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:

Is Google still searching for gender pay equity?

You may have seen that the Department of Labor is going after Google for “extreme” gender pay discrimination. You can read the latest Google response via a blog post here.

So what’s happening and why does this matter?

Keep in mind that tech companies are especially notorious for gender hiring and pay issues. Many articles have addressed the ongoing struggle to keep women in technology-related jobs, and there is even a website/network dedicated to women empowering others in these roles: www.womenintechnology.org

Since the technology field is already dominated by men, it is only natural that there exists a potential for bias, either deliberate or unconscious, against others “not like me,” including gender and race/culture. Google’s own published workforce statistics for their technology jobs support some of this behavior:

Google

Yes, Google’s tech workforce is 81% male and 57% white. That compares to the US averages of 49.2% male and 61.6% non-Hispanic, white in the 2015 data.  Note that the Google ethnicity above shows their tech workforce is 37% Asian, whereas the US average in 2015 is 5.6% Asian, so that is skewing the white percentages down quite a bit.

So why does this matter? Can’t Google hire who they want and pay their employees what they want?

Well, no, they cannot. Google is a Federal contractor, so they are subject to the pay practice rules of the OFCCP (Office of Federal Contract Compliance Programs), which requires Federal contractors “take affirmative action to ensure that applicants are hired and employees are treated during employment without regard to race, creed, color or national origin.” Gender was added in 1967, but apparently it takes more than 50 years to get the task accomplished!

It also matters because Google is a household name – it is even the verb we use for searching for something online! So, Google should know that they are a huge target for any compliance concern. They should be preemptively monitoring their HR practices and procedures for any potential issue, but apparently they were behind on that front.

The initial charge from the OFCCP/Department of Labor was for gender pay discrimination from 2014 to 2015, and the suit was filed in court in 2016. Note that in the Google blog post cited above they note “In late 2016, we performed our most recent analysis across 52 different, major job categories, and found no gender pay gap.” Is that too late? What about 2015 data? Looks like they still have a legal issue from that time frame.

I do appreciate that Google has published their compensation process online here: https://rework.withgoogle.com/guides/pay-equity/steps/introduction/. This is a valuable resource for other employers to use in their own compensation strategies. The blog post also notes that Google “recently expanded the analysis to cover race in the US.” That makes me cringe, because they actually should have been considering race before they were required to consider gender in pay equity issues, according to the OFCCP rules.

Lessons Learned

There are some lessons for all HR/Compensation managers from all of this:

  • Have a compensation philosophy and use it as your mantra
  • Define your jobs/requirements and classify them accordingly
  • Stick to your structure and try to prevent outliers
  • Assess your overall data at least annually and make adjustments where needed
  • Push back on hiring managers when you see bias in hiring/compensation decisions, where appropriate

These are not easy steps for HR – we are often already considered the bureaucracy/red tape. However, this is one front that is worth pushing back on and your legal team will thank you when you can defend your decisions in court (and can back them up with the statistical data as evidence).

 

 

Can we have an adult conversation about health care reform?

This video is about a week old, but I just found it today:

If you have the patience to watch it, John Green of the vlogbrothers (and an author of teen fiction) sums up the issues facing us with health care reform in about seven minutes. It is a bit like watching a whirling dervish, but they clearly researched the issues and have a handle on some of the trade-offs at stake.

It’s worth a watch, if only to see it all explained rather succinctly!

Will your older employees EVER retire?

According to a new Career Builder survey conducted by Harris Poll, they don’t plan to do so any time soon. One of the main reasons, according to the survey team, is financial uncertainty.

According to the survey results, “one third of workers ages 60+ (34 percent) say they aren’t sure how much they’ll need to save in order to retire.” These are employees typically within 5 year of retirement, and they don’t even know if they are near or far from being able to do so. That’s a problem not only for your employees, but also for employers who now have a large chunk of older workers who are probably ready to go, but not financially able to do so. Your employee engagement and productivity may be headed downhill.

The survey found that “when asked if they’re currently contributing to retirement accounts, more than 1 in 4 (26 percent) workers 55+1 said they do not participate in a 401(k), IRA or other retirement plan.” My guess is that if the employee is not participating, then neither is the employer; meaning, these people probably have little to no savings for retirement.

What’s worse, based on the survey results, “30 percent of U.S. workers ages 60 and older plan to retire at age 70 or older. Another 20 percent don’t believe they will ever be able to retire.” That’s 50% of workers age 60+ who plan to stick around for an additional ten years or longer!

What if those employees have health issues and/or are not fully engaged? What if they become disabled and cannot work, or insist on trying to work while not at 100%?

This seems like a looming HR crisis. How can we educate employees to save? The “head-in-the-sand” approach that seems to be prevalent with older employees is a huge disservice to themselves (and you).

Consider looking at your contribution data and specifically check on your age 50+ population. Are they currently saving? Are their savings on-track? What resources do you have to help educate them about what they need to do today to retire when they are ready?

Please take the time and effort to address this issue before it becomes a crisis for your HR department (and your employees!). They will thank you for it!

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1 CareerBuilder commissioned study of 3,411 employees ages 18 and over (employed full-time, not self-employed, non-government) between November 16 and December 6, 2016, of which 971 are ages 55+.