Health and the workplace

In the middle of World War II, finding their attempts to attract new employees stymied by a severe labor shortage and government-imposed wage controls, desperate companies hit upon a new idea: offering health insurance as part of their financial compensation packages. The idea took off, and like it or not, US employers are now inextricably involved in the health insurance – and by extension, the health – of their employees. In fact, a recent analysis by the Employee Benefit Research Institute showed that employment-based coverage was the dominant source of health insurance for 59 percent of Americans under the age of 65.

“HR managers will in many companies be the ones charged with ensuring the new measures are accepted and acted upon, which means keeping up to date with the latest developments. ”

This arrangement has worked well - at least for those who have jobs ­- but changes are on the horizon. Health care costs are on the rise for employers, with an anticipated active employee healthcare cost trend (combined medical and pharmacy rates) for 2011 of 8.2 percent, according to a survey conduct by Towers Watson in August.

At the same time, the potential financial impact of the Patient Protection and Affordable Care Act looms large, and many employers are responding by passing along additional costs to their employees: 85 percent of respondents to the Towers Watson survey said they plan to increase medical and/or pharmacy premiums for active employees in 2011.

Most employers also said they are currently focusing on compliance with the new law, rather than looking at how it might affect their longer-term benefit strategies, although they did indicate that their focus will shift to rethinking strategies and developing multiyear approaches in 2011.

This may be leaving it a bit late - although the Act's biggest changes come into force between 2014 and 2018, this doesn't mean companies can afford to take their time deciphering its implications. Some parts of the Act have already taken effect and others will do so as soon as January 2011.

HR managers - always at the sharp end of the employee/employer interface - will in many companies be the ones charged with ensuring the new measures are accepted and acted upon, which means keeping up to date with the latest developments. Below, we provide a little help in this direction by examining some essential points of the reform bill as it relates to companies and their employees.

Wellness

Many respondents to the Towers Watson survey said they plan to increase their efforts to encourage employee participation in health-related programs such as wellness programs, behavioral outcomes and health risk assessments.

This is not surprising, given the requirement in the health reform bill that employer health plans cover, at no charge, most preventive care for employees. Specifically, the law codifies the HIPAA regulations on employer-sponsored programs, which allow for employees to be given rewards when they participate in wellness activities, or when they meet certain health status targets. This means the HIPAA rules, such as the limit on financial incentives for wellness - now raised to 30 percent of the cost of coverage, up from 20 percent - will become statutory.

The new law also leaves open the possibility that the permissible wellness incentive level could be raised to 50 percent, following a review of wellness programs to ensure that such a move would not disadvantage other employees.

Large firms, at least, appear to have got the message. According to the results of the Annual Mercer Employer-Sponsored Benefits Survey, among large firms, the use of health management and consumer-oriented health plans as cost-control strategies appears to be even more important than cutting benefits and shifting costs to workers. Many large employers offer incentives - often cash, but also reductions in premiums - to workers to join such programs.

This trend is borne out elsewhere. The American Heart Association (AHA 2010) has recognized more than 1200 "fit-friendly" companies, while in a 2009 national study on prescription benefit management trends by Medco, nearly 60 percent of plan sponsors pointed to wellness programs as the single most important influence on healthcare cost containment over the next three to five years. Participation in such programs rose to 76 percent last year from 65 percent in 2008, and more than half of companies not currently offering a wellness program said they had plans to do so within the next two years.

One such employer is Boeing Inc. Speaking at the EBRI biannual policy forum, Boeing's Director of Global Benefits and Integration, Pam French, said the company sees a definite return on its investment in prevention and wellness programs.

As part of its program, Boeing offers free  health screenings to all US-based employees, who  can choose to have a finger stick blood test to check total cholesterol, LDL cholesterol, HDL cholesterol, triglycerides and glucose (blood sugar); blood pressure; and BMI and waist circumference. This information can then be used to complete a health assessment, for which they receive a $50 incentive.

Boeing also offers its employees a wellness 'toolkit' comprised of 14 elements, including a website, a monthly health newsletter, a yearly health risk assessment, weight management tools, family care resources, an employee assistance program, and exercise opportunities.

Grandfathering

A 'grandfathered' health plan is any group health plan or individual coverage that came into effect before March 23, 2010 - the date of the new law's enactment. Even if individuals re-enrol or new employees (and their families) are added after this date, the plan's grandfathered status continues.

An employee who belongs to a grandfathered health plan can add his or her dependents to the plan after the March 23 date, without affecting the plan's grandfathered status, as long as the plan allowed for dependent/family coverage before the Act was brought in.

Multi-employer and single-employer plans that were collectively bargained and were in effect on March 23, 2010, are not subject to the new rules under reform law until the date on which the last of the collective bargaining agreements relating to the coverage terminates. At that point, a collectively bargained plan would be subject to healthcare reform rules and, assuming that it is grandfathered, it would have to comply with the requirements for grandfathered plans.

Although existing plans are in this way exempted from many of the changes introduced by the reforms, there are some important exceptions. If your plan year begins six months after the date of the bill's enactment (or January 1, 2011 for calendar year plans), there are certain requirements you must fulfil, including eliminating pre-existing condition exclusions for enrolees under 19; having no lifeline limits and no restrictive annual limits; having a minimum loss ratio of 85 percent (fully insured plans only); distributing a uniform summary of benefits to participants (fully insured plans only); and barring cancellation of health insurance coverage.

From 2014, grandfathered plans will be prohibited from placing annual limits on essential health benefits, pre-existing conditions, and waiting periods of more than 90 days.

Exchanges

The concept of a health insurance exchange was a central component of President Obama's health reform initiative. In promoting health reform, Obama said that an exchange should be "...a market where Americans can one-stop shop for a healthcare plan, compare benefits and prices, and choose the plan that's best for them... None of these plans should deny coverage on the basis of a pre-existing condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs."

Under the reform bill, from 2014 employees who qualify for an affordability exemption to the individual mandate but do not qualify for credits will be able to join an exchange plan using their employer contribution. Exchanges aim to offer a choice of plans, establish common rules round insurance offering and pricing, and give consumers information to help them better understand their options - the ultimate goal being the creation of a more organized and competitive market for health insurance.

In theory, exchanges will make it easier for consumers to compare costs across plans, with the organization and standardization of covered services and cost sharing (for example, deductibles, coinsurance or co-payments, and out-of-pocket limits). The intention is to promote competition on the price of coverage and prevent or minimize the potential for plans to vary their benefits in an attempt to attract healthier than average enrolees.

Employees should be able to get transparent information from an exchange about such provisions as covered benefits and premium costs, as well as details of previous performance in managing long-term illnesses, encouraging wellness and providing customer satisfaction. Problems with billing or access to plans could also be dealt with.

Exchanges could be used to facilitate enrolment and premium payments for people buying their own insurance or those who work for smaller companies. (This function is usually taken on by the employer in the case of larger businesses.)

On October 1, California became the first state to begin work on a health insurance exchange. Although California's exchange will not be operational until 2014, when the majority of health reform provisions kick in, the fact that it is in the vanguard could mean its exchange becomes a model for those that follow.

Five categories of coverage plans will be offered on the California exchange, ranging from the least expensive catastrophic coverage plan to platinum plans with arrays of benefits. Consumers will also be able to use the exchange to find out if they are eligible for federal subsidies to help pay for their chosen plans.

The history of employer-sponsored healthcare

During World War II, following the imposition of widespread wage and price controls by the government, companies were casting about for a solution to the continuing labor shortage. They began offering health insurance as part of their employment contracts, capitalizing on the Stabilization Act of 1942, which exempted fringe benefits from caps on salaries and wages.

After the war, the National Labor Relations Board ruled that health insurance should be considered to be part of an employee's wages in the sense of the law. This gave employers the right to negotiate on the subject, cementing the involvement of employers in employee healthcare.

From very early on, employers' contributions to employee health plans have been exempt from employee taxable income, providing yet another incentive for them to include health benefits as part of a compensation package. As a result, the employer-sponsored model of health insurance became part of the everyday reality for the majority of employed Americans.

America's best employers for health 

In June, 66 companies were presented with the 2010 'Best Employers for Healthy Lifestyles' awards by the National Business Group on Health. The awards recognize large employers for their commitment to creating healthy work environments and encouraging their employees to make healthier lifestyle choices.

"Employers all across the nation are recognizing just how important a healthy workplace and a healthy workforce are to improving productivity as well as controlling healthcare costs," said Helen Darling, President of the NBGH. "The 66 employers that we are recognizing this year exemplify the kind of innovation and commitment that's possible to providing lifestyle improvement programs which encourage healthier lifestyles for employees and families."

Winners of the Best Employers for Healthy Lifestyles awards were honored in one of three categories: Platinum, for established workplace wellbeing programs with measurable success and documented outcomes; Gold, for creating cultural and environmental changes that support employees who are committed to long-term behavior changes; and Silver, for employers who have launched programs or services to promote living a healthier lifestyle.

2010 winners of the Best Employers for Healthy Lifestyles Platinum awards were:

• Aetna
• Andersen Corporation
• Baptist Health South Florida
• Cerner Corporation
• CIGNA
• Intel Corporation
• Mayo Clinic
• Medtronic
• Michelin
• Nationwide Mutual Insurance Company
• PepsiCo, Inc.
• Pitney Bowes Inc.
• Quest Diagnostics
• Union Pacific
• Unum
• UPMC (University of Pittsburgh Medical Center), UPMC Health Plan

Boeing's Wellness Toolkit

Healthy living tools offered by Boeing to its employees include:

1. www.BoeingWellness.com
   With content powered by the Mayo Clinic, offers detailed information on a wide range of health topics, as well as interactive online tools.
2. BoeingWellness health letter
   A customized monthly newsletter created by the Mayo Clinic containing practical information on wellness topics and tips for healthy living.
3. Health risk assessment
   An interactive tool on the BoeingWellness.com site. Participants answer a secure questionnaire and receive a personal health report to help them understand their risk areas.
4. Weight management tools
   Tools available online include Weight Watchers and the Mayo Clinic Healthy Weight Program. Other tools include on-site fitness centers and discounts on fitness equipment and gym memberships.
5. Employee assistance program
   Connects employees and their families to counselling professionals, covering the cost of up to six sessions per issue per year.
6. Family care resources
   Provides referrals for services such as day care, family care and elder care, and for household services such as home improvement contractors and pet care.
7. Stress management website
   A 'one stop shop' for all stress-related resources offered by the company, including links to the employee assistance and family care resources programs.
8. Exercise opportunities
   Boeing offers on-site fitness centers or discounts on gym memberships to employees and their families.
9. Flu prevention programs
   North American employees are offered free flu shots and self-care tips each autumn.
10. Free & Clear Quit for Life
    A 12-month quit tobacco plan gives employees access to a personal coach.

Money for exchanges

In early October, Secretary of Health and Human Services Kathleen Sibelius announced $49 million in planning grants to 48 states and the District of Columbia to assist them in establishing health insurance exchanges.

Making the announcement, Sibelius pointed out that those who do have health insurance through large employers pay higher costs, "because they can't pool their costs or spread the risk."

"That's why the Affordable Care Act helps states create exchanges, so individuals and small businesses can band together, have the same purchasing power as those big employers, and get a fairer deal when it comes to their health care. Today, we're providing critical resources to help states take the first step toward creating these competitive marketplaces," she said.

Individual states will be eligible for help with:

• Determining of IT technology and infrastructure need to be upgraded.
• Creating partnerships with organizations in the community organizations.
• Establishing call centers to answer questions from consumers.
• Setting out the statutory rules needed to build the exchanges.
• Hiring staff to meet ongoing needs.
• Coordinating eligibility and enrolment systems across Medicaid, the Children's Health Insurance Program (CHIP), and the exchanges.
• Putting in place performance metrics, milestones, and ongoing evaluation.