Promoting Health & Wellness in Health Care Reform

I must admit, there's not a whole lot in the over 2,000 page piece of health reform legislation that I do like - except for one area.  It happens to be in the area of promoting health and wellness.  There is a provision in this bill that allows for grants to be doled out to small businesses who set-up and encourage health and wellness programs at the worksite.  The thing I like most about grants versus loans is they don't have to be paid back.

I firmly believe that, if we do nothing else while implementing this huge new entitlement program, we must get a handle on healthy lifestyle choices for our employees.  Just by way of example, obesity health care related costs in this country have reached a staggering 146 billion dollars a year.  If we make health insurance available and affordable for all Americans and don't do anything to address controllable health issues - we're just throwing good money after bad.  This bill allows for grants to start flowing in 2011 and continuing for 5 years.  The specifics haven't been revealed yet but there's another dimension to this provision that is well worth mentioning.  For employers who implement health and wellness programs and for the employees who participate in them - there is a percentage reduction in the amount of premium paid in the form of reward or incentive.

Never before, that I can remember, is there a process that says if you do this you receive a discount on your premiums.  We don't yet know what the benchmarks or criteria will be but I am very encouraged about the possibilities of creating healthier lifestyle choices for American workers.  We will all benefit from that - not just the participants in the program.  Here are some of the highlights of this initiative:

• Provide grants for up to five years to small employers that establish wellness programs. (Funds appropriated for five years beginning in fiscal year 2011)

• Provide technical assistance and other resources to evaluate employer-based wellness programs. Conduct a national worksite health policies and programs survey to assess employer-based health policies and programs. (Conduct study within two years following enactment)

• Permit employers to offer employees rewards—in the form of premium discounts, waivers of cost sharing requirements, or benefits that would otherwise not be provided—of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard. The reward limit may be increased to 50% of the cost of coverage if deemed appropriate. (Effective January 1, 2014) Establish 10-state pilot programs by July 2014 to permit participating states to apply similar rewards for participating in wellness programs in the individual market and expand demonstrations in 2017 if effective. Require a report on the effectiveness and impact of wellness programs. (Report due three years following enactment)

If you would like to take advantage of implementing a health and wellness initiative at your company then email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

10 Creative Employee Benefit Strategies: Part 1

I grew up in the Lehigh Valley, lived and worked here my whole life.  I can remember a time when Blue Cross Blue Shield was the only option for health insurance and it was great coverage.  The best part about the plan, back then, was the employer typically picked up the entire premium cost and the employee deductible was very small or none at all.  Well, fast forward, the coverage is still great, the deductibles are still fairly low but the cost is just unsustainable. So much so that companies are faced with the possibility of dropping coverage all together.  Well, it's not just the Blue's that has this challenge.  It's really any insurance provider that offers very low-deductible plans.  Companies just cannot afford these extremely benefit rich plans anymore.  Employees love these plans because they have minimum, if any, out-of-pocket exposure.

If you're one of these Lehigh Valley businesses desperately trying to hold on to this type of plan structure - you simply have to consider increasing the deductible on the plan.  There's no other component that will get you where you need to be.  You can entertain increasing co-pays and co-insurance to the existing plan but none of those options will make a significant financial impact.

Now that you've made the tough decision to raise the deductible - now what?  There are some very practical things that you can do in conjunction with raising your deductibles that will lessen the impact on employee morale, as well as, cultivate more employee engagement with your companies employer-sponsored health plans.  Over the next several months, of this 10 part series, we will look at some creative ways to accomplish these goals.  Look for part 2, The Value of a High Deductible Health Plan, next month.

In the meantime, email me questions or concerns at bknauss@employeemployersolutions.com, visit my website at www.employeemployersolutions.com or just call our office at 484-892-3314.

Mandating Losses

Imagine with me, if you will, someone requiring you and your business to take on more losses.  It seems inconceivable I know but just play along for a moment.  Let's take your business for example.  Suppose you happen to carry a 95 percent collection rate on your entire receivables.  That would be great - wouldn't it?  This would mean that you only have to write off 5 percent as bad or uncollected debt.  I'm just choosing round numbers and I have no idea if that's good or bad.   Now, suppose I came into your business, with the full weight and might of the U.S. federal government and I said that a 95 percent collection rate was way too good.  You need to bring on more bad debt.  You'd think I was crazy.  Right?  You'd bemoan that this isn't how a free market system is supposed to operate - not mention, it would have the effect of eroding your profit margins.  You'd also have to pass that increase cost on to your customers.  No business owner likes to do that.  You might also have to lay off some people as a result of this added burden.  Yet, this is exactly what the federal government is mandating to health insurance companies by having them carry a minimum loss ratio of 80 percent on individual policies and 85 percent on group policies.

An insurance companies minimum loss ratio (MLR) is nothing more than the amount of all premium collected subtracted by the amount of claims for all of their policies.  The amount that's left over goes to things like overhead, salaries, administrative expenses and commission paid to brokers like me.  So, in normal profit making ventures the object is simple; grow revenues of the business and keep expenses in line to maintain a reasonable profit.  I use the term "reasonable" loosely because I'm a free market guy and I don't want companies to be punished for managing their finances well.  However, that's exactly what's taking place in this new mandate that health insurance carriers take on a minimum loss ratio.  So, if I'm currently carrying an 80 percent loss ratio on group business, I'm now going to be forced to increase my losses by 5 percent across the board.  Who do you think will feel the weight of that new mandate?  That's right, you, in the form of higher premiums.  It's no different than our example earlier with the small business who now has to write off more bad debt.

Look, let's for a moment put aside our natural inclination to want to see the "big guys" get what's coming to them.  This will end up hurting you as much as it will hurt them.  After all, how much do you really think is left over for a health insurance carrier after all premium is collected and all the claims are paid?  Not as much as you would think.  Maybe a couple of points.  Let's also not forget that these so called "evil insurance carriers" employ tens of thousands of employees in this country.  They're huge employers.  How do you think an increase in the cost of doing business will impact their jobs? 

I welcome your viewpoint, especially if you think this is a good thing.  Email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com