Should employers pay off student debt?

higher ed costIt is the season for graduation, so student debt is on my mind. I have a child graduating high school in a few weeks, which means I am thinking a lot about the cost of higher education.

Student debt is out of control – let’s just get that out of the way. Yes, higher education has become very expensive and many people cannot afford the retail costs. Many students do get some forms of financial aid (including scholarships, grants and loans) but many put themselves into way too much debt for an education that may be marginally better than one at a lower cost alternative.

So, in an attempt to attract younger employees (who are mired in this debt) some employers are now helping to pay off their employee’s student loans. Sounds like a great way to attract talent, right?

It could be, but as the article notes, this does not tackle the larger issue of why higher education is so expensive.

Offering this cash pay-off may also create a disincentive for those who are currently debt-free. What if you put yourself through college, working two jobs in the process, and emerged with a degree and no debt? Good for you, right? So, how do your total rewards compare to your peer who accumulated debt? Are you, the employer, rewarding someone more for having this debt? Is that what you want to reward?

I know that student debt is not necessarily a choice, and that these payments really do not amount to a lot for any individual. However, based on the Employer Participation in Student Loan Assistance Act noted in the article, some want these payments tax-free up to $5,250/year (or $437.50/month).

Payments that high can create a bigger total reward gap among your peer employees. This gap may already exist within your organization, depending on which employees cover their dependents (if any) on their health care benefits, for example. In that case, you may be rewarding families more than single employees.

I am more concerned about yet another employer-funded benefit emerging instead of tackling the greater issue of overall cost of higher education (and educating potential students on the true value of higher education at different price points).

That said, tread lightly in this direction, should you choose. It is really hard to take away a benefit in the future, so offer only with this caveat in mind. As we saw with Starbucks recently, jumping too quickly into a response can also lead to a swift backlash.

Implicit Bias is Real! Now do something about it, please…

This is the first thing we should all understand – we ALL have our preconceived notions and regularly apply them to what we know. Humans are made to compartmentalize things. It is how we organize, think and learn.

These preconceived beliefs can get in the way of what we say and do everyday. This has been bothering me for a while – partly due to the “me too” movement, but also out of the “Black lives matter” and other recent groundswelling movements.

This kind of thinking can keep us from imagining women as surgeons, minorities as leaders, or even keep us from hiring the best person for the job. Maybe you don’t realize you do this, so how can you (1) recognize this type of behavior and (2) change your ways?

If you are looking for the magic switch, I have none for you. However, science can certainly help us. This Scientific American article helps put some framework around what I have been mulling over for a while.

In the article, it notes that “A majority of people taking [the Implicit Association Test (IAT)] show evidence of implicit bias, suggesting that most people are implicitly biased even if they do not think of themselves as prejudiced.” So, we are mostly biased and don’t know that we have a problem. We are mostly living with our heads in the sand on this issue.

What scares me most is reading sentences like:

Race can bias people to see harmless objects as weapons when they are in the hands of black men, and to dislike abstract images that are paired with black faces.

-and-

White applicants get about 50 percent more call-backs than black applicants with the same resumes; college professors are 26 percent more likely to respond to a student’s email when it is signed by Brad rather than Lamar; and physicians recommend less pain medication for black patients than white patients with the same injury.

Yikes!

So what can we do about this? I think first and foremost, admit you have a problem! This is something we ALL deal with – it does not mean you are a bad human being or even racist, sexist or ageist. It does mean that we need to fight the urge to make decisions based on our “gut” feelings. Those data are clearly flawed!

Consciously associate differing opinions with your own. Get outside of your “bubble” and hear different points-of-view. Don’t let these other opinions rile you, but truly listen. You can certainly disagree, but it is okay for others to have different opinions from your own. No one needs to “win” in the point-of-view game.

Instead, I would urge you to have more conversations with diverse people. Get different points-of-view – especially when hiring! Try to get a lot of opinions on a candidate, and make sure your interviewers are from different genders, races, age groups and religious leanings.

Lastly, remember that you have a problem and you are really fighting against human nature to tackle it. Recognize when making decisions that it might be playing into the process. Really push yourself to understand why you make certain decisions. Even consider removing names from resumes when reviewing your candidate pool.

Whatever works to keep your options and minds open – the world will be a better place and you will have a better team as a result, for sure!

Why we can’t have nice things…

Hopefully everyone saw the announcement last week that business titans Amazon, Berkshire Hathaway and JP Morgan Chase were teaming up to tackle the rising costs of healthcare. This announcement noted that this was solely to benefit the collective one million U.S. employees of the combined organizations; but many of us dreamed that they would disrupt the whole healthcare industry and solve the general healthcare cost crisis in which we appear to be stuck.

That is, we were hoping until everyone in the healthcare sectors started complaining to JP Morgan’s bankers.

Wait, what??? Well, I guess that is why we won’t see any healthcare disruption anytime soon. Or, as I tell my kids, here’s why we can’t have nice things…

The reality is that way too many players in healthcare today are making a lot of money (from insurance companies to physicians). So much money that they hire lobbyists, call their investment bankers at JP Morgan and otherwise make every effort to keep their income growing. Wouldn’t you?

One key component of why we pay so much for healthcare in the US is the lack of transparency and payment integrity issues (i.e., overcharging), resulting in large profits for many in the market. We are also so emotionally connected to our healthcare in the U.S., we have a hard time becoming a consumer when our own health is involved (especially on the pre-care/emotionally gut-wrenching side of healthcare decision-making).

In Texas, the Department of Insurance launched a mediation program to assist patients with large “surprise” bills ($500 or more). With this program in 2017, the mediation only paid the providers 14% of the charges they were billing ($1 M was paid out of $7 M in disputed charges). Keep in mind that this total is only limited to:

  • People who knew about and who took the time to use the program.
  • The provider did not have them sign a document that estimated the cost of the services, or where the actual cost actually exceeded the documented amount.
  • You were treated by a non-network Radiologist, Anesthesiologist, Pathologist, Emergency Department Physician, Neonatologist or Assistant Surgeon in a network hospital.

Imagine the numbers outside of that subset in Texas alone!

So, the lesson here is that we can all hope and dream that healthcare can be “fixed.” However, until we are all aligned and agree that there will be some losers in the new equation (including insurers, PBMs and even physicians), we’re still stuck with rising costs as long as we can continue to pay. I keep thinking that we’ll hit the spending limit some time soon, but it seems to just keep rising. Maybe someday we’ll find a reason to have nice things.

 

Uncertainty Is Certain in 2018 Healthcare

Wow, this has been an exciting week – the health care bills / withdrawals / repeals abound, but no resolution is in sight.

We do know that repealing the Affordable Care Act (ACA) will leave millions more without health coverage than under the current regulations – the CBO put the number at 32 million by 2026 (but, we’ll also lower the deficit by $473 billion).

While that does not seem to have support from the Senate, the uncertainty of the health care regulations is creating a lot of turmoil for insurance companies. How can you plan for the future, when the future of the health care rules might change?

NPR and Kaiser Health News (KHN) set out to see how much this uncertainty is costing consumers. If you were not aware, the insurance premiums were due to the respective state insurance boards in June. Many companies have been asked to revisit their rates and make adjustments, but what does all of this uncertainty do to the pricing?

A lot depends on the Federal subsidies in the marketplaces. If the current administration stops these subsidies in an effort to “gut Obamacare markets,” it will eliminate the “affordable” out of the Affordable Care Act for millions of Americans and many (especially healthier) people will be forced to drop their coverage due to the sharp premium increases.

It ends up, this uncertainty may cost consumers a lot next year. Per the NPR / KHN report, “In Pennsylvania, premiums next year without the subsidies would increase by an average of 20 percent, compared with 9 percent if they remain intact.”

The Pennsylvania Insurance Department further states that “Statewide average rate increases will be 36.3 percent if the individual mandate penalty is eliminated and cost-sharing reduction funding is also cut off.”

Average premiums in Pennsylvania in 2017 (without subsidies) are $533/month. That means, 2018 may have the following average premiums for those in Pennsylvania:

ACA Chart 2018

That’s just one state’s projections, and keep in mind that these are average statistics in Pennsylvania. Some will experience less and some more that what is noted above.

I am not sure who could lose their up to 64% subsidy (average of $340/month or $4,080/year in 2017) and then potentially shoulder an additional $2,300+ premium increase next year due to policy changes. That could be about $6,400 in additional premiums next year alone.

It does look like there may not be a full understanding of what health care premiums are from our current leader. I think $12-a-year premiums sound great, but even those of us with employer subsidized coverage don’t have that kind of deal.

Whatever the future holds, I hope we do not take coverage away from millions, either through mandate or affordability. Many employers are also struggling with affordability issues, and certainly do not receive any Federal assistance.

I do agree that all sides need to come together and come up with something to help fix the situation we are now in. There will be winners and losers in this process, but keeping the uninsured as the ongoing loser hardly seems fair.

However, this uncertainty may kill us before we ever get there…

When can you pay someone less for equal work? When they earned less before…

I just learned that the 9th U.S. Circuit Court of Appeals ruled yesterday that you can pay an employee less than another who is doing the same work, simply because they earned less in the past. Actually, the ruling was specific to a woman who earned less; but really, this has implications to anyone who earns less on a prior job – not just women.

Think about it – have you ever taken less salary to have better benefits? What about a better work-life balance? What if you worked in a location that had a lower cost of living (which is actually what seems to have happened in this case)? Did you think that those decisions/situations might impact your salary for the rest of your life? Probably not.

We all like to think that we get paid appropriately for the work that we do. However, this is very situational. You might want more to work in a fast-paced environment. Or, maybe less if they offer you a rich pension plan or more paid time off.

In this case, the court is saying that it is okay for an employer to allow a lower rate of pay to follow you around for the rest of your life (unless someone smarter realizes the injustice and decides to be more equitable).

I know that we’re dancing on a very fine line here – especially when it comes to quality of work and pay for performance. Do I like Bob’s work better than John’s because Bob and I are friends? What if Bob and I communicate well, but John and I do not. When is there bias in the decisions? We cannot often tell, nor are we always aware that we are being biased in these situations. So, we need to be careful in these valuations. But this decision does not take any variations of cost-of-living or total compensation into account, which seems very unfair.

This ruling is being sent back to U.S. Magistrate Judge Michael Seng for consideration. This judge previously decided that this behavior was grounds for bias. I ask you to think about what would happen if this happened to you, even if you are not female? Would you accept this if you found out another worker earned more just because s/he earned more in a previous job?

I hope this does end up in a higher court, as I have a hard time believing anyone would accept “prior pay” as a reason to pay someone less for very long. Seniority (years of experience), merit, quality or quantity of work all still sound reasons to differentiate pay (assuming you have as little bias as possible in the assessment). Good employees know they will be in demand, and will not tolerate discrimination for long. If possible, they will go to the smarter employer who will pay them what they deserve.

Let me know your thoughts on this topic…

Do you work in manufacturing? It might be time to revisit your HR policies…

I heard this report on the way to the airport this morning and this it deserves a mention: the women are coming to fill vacant manufacturing jobs! Maybe even the oil and gas fields?

So, what has traditionally been a male-dominated employer space may shift a bit toward attracting the female population.

What does this mean for you? Well, lots of things, but I focus on HR issues, so we’ll stick to that aspect of the implications.

Benefits

Make sure your policies are up-to-date and as female-friendly as possible. Do you have PTO or sick/vacation plans (young/healthy prefer PTO but once kids or illness is in the picture, employees prefer separate sick/vacation policies)? How about your maternity policies and coverage? How do you compare to your competitors on this front. It is a war for talent out there!

Training

Unfortunately, this also means that you probably need to beef up your sexual harassment policies and training. I’ve been in plants before, and women tend to put up with a lot of off-color remarks. However, I am also a bit older and used to living in that environment – younger women may not be so tolerant. Get ahead of any issues on this front.

What should happen if a field or plant worker becomes pregnant? What will you do with her job – keep her on it or move her to a desk role? What are the risks/implications of each? Please don;t consider termination! That will not end well

Other

Do you have a locker area for women? Lactation rooms close to your work sites? Is your safety gear available in female sizes?

You can see how this relatively modest shift can quickly change the dynamics of your work environment, and it is probably long overdue. Wasn’t Rosie the Riveter over 70 years ago?

rosie

Are you considering adding an ACO plan?

Employers are warming up to Accountable Care Organizations (ACOs), but is that the right option for your employees? There are already great resources on how ACOs work [i] – and I am not going to recount these details for you here. Instead, I want to help you determine if these types of plans might be a good fit for your employees.

ACOs are a product of the Affordable Care Act (ACA), but they are not completely unfamiliar territory for those of us who have been around a while. HMOs have a rather negative connotation to many of us who were enrolled in them 20-ish years ago, but they are very much an older and less tech savvy model of the ACO. If an ACO is streaming music from the cloud, and HMO is a cassette tape. They may sound alike, but they are fundamentally different.

Service Area Issues

A few important aspects of these plans have changed. Like HMOs, ACOs are specific to a particular service area, as they have to have a hospital network to succeed. So, to the extent possible, you will need to have a carrier knit together your ACO offerings if you have multiple locations, or have a benefits administration system that is smart enough to know who is eligible for which plan (and also reassign eligibility should an employee move service areas).

Cost Savings

The older HMOs relied on restrictions to care to drive costs savings. This added more administrative hassle (to both members and providers) and potentially to inappropriate restrictions for patients whose doctors were not good at documenting their case for the necessity of the care.

As the pendulum swung from the old model of restriction to a newer one of freedom, the new way to help control costs was to make the member foot the first part of the bill to a greater extent than they had to do in years – hence, the birth of the high deductible health plan (HDHP), or consumer driven health plan (CDHP).

Many employers added HDHPs/CDHPs over the last few years – we were looking for any way to help mitigate the rising medical plan trend. The main problem with this approach is that consumers really don’t have any easy ways to understand health care costs, much less become a smart consumer. 

Yes, we were all surprised when we went to the pharmacy in January and had a $300 fee, but that did not necessarily help us become better consumers. Many of us just grumbled under our breath and paid the bill – especially if our employer help us with some seed money in our HSA/HRA (or other savings) accounts.

But what about all of those great consumer tools? Even the best built tools and resources only help for some situations – I am probably not going to search for the lowest cost emergency room when I think I am having a heart attack. Nor do I necessarily understand why one place might charge more than another – maybe the more expensive provider is better quality? How are we to know, when health care quality is not well defined by anyone, much less your employees?

Accountability

For an ACO to work correctly, the accountability shifts from the member in the HDHP back to the provider, but with the technology to make the process (hopefully) much smoother. That sounds great, right? Doctors can help me navigate the system, their nurses will call and check on me when I forget to refill my diabetes medication, and they will help me navigate the complex health care systems.

However, we’ve just spent the last few years telling members that they had to be accountable!? No wonder employees are always confused. It’s like we’ve just told them butter is better than margarine, after years of pushing margarine. We give up!

That said, many of your members may really like the concept of having more savvy advocates for their health care – especially if they have a chronic condition or if most of their providers are already in the narrower network. Since I am a visual person, here’s how I like to think about how ACOs fit on the spectrum:

ACO Graphic

So, where do your employees want to fall on that spectrum?

  • Are they constantly confused about their plan and what is/is not covered? If so, they should move to the left.
  • In control and only asking very detailed questions? Maybe they can venture more to the right.

Savings

Will an ACO save your employer money? I am not sure we really know the answer to that yet. We do know thahave these plans do tend to attract the health (when priced at a lower price point) or those who already frequent the network. More time will help us determine if there are really savings to be had by pushing responsibilities back to providers. Unfortunately, the patient also needs to take accountability, including diet, exercise and medication adherence, Somehow, we can’t figure out how to create a plan that holds everyone accountable. I don’t think PPOs do that well, either.

Network Size

The other factor on this, of course, if the network size – ACOs typically have a significantly smaller network than most PPOs and HDHPs on the market. Let’s hope that some of that changes over time, as ACOs grow their network and integrate providers into their systems. 

For now, that’s another confusing factor in all of this – especially when many providers do not turn someone away when they show up and they are not in the member’s plan. Some even use non-network status this as a strategy and submit excessive bills to employer plans to exploit loopholes in non-network provider coverage. The usual and customary rates they receive are greater than the network price, so they waive any member fees and go after the insurance company with appeals and even lawsuits.

That’s exactly why some more provider accountability sounds so good to me right now, and I think (at least for now) ACOs are an option worth considering for many employers. Even if savings are unknown, increased member satisfaction with a more guided model may be the,right fit for your population, or even for you.

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[i] See the following resources: