Piecing Together the Puzzle of Paid Family and Medical Leave

I had the pleasure of speaking at The New England HR Association (NEHRA)’s Annual Legal Summit a couple weeks ago. The summit brought together attorneys, CEOs, insurance experts and HR professionals to discuss changes in regulations and laws that directly impact the workplace experience of employees. Some of the major topics discussed included how to adapt to a hybrid workforce, how to know who to hire during and cultural and legal considerations when facing substance use and mental health issues in the workplace. All in all, the conference was a great success and allowed for fantastic networking opportunities and provided guidance around a range of compliance considerations that apply to countless employers nationwide.

During NEHRA’s Legal Summit, I presented on, Piecing Together the Puzzle of the Paid Leave Landscape, in which I dove into history of Paid Family & Medical Leaves (PFML) in the US and explained the current landscape of which states provide PFML (and to what degrees). I moved on to show breakdowns on a global level for paid leave for new fathers, new mothers and for an employee with a health problem. As you’ve probably heard, data shows that the US is far behind when it comes to enacting federal legislation that provides paid family leave in comparison to the rest of the world. Without federal paid leave policies, it has fallen on individual states to create, enact and enforce paid leave policies. Of the fifty states in the US, 23 have rejected PFML proposals and have no safety net for employees who face medical or family issues that would require time off work, unless a program is provided by their employer.

After addressing some of the global and national trends, I explained some of the barriers of access to paid family leave within the US. For instance, women are 20% more likely to leave their jobs when they don’t have access to paid leave and 25% of new mothers return to work less than two weeks after giving birth1. Additionally, when breaking down access to paid leave based on race, research conducted by the National Partnership for Women & Families found that 28% of black respondents reported having requests for leave denied, compared to 9% of white workers. It is clear even within states or organizations that provide some form of paid leave, many Americans are facing very different realities when trying to utilize or understand their paid leave options.

As this was a legal summit, I tackled some of the major questions  employers ask about leave surrounding compliance, costs, and leave options if they reside in a state that does not provide PFML. I reviewed some best practices employers can take when developing and evaluating leave policies such as leveraging benchmarks, looking into funding options (e.g. self-insurance, captive insurance, etc.), and utilizing technology and appropriate metrics to evaluate financial impacts. I also noted that different perspectives must be considered when developing leave policies. For instance, employees have different priorities; they are often worried about job security, getting paid and workload upon return when assessing taking paid leave. On the flip side, navigating leave from an employer perspective can be a daunting task when having to traverse FMLA, state laws, ADA/ADAAA, HIPAA, discrimination laws and more; so, it is essential to utilize resources to make sure your company is abiding by all  regulatory standpoints.

All in all, I was in great company at the NEHRA legal summit! As per usual, NEHRA hosted some of the leading experts in the field and tackled major topics employers and HR professionals are facing currently. I hope to see many of you again during NEHRA’s 2022 Annual Conference in October.

 

1 https://www.nationalpartnership.org/our-work/resources/economic-justice/paid-leave/called-to-care-a-racially-just-recovery-demands-paid-family-and-medical-leave.pdf

Leading Trends in the Employee Benefits Industry, a NEEBC Annual Summit Recap

Last week I had the pleasure of attending the New England Employee Benefits Council (NEEBC)’s Annual Summit. It was great seeing so many familiar faces and reconnecting with industry leaders I haven’t seen in over 2 years! When walking around the exhibitor trade show, it was fantastic to see people connecting and developing potential partnerships. As for the presentations, we saw a variety of topics spotlighted, some of which included:

 

  1. Mental Health

As May was Mental Health Awareness Month, it was only fitting that mental health was again a leading topic discussed during NEEBC. As many workers have moved towards remote and hybrid work, there has been an increased demand for remote mental health services amongst employees. During a session on strategies employers can adapt to de-stigmatize behavioral health and increase access, Lisa Bertola and Sara Gunderson from Segal explained how employers must adopt data-driven strategies to improve mental health resources and access.

  1. The Great Resignation

As many know, The Great Resignation phenomenon has been front and center within the benefits industry for over a year. The Great Resignation has affected countless employers nationally and organizations are battling to retain and attract talent through strong benefit packages and inclusive workplace environments.

a)  The Great Disconnect

The ideology of The Great Disconnect arose from The Great Resignation and represents the disconnect between what employees want and what employers think employees want. COVID-19 and the shift towards hybrid/remote work changed what many employees value from their benefits. Offerings such as mental heath resources, tele-medicine and financial wellness resources became popular, and are slowly becoming the new standard in the industry. Michal Alter from visit.org explained this in detail during his session on The Great Disconnect, where he explored how employee benefits data analyses can better help employers engage and retain employees.

b)  Tech

When it comes to deciding what benefits to implement, employers now have greater access to digital tools that can help identify the benefits employees actually want. In a session with Corestream CEO, Neil Vaswani, and Salary Finance’s CDO, Anita Ward, they explored the current state of innovative HR technology and how it is being used to measure performance and employee happiness. They further explained how these technologies can better illustrate the needs of employees and help employers develop benefits packages in response that are competitive in the war for talent.

c)  Burnout

Recognizing burnout is the first step in identifying which employees are at risk of finding other employment opportunities. In a keynote address by Dr. Neha Sangwan, titled The Burnout Awareness Prescription, she spotlighted the significance of integrating “human software” into organizations. She laid out the importance of focusing on your employee’s health and well-being by keeping up to date with their passions and making sure their work successes can help them meet their personal goals. Assuring employees are feeling fulfilled both inside and outside of work is crucial when reducing workplace burnout and retaining top-tier talent.

  1. Prescription Drug Costs

As the US is one of the countries paying the most for prescription drugs, strategizing around the costs for Rx drugs was a hot button topic this year. In a session comprised of a lineup of experts from Upside Health Advisors, ICER, Imagine360 and Point32Health, they tackled the issue many employers face when setting up medical insurance plans…prescription drug costs. They looked at different Rx payment methods, including referenced-based pricing, and walked through case studies to highlight the pros and cons of alternative Rx options. They closed by clarifying how employers of any size can manage drug costs by evaluating different Rx pricing options.

 

As a member of the Board of Directors at NEEBC, it was great to see another successful Annual Summit come to life! Beyond networking, I enjoyed learning how different industry leaders are tackling some of our biggest issues head-on.

Is Inflation Inflating Captive Demand? A Q&A

In April of 2022, the Bureau of Labor Statistics reported that inflation hit a staggering 8.5%. If current projections hold true, this year will have the highest inflation rate since 1981. COVID-19, supply chain problems, Russia’s invasion of the Ukraine, housing price increases, and more predictable market cycles are some of the driving forces behind such high inflation. In our line of work – insurance, risk management, and employee benefits – macroeconomic factors like these are seen in the challenges our clients face and they solutions they prioritize. To complicate things, the property and casualty realm is also subject to things like natural disasters, climate risk, changes in societal litigiousness, and ransomware/cyber risk. That said, we sat down with Peter Johnson, Spring’s Chief Property & Casualty Actuary, to discuss how this challenging environment interplays with his work in the captive insurance space.


Q: Is inflation having an impact on underwriting and pricing?

A: This is case-by-case between captives but as an overall average, yes. A captive in a strong surplus position and favorable historical loss experience will still be able to provide favorable pricing even when the industry is seeing high loss trend and rate increases. Higher frequency and/or severity trends are certainly still impacting pricing needs for certain lines, such as cyber and excess liability where experience isn’t frequent in nature and the credibility of a single company’s experience is low. Specifically for cyber, ransomware loss costs have grown exponentially over the last 3 years and rate increases are being observed by both commercial carriers and captives. Further for both cyber and excess liability where commercial market pricing issues exist capacity has also shrunk and captive are being looked to, to fill the gap.


Q: Is inflation currently impacting reserving and if not, do you think it will in the future?

A: In general, yes, for many casualty lines where loss trends are high or increasing, but this is also a case-by-case basis since captives with good data credibility and stable historical loss experience can respond to their actual loss development and may not have a need for much, if any, reserve increases due to inflation. Cyber liability, commercial auto liability and excess liability are three lines in the industry with increasing severity trends and captive reserving practices often consider industry trends when company experience isn’t fully credible by itself, so I would expect some reserve strengthening for these lines due to trend assumption increases. Supply chain issues have been an obvious issue in the used car market and depending on a captive’s auto exposure and experience, there may be both increasing auto rate levels and reserve levels for the captive.


Q: Some analysts have suggested that while commercial market insurers are concerned about inflation, the impact might be offset to some extent by the benefit of higher interest rates in their investment portfolios. Would you expect captives to realize a similar investment benefit? Would you expect it to be significant?

A: To the extent a captive’s investment portfolio is invested in higher yielding fixed income, securities or other investments that are inflation sensitive then yes, there would be some offset.


Q: Are there specific coverage lines in captives that will be more affected by inflation than others?

A: Cyber, excess liability/umbrella and auto liability have seen higher trends than workers’ comp. Geography is an important factor as well since certain areas have seen noticeably higher/lower trends than the industry average. For example, medical professional liability severity trends have increased, but this varies significantly by region. Some states are seeing double digit severity trends and rate increases while others are experiencing very modest increases. Difference in litigiousness and jury awards drive much of these state-by-state differences. Property is certainly impacted by inflation with increases in cost to build, but natural catastrophes such as hurricanes, wildfire and wind/hail have typically had more of an impact and to compound things the current supply chain and inflation issues immediately after a disaster can lead to even costlier natuaral disasters. According to NOAA National Center for Environmental Information 2021 came is second all-time with 2020 coming in first as far as the total number and total cost of these disasters.


Q: Would you anticipate any changes in captive strategies in response to inflation?

A: For captives with active investment advisors, I’d expect a response on the investment side depending on their current investment profile and the surplus and loss reserve position of the captive. There certainly could be a variety of responses on the insurance risk side, particularly if inflation is driving up claim severity and significantly changing the risk profile of a captive. Capitalization, limits, retentions, reinsurance, and pricing are all potentially impacted and would need to be considered.


Q: Is there any advice you’d offer captive owners regarding inflation strategy?

A: In general, it is important to sensitivity test your proforma projections every few years based on practical adverse loss outcomes and investment income scenarios. These financial projections can consider higher than anticipated inflation trends over a multi-year projection horizon. This will help determine appropriate captive capitalization levels, reinsurance, pricing, and risk margin to protect against possible adverse events.


Q: Any final thoughts on the subject?

A: Firstly, large jury awards remain top of mind for many company executives and boards. Although the impact on industry combined ratios is less obvious based on what I’ve seen, this continues to be a big concern and is part of the driving force behind pricing increases in the commercial market for certain liability lines.

Secondly, as carrier capacity presumably decreases and underwriting profit margins increase for certain carrier lines where rate level increases outpace loss trend, captives will continue to be utilized to insure more risk and recoup underwriting and investment income related profits otherwise going to commercial carriers.


There you have it. While there are many negatives that sprout from inflation, one positive is that it allows captives to continue to elevate their status as a strategic risk management and financial tactic for organizations of all kinds, and help companies better face the difficult economic climate.

A Blueprint of Health & Welfare Benefits: A Recap of NEEBC’s Beyond the Basics (Level 2) Event

Last week I had the honor of presenting at the New England Employee Benefits Council (NEEBC)’s Health & Welfare: Beyond the Basics (Level 2) event. The event provided great insights into how employers can adapt their corporate culture and provide strong benefits to attract and retain top-tier talent. Sessions focused on the following four critical areas of health and welfare: healthcare, data analytics, lifestyle accounts, and employee absence.

  1. Healthcare

David Chamberlain from Brown & Brown clarified the difference between health and wellness and steps employers can adopt to promote preventative care. He later dove into the differences and advantages of discount analysis verses repricing and how this all ties into pharmaceutical needs. Finally, he outlined the landscape of Pharmacy Benefit Managers (PBMs) and how new disrupters such as Amazon Pharmacy are able to provide pharmaceutical capabilities for people with and without insurance.

       2. Data Analytics

Mary Delaney from Vital Incite explored the need for data when developing benefits strategies. She explained how data such as age, gender, medication patterns, likeliness of hospitalization and other indicators are essential when developing a health/medical insurance plan. Lastly, she explains how this data can be collected through employee needs surveys and analyses of national health data trends.

       3. Lifestyle Accounts

Firstly, Jennifer Aylwin from Vertex Pharmaceuticals defined lifestyle accounts as a taxable account that employees can use for reimbursable expenses chosen by the employer. Due to the COVID-19 pandemic, many employees are now working in a hybrid or remote setting, and LSAs are a good practice to keep those employees content and engaged.

       4. Absence

As for absence management, I had the pleasure of presenting on this topic. I started by exploring some of the benefits of adopting absence management policies, such as reducing administrative costs and fostering a positive corporate culture where employees feel valued. I ended by showing how strong absence policies paired with effective communication of those policies have proven to provide a better experience for employees and greater workplace efficiency.

 

All in all, it has been great finally being able to see so many familiar faces in person again. As we adjust to a post-pandemic life, it is essential that we implement health and welfare strategies that match the need of employees currently. I look forward to connecting with many of you again during NEEBC’s Annual Summit in just a couple weeks on May 25th!

They’re Better than Benefits, They’re PERKS!: A 2022 PERKSCon Conference Recap

This year, I had the pleasure of attending the New York City PERKSCon event last week. PERKSCon is the world’s largest employee experience expo and provides great insights into the future of benefits and how employers can remodel their benefits strategies to better position themselves in the war for talent. Attendees included senior-level staff, HR managers, consultants and brokers from organizations ranging from under 200 employees to 5,000+. During the expo we saw some innovations in benefits we would have never believed if we hadn’t attended, including jukeboxes in the workplace, telehealth for pets and Lego gift packages for remote team building. 

Although vendors at PERKSCon represented a vast range of services, some of the most prevalent “perks” surrounded family support, mental health, and financial wellness.  

  1. Family Support

This year there was a great focus on family related benefits, with children and new parents at the helm. Employers are transitioning towards different parental support benefits than we’ve seen in the past, especially with many employees working remote or hybrid. Some of the most interesting family related benefits included: 

  • Pump Spotting: They support all things breast feeding including an app, networks, and lactation support. 
  • Outschool: Provides classes for children 2nd grade to middle school, support for working parents and tutoring & test prep for all ages (including SAT). 
  • Medela: They help foster a healthy return to work for new parents as well as provide pumps, ship breast milk, and identify lactation suites. 

       2. Mental Health

Mental health awareness and solutions have been on the rise, even more so since the onset of the pandemic, and employees expect mental health resources from their employers. As we’ve largely moved away from the office and into our home offices, there has been a push to provide mental health support virtually. A couple interesting and innovative mental health related perks included: 

  • Impact Suite: Provides a mental health app, which offers unlimited teletherapy, lifestyle coaching, digital wellness materials and 24/7 support. 
  • Breathing.ai: A digital health solution that reduces stress through guided meditation and breathing exercises, all while tracking your time away from screen, heart rate and other wellness categories. 

       3. Financial Wellness

When it comes to PERKSCon, financial wellness is always a hot button topic. Employers are looking at how they can best support their staff, and in this economy, money speaks louder than words. As such, helping employees with financial wellbeing has become a more common practice and we have seen a range of solutions gain traction over the past few years. Specific to PERKSCon, some financial benefits tools we found interesting include: 

  • Learning Lux: They help employees set financial plans by setting up 1 on 1 coaching and providing tracking and utilization reporting. 
  • Vault: They enable employers to offer loan benefit options, tuition reimbursement programs, 401(k) matches based on student loan payments and more, including individual counseling. 
  • Addition Wealth: A digital platform that helps employees make strong financial decisions (including stocks and investments, 401(k), taxes, etc.) and connect with financial professionals. 

 

I was thrilled to attend PERKSCon in person in NYC this year. The event never fails to provide great networking opportunities and showcase some of the most unique and premier benefits in the industry, something that our clients are continuously seeking. We look forward to seeing many of you again at a future PERKSCon event; it will be just one “perk” of many!  

To Transform Healthcare, Let’s Prioritize These 6 Areas

A recap of the Boston Business Journal Future of Healthcare Event on April 7th

Spring was proud to sponsor the Boston Business Journal’s breakfast event earlier this month. The title, “The Future of Healthcare,” is a critical point of discussion for our team and our clients day in and day out, and carries more weight now since the pandemic highlighted critical system gaps. Our consultants continuously look for innovative solutions that help organizations mitigate the impacts of rising healthcare costs, attract and retain employees, address behavioral health, and ultimately frame insurance and employee benefits in a more strategic way. Our work closely aligns with the market and what is trending with key players, such as insurance carriers, healthcare providers, technology vendors, and more. As such, we were delighted to get the inside scoop directly from industry partners.Future of Healthcare

The in-person (refreshing!) event provided much food for thought and called upon the sentiments of a range of stakeholders. Michael Dandorph, President and CEO at Tufts Medicine, provided the healthcare provider viewpoint. Andrew Dreyfus, President and CEO of Blue Cross Blue Shield of Massachusetts (BCBSMA), an industry veteran, brought the health plan perspective to the table. And Ali Hyatt, General Manager of Provider Commercialization and Marketing at Amwell, a telemedicine company, rounded out the discussion.

While the panelists all brought different points of view, there was a clear consensus as to what areas of healthcare need the most attention, and where the industry should focus in order to shape a more positive “Future of Healthcare.” A common thread was the need to view healthcare through the lens of the consumer (the patient) and find ways to improve that experience. We repeatedly heard the word transformation, meaning we all need to reframe our thinking and our approach to address the following key areas:

  1. Affordability

It’s no surprise that affordability was front and center, as healthcare costs continue to climb. As Dreyfus pointed out, the problem only got worse when COVID-19 necessitated paying higher salaries to staff, and caused premiums to increase. The rise of high-cost specialty drugs, which now represent around 25% of healthcare spending, and the consolidation of healthcare systems add even more fuel to the fire. As a result, employers are increasingly shifting more of the health plan costs to their employees, creating real barriers to care. Dreyfus cited a survey that found that in Massachusetts, half of the public has delayed or avoided necessary care due to costs. And as Hyatt pointed out, access is the most important driver of affordability. It is lack of access that tends to escalate prices for all parties within the healthcare system.

But enough about the problem; we all know it’s grim. When it comes to solutions, the panelists had ideas. Amwell is focused on making things like follow-up treatment, appointment making and care regimens easier to build an infrastructure that yields better outcomes. Tufts Medicine is working to build trust with consumers to help them better manage their health proactively, so that perhaps the patient never has to come to the hospital at all. Dreyfus emphasized the need to move away from the current fee-for-service system, where physicians earn less if they can keep a patient out of the hospital, which is backwards. “We should be paying for health and outcomes,” stated Dreyfus. High costs in a pandemic-stricken environment have pushed people away from engaging with healthcare systems and added to stress, leading to increased issues surrounding…

  1. Mental Health

The speakers came at mental health from multiple angles. There is the obvious problem, which is that COVID-19 took immeasurable tolls on mental health. For as much good that technology has done regarding the flexibility to “work-from-anywhere,” it has also been detrimental. Dandorph pointed out that remote work for many just means logging on earlier and signing off later, with almost no down time. Hyatt added that a recent Microsoft study showed that employees were pulling an additional “third shift” from 9-10PM, feeling the need to log back in at night after tending to family or other obligations. Beyond work pressures, we also have retirees and seniors to consider, who have been isolated, vulnerable and afraid since the onset of the pandemic, and have been exhibiting increasing signs of depression and/or dementia as they struggle with loneliness.

Then there is the more specific problem, which is burnout within the healthcare industry. Dandorph dubbed this the “pandemic before the pandemic,” with suicide rates among physicians more than double that of the general population. COVID-19 amplified things, and staff has been retreating ever since, adding to the labor shortage we are seeing across all sectors. To solve for this crisis, the panelists stressed the need to simplify processes to relieve the burden on healthcare professionals. They are looking at ways to eliminate clinicians spending hours on the phone for pre-authorization processes, or typing up notes, and ultimately remove steps when possible. By integrating automation technologies and digitizing routine tasks, not only will staff get back time, but administrative costs should also go down.

The good news is the stigma around mental health has fallen – maybe not completely, but significantly. For their part, BCBSMA has dramatically expanded their staff in this area, adding around 17,000 social workers, psychologists, psychiatrists and others. In some cases, the health plan is paying mental health practitioners more to bring them back into insurance networks, as they are often separate due to administrative burden. BSBCMA has also committed to pay at parity for mental health visits indefinitely.Employee Burnout

The panelists agreed that all the touchpoints of healthcare are inter-related; you can’t have a strong system if one cog in the wheel is poor. Specifically, the mental health component can be helped in part by…

  1. Digitization

Telehealth was a hot topic at the Boston Business Journal event. While it was even higher during the height of the pandemic, Tufts Medicine is still seeing about 80% of behavioral health visits and  15%-20% of all healthcare visits in a virtual format.

In summary, there’s no going backwards. Telehealth is here to stay, and Hyatt told a memorable story highlighting its value beyond mere convenience. She described a patient treated by Amwell who, at the time did not have a primary care physician (PCP) and was struggling with bronchitis systems. He was a smoker, mid-50’s, with various health issues such as emphysema and high blood pressure. He remembered he had access to Amwell and through his virtual visit, the clinician was able to discern that his nebulizer tubing was cracked, that he was not taking his blood pressure medication, and that his wife’s cuff he had been using wasn’t the right fit. After the visit these problems were resolved and he was enrolled in a care management program through the insurer from which he receives nutrition tips, reminders about appointments, and more. As Hyatt put it, “This was a consumer who would have gotten lost in the system.” Dreyfus agreed that seeing patients in their home environment can be extremely valuable, as the clinician can do things like look into their fridge to get a gauge of their diet, look into their medicine cabinet to understand drug-to-drug interactions, or flag things like rugs that could cause a fall.

Telehealth does not work for every medical issue, and some still prefer in-person care. Importantly, Dreyfus flagged up that someone seeking mental health services, for example, may not be comfortable doing so in their home, which could be the source of their stress. But as Hyatt pointed out, we shouldn’t be viewing it as telehealth versus in-person care, but how it all works together. The panelists think of telehealth as the beginning of a series of services that are more focused on the patient experience with the goal of increasing…

  1. Consumer Engagement

As Dandorph explained, a virtual healthcare visit is one aspect of where the future of healthcare is going, but we need to think about digital more broadly. He pointed out that in the tech industry for example, they have figured out how to engage consumers and be a regular part of their lives without being intrusive. Healthcare isn’t there yet. But if we can engage patients with their health early and often, and make their care needs and system navigation easier to understand, the result will be better outcomes and lower costs across the board. Dandorph introduced the concept of food as medicine and suggested partnerships that could enable all types of populations to eat healthier.

There are myriad ways to achieve such engagement, and one of them pitched by Dreyfus is to make the home the new locus of care. We were able to figure out at-home COVID-19 tests, so why stop there? Are there other tests or treatments that could be out-of-the-box? With the appropriate clinical support, better outcomes may be more likely in a home environment, and could be more comfortable for the patient and convenient for unpaid caretakers. This is especially true for elders, where the panelists agreed that long-term care needs to be a big piece of this puzzle as we move forward.

To bridge the consumer engagement gap, Tufts Medicine is thinking differently regarding hiring and leadership. Dandorph and his team brought in leaders from outside the healthcare realm, more familiar with consumer markets, who could think differently about making those connections and building brand recognition. Hyatt echoed this sentiment. At Amwell, they prioritize having a mix of staff; a balance of those from healthcare who understand the realities and the regulatory environment, and those from outside the industry who can bring fresh ideas and rethink the consumer experience. Hyatt noted that the biggest issue at a health system in New York was around payment and billing, where patients were frustrated with the complexity. We again get back to simplicity.

While all of these innovations are fantastic, we need to remember that they are not all equally accessible, which brings us to…

  1. Inequity

Like mental health, health inequity was another issue unmasked by COVID-19. There is still a digital divide, where technology solutions may not be accessible for some. There are social determinants of health to consider, Dandorph noted, such as food access, safe housing, economics, and education. When we talk about Food as Medicine, as an example, it may not be simple for everyone due to costs or inconvenience. And as Dreyfus pointed out, we are still dealing with underlying racism in care. So, what can we do about it?

recently collected all their member data – race, ethnicity, and other measures – and published it in a transparent way, highlighting where they stand now and where they need to improve equity efforts. They also developed similar reports for healthcare systems and vendors in the region. Then, they committed to using their value-based care programs to eliminate the inequities they found. The health plan made a $25 million grant to the Institute of Healthcare in Improvement in Boston. And starting in 2023 they will be the first plan in the country to pay hospitals more for achieving equity goals, as they have in the past to improve quality of care. Tufts Medicine is focused on developing more culturally competent services, as a start, but Dandorph stressed that health inequity is a societal problem that will require stronger…Improving Healthcare Partnerships

  1. Partnership

Yes, the healthcare system in the U.S. is broken in some ways. But it isn’t just up to hospitals and carriers to fix it. The panelists emphasized that things work better when silos are broken down, admitting even their organizations could work in closer collaboration, as they are aligned on priorities and direction. Dandorph explained the need for more partnership between the private and public sectors. For example, federal regulation is needed in the realm of high cost prescription drugs. Further, the government funds 40% of all healthcare in the U.S. through either Medicare or Medicaid, and many of its members are the ones suffering most from problems related to inequity and mental health. “These are macro societal issues,” said Dandorph, and as a society we need to elevate the economic status of those vulnerable communities and work on building trust between the people and the companies who can help them. This will take more work than any of the panelists’ organizations can do

alone. It will require community leaders. It will require businesses and employers to be more involved. Just like patients need help connecting the dots of their care, we need to connect the dots between each other.

Ultimately, the first 5 focus areas can be solved for only if #6 plays a larger role. Many of the objectives discussed – shifting from a sickcare system to a healthcare system, lowering costs, minimizing complexity, eliminating disparities, driving engagement in healthy behaviors – can only be accomplished through greater and widespread collaboration and connectivity.

Organizational Change Philosophy: Time for a Makeover

Heraclitus, a Greek philosopher, has been quoted as saying “change is the only constant in life.”  If that’s true, and I believe it is, then why is it so hard for us – both people and organizations – to accept change and realign goals and objectives?  We could cite deep routed tradition at universities and colleges, pillars of success permeated from board chairs at non-profits, family values passed from prior generations at partnerships, or implanted views from shareholders.  But whatever it is, the things that once got us climbing toward the top may also be what is holding us back from reaching the next summit.

As I refine my lens as a thought leader in employee health and welfare programs, I believe traditional change philosophies may be outdated.  As organizations continue to evolve and grow, those corporate flaws that once reflected in the mirror as fine lines are becoming deeper.  Workers and customers are redefining their definition of perfection and demanding more action, transparency, and change.  Alas, our approach to organizational change requires a facelift, or maybe just a makeover. Organizational Change

I think Martha Freymann Miser, PhD summarized things well in a piece called Three Myths of Change.  In that piece she highlights 3 myths of change, which reflect some outdated philosophies of change management:

  • Change Starts at the Top
  • Prediction is Possible
  • Control Equals Efficiency

Myth Makeovers

Although it is poetic to think that change starts at the top, I think it’s more accurate to say that change starts with leaders. Those leaders may or may not be at the top. In addition, I think there is a healthy skepticism that exists in many corporate cultures making it necessary to find change agents within all areas of your organization, so colleagues can take inspiration from their peers as well as senior leaders.

The myth of prediction is possible resonates with me because that is how I live my personal life…plan, plan, plan, execute. My goal is to methodically plot things out and make calculations to predict the future and remove the unknown. However, planning does not remove risk, it just mitigates it – or at least that is what I tell myself. Martha says it best with, “We like to believe we can plan change and roll it out much like a new system in a factory.” Unfortunately, that is rarely the whole story, and organizations need to accept and embrace some modicum of the unplanned.

Given the recent COVID-19 landscape, organizations were forced to reconsider how they managed and regulated performance, which is a necessary lesson in the myth control equals efficiency.  With all the standardization and best practices (which of course have a place), it’s possible we have removed the flexibility required to be pliable and see change as an opportunity rather than an obstacle.

More important than highlighting the myths, Martha summarizes three new approaches that hit the nail on the head after we have spent the last two years living in a world where change within our personal and professional lives was not just constant but imperative.

  • Use New Metaphors
  • Do Less Planning and More Experimenting
  • Celebrate Disruption

These refined strategies require that we accept our organizational flaws since they are arguably what makes our organization special, human, and best in breed.  Instead of focusing on the laugh lines, focus on what got us to today…the laughter and experiences…and build from there. If we think like aging entrepreneurs going under the knife isn’t necessary, we can makeover our organizations (and ourselves) by shifting our mindset.  From there we can reap the benefits of a stronger organization with workers who know they are living their best lives because they are part of our workforce culture and mission, not in spite of it. Our client, edHEALTH, has a model based off of the need for change for its members, and is well versed in rolling with the punches it cannot control.

Self-Insuring a Medical Benefit Program

In the United States, over 155 million people received medical and health-related benefits through some form of employer-sponsored program in 2021, according to the Kaiser Family Foundation. As healthcare costs continue to increase year over year, it should not come as a surprise to learn that after compensation-related expenses, healthcare costs are usually the second highest expense for most employers.

Employers are beginning to ask important questions about the future of their health care offerings and turning over every stone in an effort to control these ever-increasing costs. For employers that are currently leveraging fully insured plans, a prime opportunity to lower the total cost of healthcare exists through self-funding. By transitioning to a self-funded program, employers can achieve savings of anywhere from 5% to 15% depending on their program design and cost structure.

Self-insurance has become the most prevalent way to fund for healthcare benefits. Of those employers offering employer-sponsored programs, 67% choose to do so through a self-funded program.[1]

What is Self-Insurance?self insurance

Self-insurance, also known as self-funding, is a strategy used by employers to gain control over healthcare costs. In addition to control, the significant savings achieved through self-insuring is exactly why so many are considering a transition, as a viable alternative to manage and lower costs.

Self-insurance is the process of unbundling a fully insured plan, where employers use a third-party administrator to operate the plan from a benefits and claims processing perspective. This ensures that employees are not impacted by the change. The most significant difference pertains to how the program is funded; instead of paying a fixed premium amount, employers take a portion of the financial risk associated with the claims of the program, in exchange for lower overall costs.

The incentive for incurring this additional risk directly relates to the hefty charge carriers typically add on to their fully insured premiums. By taking on this extra risk, employers strip away these insurance carrier profits and are able to reduce their healthcare spending. To protect against the catastrophic losses that may occur due to higher-than-expected claims frequency or severity, employers typically take advantage of medical stop-loss coverage.

Groups looking to move to self-insurance should focus on understanding the financial and qualitative impact of this move. For this reason, we usually recommend groups that are larger (over 100 enrolled lives) to contemplate this strategy. The reason for this threshold is that most states regulations allow companies with over 100 enrolled employees (50 enrolled employees in some states) can request the insurance carriers for their historic claims information. This can then be reviewed by actuaries to help understand and outline the financial implications of potentially taking on some of the risk associated with moving to self-insurance.

Managing Risk – Stop Loss Insurance

The largest concern when considering a self-funded program relates to the risk of the program being impacted by unexpectedly high claims – be it due to the volume of claims or due to the exposure to a handful of large loss claims. One very sick individual or a series of unanticipated smaller claims could lead to a higher-than-expected claims level in a self-insured plan. Stop-loss insurance minimizes or eliminates this risk as well as dramatic fluctuations in claim costs over time, creating a level of predictability.

Aggregate Stop-Loss – Provides employer protection for the risk of catastrophic loss by providing insurance coverage for total group claims over a certain dollar amount. Stop-loss carriers issue policies that pay when the aggregate claims amount exceed a pre-determined percentage of expected claims levels.   Aggregate stop loss is usually expressed as percentage of expected claims like 125%.

Specific Stop-Loss – Provides employer protection for individual catastrophic claims. Similar to aggregate stop-loss, financial protection is provided when the claim exceeds the pre-determined deductible or attachment point. Specific stop loss is usually expressed as a deductible amount like $25,000 per individual. For both specific and aggregate stop-loss, all claims exceeding the attachment point are covered by the stop-loss carrier and not the responsibility of the employer.

Benefits

Additional benefits to self-funding include design flexibility, cost transparency, and increased savings. Further, increased insight into the actual cost of care, administrative costs, and any loaded fees or additional expenses to the plan allow for more informed decision making.

  • Full Transparency & Increased Access to Data

Many fully insured employers don’t understand the true cost of their program or areas of claims concentration, or using a broker or advisor, as commissions are often loaded into premium rates. Additionally, obtaining claim information in a fully insured environment is challenging. Increased transparency and data with self-funding allows employers to analyze cost drivers and implement targeted programs to lower utilization costs, while increasing employee health and satisfaction. In a self-insured plan this information is easily available on a timely basis, thereby allowing employers to better understand their programs and make changes to cater to their unique demographic of employees before their next renewal.

  • Program & Design Flexibility

Every state has a unique list of mandated coverages that can add significant costs for both employers and their employees. Because self-insured plans are governed by ERISA and generally pre-empt state law, employers avoid these additional costs by allowing them to design plans that meet both employer and employee needs, increasing satisfaction for all stakeholders.advantages of self insurance

  • Financial Control

Better-than-expected claims in one year can offset next year’s expenses or reduce program contribution levels. In addition, employers may choose to purchase medical stop-loss insurance or a level funding arrangement to provide additional security and create consistency from a cash flow perspective.

  • Cost Savings

Typically, premiums paid in fully insured programs include loaded fees and industry loss trends. In a self-funded program, employers not only minimize or avoid paying these additional charges, but their costs are directly correlated to their specific experience, and not that of their peers. Tools such as consumer-directed health care, price transparency tools, specialty networks, value-based plan designs, and wellness programs all can be built seamlessly into a self-funded plan and help drive down utilization costs and the total cost of healthcare.

 

Learn More

Self-insurance remains a powerful tool in an HR team’s arsenal to control and potentially reduce the burgeoning healthcare costs, as well as provide benefits that are targeted to their population. Employers who make the change can reap immediate advantages and avoid, or at least slow down, inevitable cost increases. Our client, edHEALTH, is a prime example of self-insurance done right, where their members were able to gain savings, offer enhanced coverage, and take a more targeted approach to employee benefits. Our Consulting Team is made up of highly trained risk funding professionals with years of experience. We help employers navigate the self-funding waters and to develop the best funding strategy to meet their individual needs.

[1] (2021).  2021 Employer Health Benefits Survey. kff.org. https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/.