it was even three years ago just because we have this whole new set of partners in the Oregon community who are stepping to the table and looking for ways to support employers, whether that be new ways to do raffles or new ways to incent engagement.

Most employers now are doing some sort of premium differentials to incent engagement and participation in their wellness programs. While that was an emerging trend five years ago, now it’s become the standard. It’s been proofed through some more recent legislative rulings that it’s OK to do.

We still don’t see a lot of trends moving towards outcomes‑based programs. At the national level we see conversations around outcomes‑based programs where they specify that to earn this incentive, you must achieve these health standards. In Oregon, we still haven’t seen too many employers going in that direction. Participation‑based programs are still the norm.

Linda: I’m sure Millennials are also driving the interest in wellness programs, particularly that demographic.

Sarah: Absolutely.

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Pharmacy Benefit Management Strategies

Linda: Let’s talk about pharmacy benefit management strategies. We all know that pharmacy costs are the fastest growing segment of the healthcare expenditures. Pharmacy benefit management programs can be one way to alleviate these costs.

Although it’s interesting, yesterday in preparation and doing research for today’s discussion, I came across eight articles written by the Wall Street Journal, Forbes, and Fast Company, etc., critiquing pharmacy benefit management programs. I thought we could have a little discussion about both the costs and the benefits. Why should employers consider pharmacy benefit management programs or PBMs? What are the costs? What are the benefits?

Sarah: For most employers, about one out of every five dollars of their healthcare spend is pharmacy costs and there’s a lot of money on the table when it comes to a PBM program. There are a lot of people taking a few dollars here or a few dollars there. Then suddenly, by the time the bill gets to the employer, it’s a lot more than it should be. There are a lot of strategies that an employer can do around pharmacy costs. For smaller employers that have a fully insured plan, you can’t carve out your pharmacy program. It’s bundled with your insurance carrier. You’re not going to be able to take your pharmacy and outsource that to a third party.

If you’re a small fully insured emplorer, you could still look at strategies around pharmacy to save you money, in terms of considering moving from a three‑tier benefit strategy to a four‑tier, where you’re having a higher copay for specialty medication, which is the leading cost driver for pharmacy costs. We see many employers actually at a five‑tier right now. There’s all sorts of pharmacy strategies, from a benefits standpoint that even small employers can look at for this upcoming renewal to save you money. If you’re a larger employer, specifically self‑funded, then that’s where you really have a lot of control over helping to manage your pharmacy costs.

The Partners Group has partnered with a national pharmacy benefit management company, a consulting agency really, and that’s all they do. If you’ve ever looked at a PBM contract, it’s no wonder that there’s money buried everywhere in these contracts. You really do need the help and advice of an expert to do a good job of negotiating your pharmacy program. When we started doing this several years ago, we were doing pharmacy re‑pricing and the average savings we would get for our self‑funded health plans was north of 20 percent. 20 percent on 20 percent of your spend is 4 percent of your overall healthcare costs.  That is reason, in and of itself, to at least make sure that the pharmacy contract you have in place with, either your carrier or your self‑funded administrator, has the absolute best terms in place for you.

You don’t necessarily have to carve out your pharmacy if you’re having those conversations with your trusted advisor and they know how to negotiate with your carrier or your self‑funded TPA, the best in class contract terms around AWP discounts and around rebates, to ensure that you’re getting the most competitive contract you can. It doesn’t have a lot of member impact. You can save hundreds of thousands of dollars back to the bottom line of the employer and it’s almost invisible to your employees. You don’t necessarily have to slash benefits to lower your healthcare costs.

That is why there is so much focus around PBMs. For a long time, there’s been so much hidden money there and now the spotlight has been shown on that area, so there’s a lot more competition.

Renae: I think all we talked about for years with pharmacy was your generic percentage. Then, to find out that there’s all this extra money in preferred and non‑preferred generics and where our money was going. I think just the transparency of going through that process was critical to find out where our dollars are going. We used it to leverage our insured plan so that we didn’t have to break it apart. I really didn’t want it to be unbundled, just because of that member impact and the communication. Since I have to do the communication, I don’t want it to be hard. Although, we would have if the price would have been right.

Ultimately, the money we saved, saves the member. It’s a passive cost and it’s a much smaller difference for the employee. However, it’s important. We also found out there’s support for some of the specialty drugs. Some of the members can be getting money back on their specialty drugs. We don’t ever want to make it harder for people to get their medication or make it so they have to make a choice of whether or not they should continue their medication. Our goal is to keep them on it and to keep their costs down as well.

Linda: At Harsch, you have a bundled package, is that right?

Rojita: Yes, we do. I absolutely agree with what you were saying, as well. In addition, I think that educating your staff members with regards to pharmacy is also important. When we do renewals, we look at what products employees are using and what makes sense. Part of the benefit of being in a self‑funding program is we get to make choices. We have control over what choice options we choose and pharmacies. As an employer, I think we have an obligation to make sure that we’re getting the best price to work with our vendors and negotiate well, and work with our partners to make sure the pricing is right.

Five to seven years ago, everybody was talking about the hype regarding pharmacy, and that there’s so much money to save. I don’t know how much of that is actually true right now because I think we all have looked at it and tried to reduce whatever we can. I still think there’s a lot more money to be saved. On the other end, we also must educate our staff on making right choices and on using generic drugs.

Sarah: The last thing I would add about pharmacy is that generic utilization is still important. Best‑in‑class is about 90 percent. If you’re hovering around 80 percent, that tells you from a plan design standpoint, maybe there’s some things that you can do to get yourself to that 90 percent, such as best‑in‑class and generic dispensing rate, which will save your plan money. As a final note, everything is negotiable. If you’re a 100 plus employer then work with your broker, work with your trusted advisor to make sure that you are negotiating the terms of your pharmacy contract because if you don’t, then you’re leaving money on the table.

Linda: Harsch has 250 employees, so I think that qualifies as midsize. Sarah said, remember that everything is negotiable but that really holds true for larger companies in particular. Wouldn’t you say that holds true for a midsize company, as well?

Rojita: I came from a larger company, so for me I still call it small to maybe a midsize company. You have more control in negotiations as a larger employer. Definitely more than a smaller company, but I think you still have the impact. A lot of business is still done on relationships. A lot of business is still done on communication. I think our job, as benefit administrators or as HR executives, is to ask the right questions, work with your partners and make sure that you’re focusing on it because people pay attention to what you pay attention to, so ask questions. That will drive your cost down. It’s OK to say, “We’ve done it this way.”

I ask The Partners Group, “I’ve been here two and a half years, so why do we do this? Tell me, what’s the cost associated with this? What did we save?” I’m a former accountant. When it comes to wellness and other things, I always like to see cost savings at certain points. It just depends on what you measure as a ROI.

Linda: And, SAIF as a larger employer would you agree that everything is negotiable?

Renae: Everything is negotiable but nothing is as negotiable as competitive bids. Bringing in competitors is so time‑consuming that we question whether we really want to take the time. However, every time we do, we save money. It takes my time and my staff’s time to go out to bid. We can leverage our relationships and our size but really it’s the competitors that get us the best price.

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Wellness Strategies

Linda: We have time for one more question before we open the discussion to the audience. I’d like to ask the two employers represented here if there are other targeted strategies that you have taken advantage of to improve wellness and cut costs for your employer?

Rojita: At Harsch last month, we did a benefits and wellness survey for all our staff members. We went in expecting a certain result but we were surprised. Physical fitness, of course, was one of the number one things that our people wanted and we always anticipate it to be. However, the second wellness component our people wanted was financial wellness. Everybody expected stress to be the third one. It wasn’t. It was the fifth pertinent thing that was important to our staff. Our strategy this year is to completely look at the survey results and redesign our wellness program that is a little bit more holistic in the fact that it doesn’t just take care of the physical fitness. It also takes care of the wellness program, the mind, the body, the stress, as well as, incorporate team building, and incorporate other activities that help make us better employers. Wellness right now is a tool to attract, retain and make your employees happy. That’s our strategy at present.

Renae: I would second the financial health, too. This is the time to do it. We always think about financial health when the economy’s down and people don’t have money, but that’s the wrong time to talk to people about their money. It’s better now. We’re looking for ways that we can give something to employees to give them some financial peace or mindfulness (I think we’re all tired of the word stress), extra time at the end of the day, and easy to find healthy food options. There’s a lot of working parents and a lot of single parents out there. They’re short on time and finding the right resources to help them be successful has been hugely important for us.

We’re always looking at trying new things. I think you must change, but don’t change so quickly that your employees can’t stay focused. I know that when I was first in wellness, it was like a monthly calendar and every month you focused on a different thing. It was too fast for people. Give them a good quarter or even a year with the same message that’s repeated and consistent and get that middle manager to pay attention and to support you. We just wrote another campaign for the middle managers to let them know that typically if they’re not engaged, they’re not going to support their staff either, and they’re the breaking point for us.

Make sure middle management knows how they can support employees, specifically tell them, “you should encourage your employees to go to this,” and different tactics that they can do to show engagement. Our campaign looks different every year but not completely different. We still have those staples that I talked about earlier. Then, sprinkle that with whatever employees think is fun. 

Our employees really get into games. It’s funny, we started with some ping pong tables. Now we’re remodeling our campus and taking into consideration the employee feedback sessions and surveys we’ve done. Our employees have made it clear what their priorities are and they want an interactive game and hangout space. They don’t just want a couch where they can go surf on their phone. They actually want the forced interaction that we get through games, whether it’s shuffleboard, foosball or basketball. Some of them get pretty loud. The goal is to drive engagement.

We’re surrounded by parks. The walk-ability of your office is huge but getting employees to know where those are is key, so take your new employees on a walking break. Have a mentor or someone that can help show them the routes. That’s also how we help them find healthy food options. One of their coworkers will invite them to lunch and show them there is a food cart that’s not full of oil. You should drive that engagement and get your employees to have some ownership in it.

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Targeted Strategies for Small Employers

Linda: Sarah, I’ll have you close out the discussion by talking a bit more about targeted strategies for small employers, again, since Oregon is a small business state. What are some other targeted strategies for small businesses?

Sarah: For smaller employers who are fully insured, we’re reliant on the carrier products. A couple of new trends that allow employers to save money for which we’re seeing a higher take up rate are ACOs and narrow network strategies.

Now all the carriers are offering both their broad networks and then some version of a narrow network strategy or affordable care organization (an ACO model). Some of our carriers will allow you to do a dual choice. It’s broad network alongside a lower cost, narrow network strategy. We’re seeing the average premium savings of those narrow network strategies of about eight percent for the exact same benefit design. We’re seeing a lot more employers considering those narrow network options. We saw a lot of people talking about them in 2017 and we expect that more employers will be looking at those narrow network strategies for 2018 as well.

Tried and true HRA strategies are still very popular among smaller, fully insured employers, where the employer will buy a higher deductible health plan and get premium savings because you’re buying a less rich insured plan. Then, the employer funds a health reimbursement arrangement to help offset that increase in the deductible. It’s dipping your toe in self‑funding. You’re only self‑funding that deductible for the employee. Those HRA strategies are also a really good means for smaller, fully insured plans to save money.

Finally, there’s a Kaiser option. Kaiser is expanding its network and we’re hoping, crossing our fingers, that Kaiser will be an option in Eugene sometime soon. Kaiser is also a great option for employers of all sizes to offer that HMO, side‑by‑side offer for employees to have a lower cost option.

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Questions from the Audience

Audience Member: Are you seeing any employers move towards more of a defined contribution marketplace type plan?

Sarah: While we haven’t seen a lot of employers in 2017 pull the trigger on that strategy, I do think it’s a strategy that’s going to gain momentum. I’ve had two large employers call me in the same week saying, “I’ve been thinking, I’ve got this new Millennial workforce who really wants a broader choice of benefits.” They don’t want to be told that this is your one health plan and dental plan to choose from. Take it or leave it. They want a cafeteria style plan, where the employer sets a defined contribution. Let’s say the employer is going to give their employees $500 a month and then they’ll be provided a choice of benefit plans to choose from.

I think we’re going to see more conversation around defined contribution, especially with the needs of Millennials who want more choice. I will say in that model, it sounds really easy but you have to design it very carefully because the whole premise of insurance is that a lot of people pay into the system who don’t use it at all. Their money, paying into the system, is used to pay for the needs of the few.

If you move to a cafeteria model where everybody’s taking things off the cart at an equal rate, suddenly there is less money to pay for that very high cost of the few. From a design standpoint, you must be very careful about how you create those selections for employees so you don’t blow up your plan. I do think that is going to be a strategy that more employers are going to gravitate to. However, for it to be successful, it should take some careful planning.

Audience Member: Looking forward a year from now, with ACA reform, what does it look like? What would you most like to see in managed healthcare program?

Sarah: If we were writing healthcare reform, how would we write it? That’s a really good question. It’s complicated. The employer sponsored market is the one thing that’s working. At a national conversation level, the idea of chipping away at that employer sponsored market or moving it all to a federally funded marketplace scares me, because those are the programs that really aren’t working today. They aren’t sustainable. One thing that is stable in terms of cost and increases is the employer sponsored market. I would really be pushing to make sure that employer sponsored programs are maintained.

There’s a real threat to employer sponsored programs right now. That is today, we all enjoy the deductibility of the value of insurance our employers buy for us. It’s called the Employer Sponsored Insurance Deduction. It means that for my insurance benefits I get as an employee of The Partners Group, let’s say it’s $20,000 a year, I don’t get taxed on that. It isn’t added to my taxable income like my paycheck is taxed. That is the largest deduction at the tax levels, beyond the mortgage deductions.

If you think of the value of healthcare that we receive from our employers, none of that is taxed today and we’re all thankful for that. That is a big pot of money that people are trying to get their hands on in order to fund all sorts of stuff. I understand. We need revenue to pay for services, absolutely, but that ESI deduction is something that lots of people are talking about. How do we start taxing benefits that are provided though employer sponsored programs?

I would say that if I were king or queen for a day, I would make sure that it’s easier, not harder for employers to continue to offer benefits. The administrative burden of the ACA has almost gotten people to a breaking point of throwing their hands up in the air and saying, “Forget it. This is now not taking me just one FTE (full-time equivalent). It’s taking three FTEs just to be able to handle all the administration.”

I would make sure that we protect the one source of insurance that seems to be working, which is insurance through employers, while also making sure we have a stable individual Medicaid market. The AHCA ends Medicaid expansion in 2020. In Oregon, 400,000 Oregonians got new insurance under the ACA because of Medicaid expansion. If that goes away, insurance is threatened to those 400,000 people, and they won’t have insurance anymore. They still have healthcare costs. Those healthcare costs then get shifted back to the employer market, and that again destabilizes the employer market. It’s important for us to look at the big picture, but also not disrupt the one thing that seems to be working relatively well.

Audience Member: There’s a growing appreciation of behavioral economics, which is incentivizing or nudging people, to engage in certain behaviors. I wonder if you could talk a little about whether you see any programs to nudge people? What’s been effective in the insurance world to promote certain behaviors among the population?

Renae: The nudging is key. Babysitting, hand holding, whatever you want to call it. For sure, nudging is key to keeping it front and center on people’s minds. We have lots of different ways that we nudge people. Our pedometer program has daily nudges set on your personal interests that you choose. We have nudges from our on site clinic to come get care. We nudge employees for their incentives. The reason we have 99 percent participation is because of the nudge. It’s not because I have some perfect concoction that everybody can’t wait to get. It’s because I drive them insane and they just eventually give up and do what I want.

I think that behavioral economics is great. We’ve looked at pushing our vendor to create more environmental nudges. I think an environmental nudge is having fun and active things that are very easy for people such as sit to stand work stations, collaborative work spaces, easy walking paths. In my mind those are a nudge, making sure that your environment supports what you’re all about.

I think all those nudges around you are key. The best nudge you can get is from a good friend, a good coworker, and someone who’s supportive of your lifestyle. Connecting people with like situations and interests is key. Letting people sit around people that they want to be around and engage with people that help support them is key. That work environment is the best nudge we can do.

Rojita: I agree with that. At Harsch, we look at positive reinforcement a lot more. If you’re a good HR person, you can spin any nudge in a positive or palliative way. We just do a good job of making sure that our nudges our more positive. Being responsive to your employees and what they want to do, listening to what they want to do.

This year, we’re completely remodeling and we’re adding a gym. The old story of, “Oh, we’ll buy you a gym membership,” doesn’t really work unless there’s something else that you add to it. It also means that you need to have the right advertisement to go with it, the reminders, and add a little competition, a little incentive. We all like little incentives, whether it’s cash or it’s other things. Make sure that it’s front and center. Work with your marketing department to make sure that it’s in your social media right now so that everybody’s aware of it.

Renae: One of our strongest campaigns was to participate in the wellness program for your family members, because the employees in all our focus groups said they probably wouldn’t do it for themselves. However, if they thought it made them a better spouse, a better parent, a better employee, than it would motivate them more than doing it for themselves.

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2017-07-11T10:04:47+00:00

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