With the end of the year just around the corner, we are taking a moment to look back at the most popular posts on the OneExchange blog this year.

Most-read topics included benefits administration, telemedicine, disease management programs, and types of benefits being offered, including student loan repayment, workplace perks such as snow days, and changing PTO policies. We also got to know more about exchange innovator Sherri Bockhorst, a managing director of Willis Towers Watson’s group exchange business.

Here are some interesting tidbits from the top 10 posts:

On workplace perks: “New parents no doubt perked up (pun intended) when companies offered such benefits as unlimited parental leave (Netflix) and $4,000 in “baby cash” for the birth of a newborn (Facebook).”

On telemedicine: “The average telemedicine visit costs between $40 and $49…. This compares favorably with a visit to a primary care doctor ($110) or a trip to the emergency room ($865).”

On biosimilars: “The potential benefit [from the FDA approving more biosimilars] is huge… biosimilars could result in over $44 billion in savings on biologics between 2014 and 2024.”

Read on for the complete list of the top 10 blog posts in 2016:

  1. “Panda Days” and Paid Time Off: What Perks Perk Up Employees
  1. Employers Look To Private Medicare Exchanges As Alternative To Group Retiree Health Coverage
  1. Meet Exchange Innovator Sherri Bockhorst
  1. Little Known Rule Allows Some Seniors To Change Medicare Advantage Plans When Plans Drop Their Doctors
  1. League Of California Cities Partners With OneExchange On New Private Exchange Offering
  1. Employers Add Student Loan Repayment To Benefits Offerings To Attract Millennials
  1. Employee Well-being In The Workplace A Priority For Employers In Coming Years
  1. More Private Exchanges Adding Disease Management Programs
  2. Reimbursement Issues Plague Biosimilars
  1. Telemedicine Benefits Remain Underutilized

A trend toward coinsurance over copays results in Medicare beneficiaries paying higher out-of-pocket prices for their prescription drugs. It also makes it harder for seniors to predict costs because drug prices fluctuate.

Unlike copays, which are flat rates, coinsurance rates are based on a percentage of total costs. Coinsurance was previously limited to higher cost specialty drugs, but its adoption in other drug tiers now is increasing.

According to an analysis from Avalere Health, reported in a recent article in Kaiser Health News, more than half (56%) of drugs covered under the Part D Medicare benefit will use a coinsurance model in 2016. Medicare Advantage plans are also making the change, but at a much lower pace. Just 26% of drugs offered through Medicare Advantage plans will require coinsurance in 2016.

Rising pharmacy costs have been a concern not just for seniors on Medicare, but for health care consumers and providers generally. Pharmacy Benefit Managers (PBMs) have been working to manage the rising cost of drugs to avoid passing on higher costs to employees.

To learn more about the Avalere analysis, click here. To read the complete article in Kaiser Health News, click here.

According to new data from Willis Towers Watson, 56% of U.S. employers are confident that the public exchange will be “a viable option” for pre-65 retirees within the next two years. The data comes from the 2016 Willis Towers Watson Emerging Trends in Health Care Survey, which gathered responses from 467 employers representing 12.1 million employees.

Additionally, the survey found that 72% of employers intend to make moderate to significant changes to their existing pre-65 retiree health benefits. The willingness of employers to make these changes can be attributed to the continued rise in health care costs for this segment of the employee population. In other words, costs rise, and employers need to take action.

In a recent article for Business Insurance, John Barkett, senior director of policy affairs for Willis Towers Watson, said, “Employers are seeking alternatives to providing their retirees with the same group health care coverage they offer active employees. Many employers have already transitioned their post-65 retirees to original Medicare plus private individual Medicare plans or are planning to. This keeps costs down and retiree satisfaction up. However, because Medicare is not available to younger retirees, employers are looking elsewhere for a solution.”

To read the article in Business Insurance, click here.

To read the complete press release from Willis Towers Watson, click here.

According to Kaiser Family Foundation data, just 23% of employers with over 200 employees offered retiree health benefits last year. But that statistic doesn’t tell the whole story.

Rather than exiting retiree benefits, a growing number of employers are looking to other avenues to provide benefits to retirees, including private Medicare exchanges.

According to John Barkett, director of policy affairs for Willis Towers Watson, the private exchange option is appealing to employers for a variety of reasons. In a recent article for Business Insurance Barkett said, “[A private Medicare exchange] allows employers to make coverage available with predictable costs and in an affordable way.”

Barkett noted that an exchange also allows employers to offset the cost of the benefit for both themselves and retirees by creating and making contributions to tax-advantaged health reimbursement accounts (HRAs) on behalf of retirees.

While traditional employer-sponsored retiree health coverage continues to decline, data from Willis Towers Watson shows that this alternate approach is on the rise. One third of U.S. employers surveyed by Willis Towers Watson reported that they have already transitioned to a private Medicare exchange for retiree benefits and two-thirds are considering it by 2018.

For the complete article in Business Insurance, click here.

Sherri Bockhorst

For highlights of my perspectives in articles and other forums, see links on LinkedIn and Twitter.

This post is part of our Exchange Innovator Series featuring leading private exchange, health care reform and Medicare experts from Willis Towers Watson. See Joe Murad and John Barkett.

I’m Sherri Bockhorst, managing director with Exchange Solutions, Willis Towers Watson’s private exchange business segment.

It’s my mission to support employers’ strategic business needs as well as help them meet their employees’ needs around their health care, finances and family situations.

At the end of the day, I’ve found that employers and employees are after the same thing: They want better health, productivity and protection from risk.

I help support the strategic direction of our group exchange for active employees through product design and development, forming strategic alliances with value-add third parties and raising the level of awareness and understanding across exchange-space participants including employers, employees, insurance carriers, and others.

My health insurance roots

Horsing around with Dusty

Most of my career has been focused on supporting large employers in the health care space. I have worked with employers under many different circumstances, including companies that needed to figure out how to provide benefits in a high-turnover environment, or how to work successfully with their unions.

My passion for my current job is based on seeing how a comprehensive exchange solution can be configured to solve each employers’ unique needs in a way that provides many options for the employer and a range of plan choices to meet the diverse needs of employees.

Exchanges like ours take the best practices that we’re figured out for large employers with the resources for a completely custom solution and package those leading-edge solutions so employers without the same resources can deploy a similarly configured approach.

We take the best thinking from our years of experience working with large employers – levers like high-performing networks, optimizing pharmacy costs, promoting and supporting consumerism, choice from the right mix of plans so employees and retirees can pick the best one for their personal needs, and integrated well-being and incentive design – and make it more accessible to smaller groups. Because why should these levers only be available to employers with a 100,000-employee workforce? The same solution could make sense for employers of any size.

At the same time, many employers aren’t necessarily ready to adopt the full depth of our solution. Account-based health plans are a good example; initially employers may want to make them available while continuing to offer more traditional options, like PPOs. Not all employers will be on a total replacement track, but having access to them is likely to be of interest.

All of those levers are embedded into OneExchange. So if and when employers are ready to change gears and adopt new strategies to achieve their goals, they can dial our exchange levers up or down at the pace that’s right for their organization.

Sailing with son, George

 

Where I see health insurance going

Right now we’re continuing to see exchanges evolve and change, and that makes a lot of sense, given how this space is developing as a new way for employers to deliver health benefits.

With employer adoption, we’re learning more about what employees will purchase, what kinds of choices and products they gravitate toward and how much they need to talk to individuals or want other types of on-demand decision support.

So that brings us back to where we started in terms of employers and employees ultimately wanting the same thing. Exchanges are fine-tuning the many ways their offerings can support the common ground between employers’ and employees’ goals – both where they are now and where they want to be over time.

As exchanges become more ubiquitous – and I believe this will happen within the span of my career – private exchanges will contribute greatly to the environment that will create transparency and choice for individuals and operate as a robust channel for delivering higher value employee benefits programs for employers.

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.

Two Towers Watson surveys reveal a notable disconnect between what retirees believe they were told by their employers about their retirement medical benefits when they retired and what employers say they offered retirees in education and information.

In March 2015, Towers Watson surveyed 3,384 retirees aged 65 and older who formerly worked at large and midsize employers. Previously, in September 2014, Towers Watson surveyed 144 HR executives at large and midsize employers that sponsor retiree medical benefits. The retiree survey showed that 43% said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired; the employer survey showed that just 9% of employers acknowledged they offered no help.

Other issues that retirees claimed employers did not discuss with them included the reality of out-of-pocket costs, and financial planning resources and decision support tools that would be available to them.

According to John Barkett, a director for Towers Watson’s Individual Exchange line of business, the disconnect points to the need for employers to redouble their efforts to make sure retirees have crucial information that could affect their financial health in retirement.

“It’s evident that employers can do a better job of educating employees about retiree medical costs and benefit options as well as explaining more clearly the support retirees can expect with benefits after they’ve stopped working,” said Barkett.

For the full press release, click here.

Happy 50th Birthday, Medicare

September 7, 2015

On July 30, 2015, Medicare turned 50. In 1965, before Medicare was passed, nearly half of the elderly in the United States lacked health insurance. Today, just 2% of people over the age of 65 are uninsured.

In fact, approximately 55 million Americans were covered by Medicare in fiscal year 2014 at a cost of $505 billion. That’s a lot of money — and there are those who worry that the high cost of Medicare cannot be sustained.

However, the 2015 report of Medicare’s trustees shows that Medicare costs have levelled off, attributable at least in part to the passage of health care reform, suggesting those fears are unfounded.

One sign of Medicare’s sustainability is that spending has seen slower growth than other forms of insurance. According to Kaiser Family Foundation data, the annual growth rate for total Medicare spending dropped from 9% (2000-2010) to 4.1% (2010-2014).

This growth has been lower than what was projected primarily because of changes in the health system brought about by health care reform. The changes include payment and delivery system reforms that emphasize coordinated care, especially for people with multiple chronic conditions, incentives that reduce the rate of hospital readmissions, and a slowdown in payments to hospitals and private Medicare plans.

In addition to slower growth in spending, the trustees’ report also indicated that Medicare’s solvency has greatly improved since passage of health care reform. Medicare’s Hospital Insurance trust fund, which is one of the two trust funds specifically allocated by the U.S. Treasury to fund Medicare, will have a surplus of about $2 billion in 2015. Trust fund surpluses are expected to continue for another 8 years, or until the year 2023 — and the fund will remain solvent (that is, able to pay 100% of the costs of the hospital insurance coverage that Medicare provides) through 2030.

That’s good news for Medicare-eligible retirees — and for their former employers who have sponsored their health care coverage.

For the full 2015 Medicare trustees’ report, click here.

Joe Murad, Managing Director with Ex

For highlights of my perspectives in articles and other forums, see me on Twitter at #WTWJoeMurad

This post is part of our Exchange Innovator Series featuring leading private exchange, health care reform and Medicare experts from Towers Watson.

I’m Joe Murad, managing director with Exchange Solutions for Towers Watson. I oversee our individual exchange solutions that serve Medicare-eligible and pre-65 retirees, part-time employees and their families.

Every day, my goal is to figure out how we can leverage our position as a technology leader to connect employers and the consumers they represent with better value while selecting health insurance. Our mission is to create cost savings for our employer-clients and provide our individual consumers with improved choice and control over their health benefits.

My health insurance roots

I grew up in Silicon Valley, surrounded by technology, innovation and disruptive market forces. Of the four start-ups I’m fortunate to have been a part of – my last two have been in the health insurance space – but I got my start in the world of relational databases.

It’s very typical of Valley ventures that innovation comes from outside an industry – from those who are not entrenched in industry thinking. Given my tech and my health insurance experience, I’m now one of the few people in our industry who has brought technological advancements to health care twice.

Joe Murad, Managing Director with Exchange Solutions

Skiing with the kids in North Lake Tahoe

I helped found the nation’s first private Medicare exchange start-up a decade ago. Today I continue to apply that expertise to help employers leverage opportunities in the individual market made possible by health care reform.

It was true then and remains true today that health insurance – the largest sector of the nation’s largest industry (health care) – is burdened by inefficiencies, making it ripe for innovation and change.

The evolution of private exchanges

Private exchanges emerged as a result of three factors coming together at just the right time. The first was the idea of managed competition in health care, pioneered by Alain Enthoven in the 1970s. We were very fortunate to work closely with Alain early on as we were designing our private Medicare exchange.

The second factor was health care reform – which took the form of the Medicare Modernization Act in 2003 and now the Patient Protection and Affordable Care Act (PPACA, aka the ACA) of 2010 – both of which created a viable individual market for health insurance, first in the Medicare world and now in the pre-65 world.

Joe Murad, Managing Director with Exchange Solutions

On the beach

The third factor is powerful platforms for consumer technology, which emerged in other industries – think of Amazon and Travelocity – and which we applied to health insurance.

Today my focus is on helping employers provide quality health benefits at a lower cost and to empower consumers with more choice and control over their health benefits. I also believe that over time our exchange model will drive more consumerism in health care – which will lead to a more efficient and effective health care industry.

Where I see health insurance going

On the Medicare exchange side, the market has hit its stride in the private sector. Two years ago when IBM announced moving to OneExchange for its retirees, the whole nation sat up and took notice of the exchange concept. It was no longer seen as a nascent technology play – it’s now understood as a practicable strategy that crosses all industries and company sizes. We are also seeing strong uptake in the traditionally conservative public sector.

As we move forward, the next logical frontier is how to make health insurance more reflective of the voluntary insurance and employment markets, which have become more personalized and portable in recent years.

If you think about all the other insurance coverage people have access to – auto, home, life – and combine that with the leading retirement savings programs – 401ks and IRAs – these are portable, individual plans and accounts that aren’t tied to where someone works. Why should health insurance be any different?

In the past, because employers were the purchasers of health insurance, they made all the decisions. With exchange technology enabling employers to offer retirees and employees more choice and control of their own health coverage decisions, it raises the question: Why can’t employees take the coverage they’ve chose for themselves when they move to another job? The law isn’t there yet but the consumer mindset is. If health reform catches up to that thinking, we will be there to provide the business model and technical solutions to enable it.

Nine out of 10 employers (89%) say retirement benefit security is somewhat to extremely important to their retirees. While employers want to honor their promises to retirees to provide medical benefits, rising costs and a lack of strategic alignment with their workforce management strategies is causing them to evaluate new alternatives.

These conclusions are based on results from the Towers Watson 2015 Survey on Retiree Health Care Strategies, which surveyed 144 HR executives at large and midsize employers that sponsor retiree medical benefits. Of these, 78% said their company currently provides health benefits to both pre-Medicare and Medicare-eligible retirees, and 70% said they will offer benefits to most of their current full-time employees when they retire.

However, according to the survey, just 38% of employers said their retiree medical benefit program is effective in attracting and retaining employees. Even fewer — 26% — said the benefit is integrated into broader workforce management and retirement strategies.

Thus far, most employers have relied on traditional levers to control costs and risk, including:

  • Shifting costs to retirees
  • Capping subsidies
  • Changing eligibility requirements
  • Limiting or ending retiree benefits for new hires

Increasingly, however, employers are looking at new options:

For pre-Medicare retirees, these include providing services that enable retirees to purchase individual health plans either directly from carriers or via public exchanges. For 2015, just 8% of employers are confident in public exchanges as a viable alternative, but confidence rises to 35% by 2017. By 2017, more than half of employers (53%) will reassess their current approach to providing retirees under the age of 65 with health benefits and will consider public exchanges and federal subsidies based on family income where the employer subsidy is nil or modest.

For Medicare-eligible retirees, nearly eight in 10 (78%) employers are already using or considering the services of a private Medicare exchange to assist retirees with finding individual coverage. In addition, insurance products are emerging that enable employers to transfer the liability for retiree medical benefits to a highly rated insurance company through the purchase of an annuity that gives retirees tax-free funding to pay medical plan premiums for life.

For more information on the survey, read the full report.

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.