January 28, 2015
It’s a brand new year, but before we’re too deep into 2015, let’s look back at the posts that attracted the most readers last year. With topics ranging from wellness to private exchanges to the primary care physician shortage, here are the most popular OneExchange blog posts from 2014:
Preventative care costs employers significantly less than treatment for medical conditions and as a result, employers are looking increasingly to employee wellness programs to keep costs down. However, measuring the effectiveness of wellness programs is difficult. In this post, we explored some of the challenges of measuring wellness program ROI — and offered some advice on best practices for employers determined to crack the code.
Wellness was top of mind for employers heading into 2014, according to Towers Watson survey data. Nearly half of survey respondents said health and productivity programs are essential to their overall organizational health strategy. However, they acknowledged a disconnect between the efforts of employers (often high) and the level of engagement amongst employees (low). This widely read post offered perspectives on what employers are doing to address this issue and increase the chances that their programs will be successful.
The term “churn” used to refer to low-income Americans under the age of 65 fluctuating back and forth between qualifying for Medicaid and not qualifying. With the passage of the ACA, it now encompasses shifting eligibility between Medicaid and being able to buy health plans on private exchanges with a federal subsidy based on income levels. In this post, we broke down the concept of “churn” in health insurance as it was expanded to include overage on the public exchanges and expanded Medicaid eligibility in some states.
Towers Watson survey data revealed that retirees did not take their health care costs lightly back in the fall of 2013 when they enrolled in plans for the plan 2014. Towers Watson data showed that 70% of Medicare retirees who purchased plans on the Towers Watson OneExchange Medicare exchange reevaluated their plans to ensure that they have the best coverage to meet their needs and their budget.
In part three of this three-part series, we explored advances in telemedicine and its unique application for reaching individuals in remote areas without access to care. Technological advances allow doctors and specialists to treat their patients regardless of how far away they live from providers of the care they need. We also examined telemedicine as a means to address the primary care physician shortage that has resulted from increased enrollment in health insurance nationwide.
Like what you’ve been reading?
Keep coming back to the OneExchange blog for more compelling posts on relevant topics in 2015.
January 23, 2015
This post is part of our Exchange Innovator Series featuring leading private exchange, health care reform and Medicare experts from Towers Watson.
I’m John Barkett, director of health policy affairs for Exchange Solutions, Towers Watson’s private exchange business segment.
It’s my mission to stay on top of the ever-changing regulatory landscape of today’s health insurance market. My focus is on how health care reform and changes in Medicare impact employers’ needs and options when it comes to private exchanges. As our development teams engineer new private exchange tools and services, I advise them on how to extend and improve the exchange experience for workforces, active and retired. My goal is to make the most of new technologies and new consumerism sensibilities – like being able to see and quantify differences between health plans and how they would work for the individual consumers considering them – to shop like you would for any other major consumer purchase.
My health insurance roots
When I first got into health insurance, I had the idea that if people could truly shop for health coverage, like they did for other important life purchases, they could make better health coverage choices for themselves and have real influence back on the industry.
It sounds simple, but shopping for insurance has been mind-bogglingly hard to do for generations of Americans. In years past, the marketplace really wasn’t set up with individual consumers in mind.
Employers play a huge role in providing Americans with health coverage, and that has meant employers acting on behalf of employees and retirees – with the mantle of choice, accessibility and cost on employers – not the people who ultimately would use the coverage.
The growth of private exchanges and online public marketplaces has meant that Americans are finally getting consumer choice and leverage in their health insurance options – and that’s makes this a very exciting time to be in this field.
I studied economics back when the other social sciences – psychology, sociology, political science – were starting to apply economic models to their fields. I remember reading a psychology paper called “the Tyranny of Choice,” which described how people do not make rational decisions when faced with overwhelming choice. I think about his every time we extol the benefits of competition in a health insurance marketplace. My take-away:
– Consumers can’t benefit from competition if we don’t provide tools to simplify their options. –
And that’s what we do as a private exchange – provide people with the tools and services they need to really have influence as consumers – over their own health insurance decisions and as purchasers in the market.
Eventually I staffed the House Ways and Means Health Subcommittee when Congress was writing the Affordable Care Act. The policy debate centered on how to create a competitive health insurance marketplace. It turns out the attributes of such a marketplace – affordable plans, a simple shopping experience and market rules that protect consumers as well as insurers – are necessary for any type of exchange – public or private – to attract consumers.
Where I see health insurance going
In the years to come – and we are well on the way there – I see exchanges driving insurers to become more consumer-friendly.
Right now insurers operate as B2B companies. In an exchange environment, they must operate as B2C companies. As exchange adoption grows, insurers will compete over how they treat their customer, not just their customer’s employer. My belief is this will lead to some new thinking on the old frustrations that plague our health care system.
I also see the other groups that have been involved in health insurance purchasing, such as employers, becoming more consumer-oriented themselves – for example making more health consumerism tools available to employees and retirees.
A key consideration for this consumerism sea-change is the question: If we all got to choose our own health insurance plan, would we all pick the same one?
The answer is “Of course not!” Yet most people with traditional employer-sponsored insurance only have one or two options for coverage.
In an exchange or marketplace setting, the exchange can innovate by tailoring insurance products to individual consumer preference and consumers can enroll in products that are a better fit for their needs, budgets and lifestyles.
Overtime, this should lead to consumers and employer sponsors getting much better value for their health care dollars.
To reach me for comment on an article or a presentation, contact Melanie Meharchand, Director of PR and Social Media for Exchange Solutions, Willis Towers Watson.
The ACA’s requirement that large employers report the health coverage status of their employees was strictly voluntary for 2014. Not so for 2015. Copies of the forms must be provided to employees by January 31, 2016 for the calendar year 2015 and filed with the IRS shortly thereafter. That means recordkeeping must begin now.
The type of reporting an employer is required to do depends on which category the employer falls into:
- Section 6055 reporting is required of self-insured employers and multiemployer plans employers. The IRS will use the information in these reports to enforce the individual mandate.
- Section 6056 reporting is required of large employers, defined as those with 50 or more employees. The IRS will use this information to enforce the employer mandate.
Employers are already required to report on the value of the health coverage they offer employees on W-2 forms, which are wage and tax statements. Ben Lupin, senior regulatory advisor for Towers Watson Health and Group Benefits, calls these forms the “new health care W-2.”
According to Lupin, despite a year-long delay in the employer and individual mandates, prevailing opinion among experts is that there will be no further delays unless Congress passes legislation and President Obama signs it into law, which is unlikely.
“Pay or Play”
The employer mandate to provide health coverage for full-time employees, defined by the ACA as employees who work 30 or more hours per week, creates a “pay or play” decision, which most employers have made already. “Play” meaning to provide health coverage for full-time, active employees – which the vast majority of large employers are doing, and “pay” meaning to not provide coverage.
For employers who “pay,” there are two penalties:
- The big penalty will be applied when an employer does not cover enough of its full-time employees. “Enough” is defined in 2015 as 70% and will increase to 95% in 2016. Employers subject to the big penalty will have a fine assessed for every employee under 70%.
- The small penalty will be applied based on an employer’s failure to provide health coverage for a full-time employee. For every full-time person who receives a subsidy from a public exchange, an employer will be required to pay $3,000.
Lupin advises employers not to count on a bill passed by the House earlier this month raising the threshold for full-time employees to 40 hours a week from the current 30 hours. Even if the Senate also passes the bill, President Obama has vowed to veto it.
For more information on employer obligations for reporting, see the IRS website.
January 15, 2015
Recent data from Towers Watson revealed that by 2017, 53% of employers that sponsor health care programs for pre-65 retirees will reassess their approach.
“Pre-65 retiree medical plan sponsors have been eagerly awaiting options to deliver improved value to their early retirees. For too long, limited options and high costs have burdened employers and retirees alike. In part, these barriers have been addressed and now private exchanges can help retirees find coverage that best suits them,” said Trevis Parson, chief health actuary, Towers Watson.
Confidence is growing that public exchanges will be a viable alternative for employer-sponsored coverage for pre-Medicare retirees. While only 8% are confident for 2015, confidence rises sharply to 35% for 2017.
Looking for alternatives to traditional methods of providing coverage to pre-Medicare retirees stems from the high cost of coverage for this segment of the population.
While annual cost increases for Medicare-eligible retirees, without the benefit of Medicare but after plan changes (3.9%), are similar to those for active employees (4.0%), increases for pre-65 retirees after plan changes are much higher (5.5%). Further, 73% of employers offering medical benefits to retirees under 65 said their 2015 plan costs already exceed the cap for the plan.
As a result, employers are actively considering alternatives to current coverage models and making changes. In 2015, 61% of employers surveyed changed plan designs for their pre-65 retirees.
Considering alternatives should not be mistaken for considering ending coverage entirely. Just 4% of employers said they have given some consideration to ending coverage and subsidies — even though these retirees often have access to federally subsidized plans on public exchanges.
Even employers who are looking to end coverage do not want to leave their employees without options. Given the choice to end coverage but provide a private exchange solution that connects retirees to plans on the public exchanges, the percentage of employers that have considered this option rises to 17%.
“Pre-65 retiree medical benefits are complex,” said Joe Murad, managing director for Towers Watson’s Exchange Solutions. “Companies have to consider the excise tax, new benefit options, provider networks and subsidies along with the retirement needs of their workforce. Fortunately, with guaranteed issue, the PPACA created a viable individual market for health insurance. Public exchanges simplify access to individual plans, and private exchange solutions help ease the experience of purchasing plans on public exchanges or directly from carriers. For the first time, employers can develop a pre-65 retiree medical strategy that meets the needs of retirees and helps them manage costs.”
Click here for the full release.