12 Implications of Health Care Reform

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In response to the 2011 health reform, insurance carriers increase premiums. As employers start dealing with the law’s new requirements, there is a heightened focus on providing better education and communication to employees, on negotiating and investigating alternative options, making smarter benefits decisions, and enhancing wellness programs. Here are 12 ways in which health care reform impacts how we do business now and in the future.

1. Increased cost-sharing

Cost-sharing between employers and their employees for health insurance continues to increase. This is one of the easiest ways to manage health insurance costs, but naturally has effects on employee engagement and morale that employers need to consider. The average cost-sharing arrangement has steadily increased in the years preceding 2011.

2. Education about health benefits

Education about how employees can be better health care consumers is becoming more imperative. Often employees do not understand how usage affects costs and need to be educated buyers when using their health insurance plans. Ideas for education efforts other employers have initiated include:

  • Explain the costs associated with health care decisions (i.e. going to the emergency room vs. their primary care physician).
  • Show employees the drivers of health care costs at the organization.
  • Communicate what employees can and need to do in order to maintain or reduce their current costs. Specific actions steps are recommended.
  • Expand education to spouses who are also users of the plan.
  • Provide employees with key questions to ask their doctor.
  • Make health insurance an on-going conversation and communication effort with quarterly meetings to discuss trends, employee forums to discuss suggestions, and other media to disseminate wellness and health insurance information.

3. Use of benefit statements

Benefit or total rewards statements are a widespread and important communication tool that show employees how much the organization is investing in their benefits, and particularly their health insurance. Showing employees actual dollar amounts and levels of coverage your organization has been shown to enhance satisfaction and improve understanding.

4. Review of plan design

Reviews of plan design are increasingly occurring. Plan design should be reviewed carefully and different scenarios should be run and analyzed. Raising deductibles or co-pays to offset other costs or providing a health savings account (HSA) or health reimbursement account (HRA) are options to consider. But it’s also important to pay attention to the level of benefits that other employers are providing. Conducting an annual benefits analysis can help determine where employer benefits could be modified without compromising competitiveness.

5. Negotiation of options

Taking responsibility for your health care costs and seeking additional bids from other carriers is a necessity. Inquire about other options from your broker that reduce costs and provide greater wellness resources to help employees better manage their health. Your broker may not freely offer this information, so take initiative and ask.

6. Implementation of restrictions or penalties

Increasingly, organizations are implementing more restrictions in their health insurance plans such as spousal carve-out provisions and higher premiums for smokers. Shifting additional costs or penalties to unhealthy workers, although not widespread, is becoming more popular and may help reduce or manage health care costs.

7. Offering of incentives

Incentive use for wellness program participation is expanding. A chief reason that wellness programs may not reduce your organization’s health care costs is lack of participation. Studies continue to show, however, that employees are more likely to participate in programs when meaningful incentives are offered, such as discounts on health insurance premiums.

8. Health risk assessments

Usage of these assessments is becoming very common as they can be valuable data-gathering tools for both organizations and employees. Employees can attain greater insight into health risk areas and organizations can receive an aggregate report of areas where employees need wellness assistance. Wellness programs can then be targeted to those needs. 

9. Free prevention services

Services like flu shots, health screenings, cholesterol and blood pressure checks, vaccinations, and other yearly screenings are increasingly offered in the workplace.  By providing free wellness services on-site, you can decrease usage thereby managing costs better. Also, educate employees to take advantage of the new provision of health care reform which provides free annual preventative services.

10. Wellness initiatives tied to health insurance costs

Wellness initiatives are obviously one of the best ways to reduce health care costs and the majority of employers either have one in place or are planning on initiating one. When planning wellness initiatives, be sure to not only emphasize how your organization is supporting employees’ well-being, but also how these programs are intended to assist employees in better managing and maintaining their health care costs. Employees need to see the connection.

11. Promotion of healthy habits

Recently, we’ve found that more organizations are promoting healthy habits to deal with increasing health care costs through internal nutritional standards, on-site fitness activities, and educational efforts like seminars, paper materials, and online information. Create the “norm” of healthy behavior in your workplace to manage health care costs.

12. Make it a team effort

Involving employees in solving health insurance problems can be effective. Encourage them to get involved in suggesting or implementing wellness activities and to provide their feedback on health insurance options. Collaborating and creating a conversation with your staff can help generate greater buy-in about health care decisions and limit negative perceptions of change.

Navigating health care reform and its effects won’t be easy, but we’re seeing many employers taking a proactive approach and implementing a variety of initiatives to cope, educate, and manage the law’s changes and effects on their businesses. 

Additional Resources

ERC Health
Visit www.erchealth.com to learn about our health insurance offerings for small and mid-sized businesses.

HR Help Desk
For more information and guidance pertaining to any of the content in this article, please contact hrhelp@yourerc.com.

Employees Sharing More of Health Insurance Costs

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According to ERC’s 2011/2012 Policies & Benefits Survey, the average health insurance deductible paid by employees (as reported by Northeast Ohio employers) increased significantly from 2009. Employees' co-pay amounts and contributions to health insurance premiums also showed slight increases from 2009.

The results of the survey, which provided detailed information on a variety of health plans and health insurance practices, appeared to suggest that organizations continued to increase cost-sharing with employees to cope with rises in costs.

Specifically, the survey provided detailed information about eligibility for coverage, medical plan options, and detailed practices for HMO, PPO/POS, Indemnity, and High Deductible Plans including percent of medical premium paid; average amounts of co-pays, lifetime maximums, and annual deductibles; and in-network and out-of-network amounts. It also covered information about Health Savings Accounts in terms of average annual contributions, services covered, and out-of-pocket expense limitations, as well as Health Reimbursement Accounts, Prescription Drug Plans, and much more.