Non Profits and Private Exchanges

Rather than pass along healthcare costs to employees to save money, there has to be a better way.  The recent trend among nonprofits to lower benefit expenditures has been to pass costs on to employees either in the form of higher premiums or higher payments per service.  Private exchanges are cafeteria plans updated for health care reform combining plan choices with modern decision support tools.

By giving employees a budget and a choice of options not only for medical insurance, but for all benefits, nonprofits are seeing lower costs for both employer and employee.   How is this possible one may ask?   The answer lies in the fact that most employers over insure their employees.  Keeping usage costs low, keeps premiums high.  Once employees have been given a budget and a tool to undertand how different types of insurance plans work, the choices they make differ significantly from the choices employers had made on their behalf.  More often than not, shifts are made to high deductible plans.  It turns out employees are willing to take on the risk of higher out of pocket costs when they’re using their own money to buy benefits.

All nonprofit employers should consider the private exchange as one method to lower costs without hurting employee satisfaction.

Oregon Medicaid Study – Why Health Insurance is So Important for Nonprofit Employees

The New York Times’ recent article , “What the Oregon Study Can’t Tell” by @AnnieLowrey, showed that although Medicaid recipients in Oregon did not have healthier outcomes due to Medicaid, it did protect them from financial ruin.  While it is a laudable goal to have a government sponsored health insurance programs like Medicaid improve the health of participants, the true goal of any insurance program is for financial protection.  In that measure, the program succeeds.  The health of participants needs to be thought of separately.  Many programs that set out to achieve health improvement succeed.

Nonprofits employees, who generally place more value on benefits over salary when compared to their for-profit counterparts are often more vulnerable financially.  Affordable quality coverage is more important than ever to make sure that these lower paid workers are shielded from the financial strain of illness and high medical bills.  Once that framework is put into place, the goal of a healthier workforce can and should be considered.  Organizational health goals are critically important and when reached have significant financial benefits to employers in the form of lower insurance costs and greater productivity from the existing workforce.

Health Care Reform Offers Savings to Not For Profits – Just Not Right Away

As 2014 approaches with many of the the new mandates from Health Care Reform about to come into effect, number crunchers are adjusting their estimates as to the actual costs.  In Elizabeth Dwoskin’s (@lizzadwoskin) March 28th 2013 Bloomberg Businessweek article titled “Obamacare Should Make Health Care Cheaper—Just Not Right Away” the reasons are explained.

With many new people entering the insured population, deferred care will be addressed all at once.  This can raise insurance costs resulting in healthier individuals dropping their coverage and paying the small penalty assessed.  The cycle continues as healthy people leave, rates increase at a greater pace causing more to leave.  After the initial shock subsides, having more people covered should bring down rates.

These rate changes are going to hit nonprofits harder than most.  Budget flexibility is key in handing the increases both in the overall insurance marketplace and in their current rate structure due to some of the new taxes and fees imposed by the legislation.  Long term planning and communication with employees about the changes must be implemented to come out on the other side ready for anything that new legislation throws at nonprofits.

 

 

The 2 Keys to Avoiding HCR Sticker Shock for Non Profits

Those not for profits not looking now are in for some sticker shock come their next renewal.  With new fees and new rules, the wrong decisions now can be costly down the road.

Budgeting

For the next year there are a number of new fees being tacked on to health insurance policies. While there is not much any organization can do to avoid these costs, understanding them and budgeting for them can help at renewal time in being in a financial position to absorb more rather than passing it all on to employees.  While the numbers will vary depending on some variables in the makeup of the employee population, the fees can add up to 4% of the total health care premium, a number many groups cannot swallow without serious cutbacks elsewhere.

Staffing

The number of hours an employee works this year can affect an organizations costs and responsibilities next year.  If an organization has variable hour employees who work different amounts on a weekly basis or even for certain months of the year, government mandated measurement periods have to be decided upon and tracked so that employers and employees know who is a full time equivalent employee for health insurance mandate purposes.  Based on an organizations goals, all these decisions which need to be made in 2013 will once again lend predictability to 2014 when more decisions will come to the forefront.

Health Care Prices are the Elephant in the Room

A March 29, 2013 posting by Uwe E. Reinhardt an economics professor at Princeton in the New York Times’ Economix blog (nyti.ms/14AR8oD) discusses a problem facing employers in the United States compared to other industrialized nations, health care pricing.   The range of pricing for medical services in the US varies so greatly due to the structure of both the the medical community and the payer for most services, insurers.  In many countries the payment system is less fragmented making pricing less varied for services.

One way to combat the variation is through transparency.  If consumers know and care about the prices of procedures and services, providers should respond with a more competitively responsive pricing setup.  However, due to many state regulatory structures, transparency in health pricing is not readily available to help individuals make better decisions.

The opportunity for employers, especially not for profits, where such decision making by employees can be the difference between achieving their goals or running short of funding.  Insurance companies are starting to put the tools into the hands of employees to see the variation of costs for services.  With smart plan design, employers can align the interests of the not for profits and their employees leading to cost savings without sacrificing service or quality.

Nonprofits Need Retirement Plans on Autopilot

Nonprofit employers, more so that a commercial employer need high quality benefits to recruit and retain better employees.  As often is the case, good programs gone unused or under used produce similar results as having poor benefits in the first place.  Retirement plans that don’t deliver retirement ready participants are one such example.  In the article, The Strong Case for Auto-Enrollment, Escalation, author Richard Stolz makes the case that putting both enrollment and escalation onto autopilot can go a long way towards getting employees financially prepared for retirement.

Gone are the days when benefits offered were on a checklist and if an employer offered certain benefits, no further questions were asked.  Today’s nonprofit must take into account the goals of the program and take care to make sure that the program is designed with that goal in mind.  Automatic enrollment and automatic escalation of contributions both move plan participants toward retirement readiness without a financial cost to the organization.  Coupling these programs with a rich communication program put both the organization and its employees onto the path of success.

Not for Profits: Tax preparers + health insurance exchange?

In the recent article, “Tax preparers enrolling in a health insurance exchange = Match made in heaven?” from MedCity News, author Veronica Combs discusses the possibility of the major tax preparers in the US (H&R Block, TurboTax) taking on the new role of helping individuals enroll in the the new health care exchanges being setup for next year by both the federal and many state governments.

While these companies may be capable of enrollment assistance, they are not necessarily prepared for what comes next.  After enrollment, these individuals and families, many covered by insurance for the first time, will be navigating the world of medicine and insurance that is not traditionally hospitable to the individual.  The assistance that these people will need to get the right treatment at the right price cannot easily be addressed by someone trained in enrollment.  Additionally, the fees charged for enrollment assistance, cannot possibly cover the expenses for year round advocacy that is needed.

Non profits who have part time employees or volunteers who don’t participate in their group health plan will be affected by this trend.  If the organization or if groups of non profits decide to tackle this issues together, the costs of providing year round advocacy assistance can be done at minimal expense and can benefit these individuals tremendously.    As part time and volunteer positions are critically important to these organizations, having a solution for them can only help with recruiting and retention.

 

Non Profits Can Benefit from the Habits of Imaginary Peers

In the recent New York Times article, “The Destructive Influence of Imaginary Peers,” (NYT 3/27/13 – nyti.ms/Xe6a0m) Tina Rosenberg describes how studies are showing that the strongest influence on decisions is what we believe people around us are doing.  While the article details the results of this strategy on college drinking, the concept can have an impact on not for profit employees that can contribute to the bottom line.

Often for non profit employers, the largest expense after payroll is employee benefits, especially health insurance.   The largest driver of the cost (for non profits with over 100 employees) is claims experience – the amount of money paid for medical claims.  Obviously believing that other employees are not going to the doctor or hospital is not going to change one’s decision on whether or not to go to the hospital, this concept can be useful in healthy behaviors.

As studies have shown, people who have certain healthy behaviors have lower long term health problems and are therefore less costly overall.  If not for profits can introduce this concept successfully, they can move toward lowering long term costs without a significant investment.

Do Non Profits Really Want to Make Employees Pay More for Poor Health

The Wall Street Journal recently published an article titled, “When Your Boss Makes You Pay for Being Fat.” on.wsj.com/14KY0Qc  The article details how large companies around the country are financially penalizing employees who don’t meet ‘healthy standards.’  These programs are designed to provide an incentive for employees to improve their health and thereby lower their employer’s health care costs.  While the goals are laudable, they don’t address a number of issues critical to not for profit employers:

1. Recruiting and retention – employee relations may take a hit if potential and current employees feel as if they are not wanted
2. Turnover costs – the money spent on healthy standards, may not have a long term material impact because if the ‘healthy’ employees happen to be younger or more inclined to leave, the non profit will no longer benefit from their lower medical costs
3. Discrimination – without being careful to not run afoul of any anti-discrimination rules, anything that penalizes someone with an underlying medical condition causing that person to not meet the standards, may cause significant legal, financial and PR problems down the road.

For most mid-sized not for profits, the solution requires more than just financial penalties or incentives.  Any successful program to bend the health care cost curve must always involve these three components:

• Transparency
• Responsibility
• Quality