by: Amy Gallagher, RIBGH member

In 2005, the Preservation Society of Newport County, also known as the Newport Mansions, was at a crossroads. The nonprofit organization paid 87% of the health care premium for its 87 full-time employees. Premium increases had run 25% to 30% for five consecutive years. When forecasting projected that health care costs would double by 2009, the organization knew it was time to make significant changes. Click here for the entire article.

Valuable Resources Presented by:

Your first 100 days as Chief Human Resource Officer: Make a good first impression for lasting success

This is a unique opportunity … one you will never have the chance to do over. How can you make the most of it? We suggest you spend these critical first 100 days at the strategic level, focused on the development of connected strategies for both the organization’s workforce and the HR function itself. Click here for entire article.

One strategy many states are using to address the problem of the uninsured is extending the age of children eligible for dependent coverage under insured group health and HMO plans. Some states are also applying this coverage requirement to stand-alone dental and vision plans, as well as to insurance policies and contracts issued in another state that cover state residents. For employers, these extension mandates raise several issues related to benefit cost and taxation, compliance, notice, and COBRA. This Update explores those issues. Click here for entire article.

Engaging employees to drive global business success:

Over the last two decades, employers’ needs and interests have moved from creating conditions and programs that result in employees who are merely “satisfied” with pay, benefits and working conditions, to employees who are “committed” to the organization and not considering a move, to those who are genuinely “engaged” in the work and mission of the organization. Click here for entire article.

Improving the value and cost of US health benefits: Could shifts in the employer role provide the solution?

This Perspective examines the history of employer-sponsored health coverage
and its current environment. Along with reviewing the different changes that
employers are debating, we discuss the health policy and insurance market
developments needed for significant shifts in the role employers play. In
addition, we offer practical considerations for employers contemplating
near-term change. Click here for the entire article.

Managing details, deadlines for health plan disclosures

Employers sponsoring health and welfare benefit plans face a dizzying array of required disclosures under ERISA: summary plan descriptions (SPDs), summaries of material modifications or reductions (SMMs or SMRs), and summary annual reports (SARs). Each of these disclosures has to contain different details and meet different distribution deadlines. Failure to meet these requirements exposes employers to a variety of risks, including courtassessed fines and liability for unintended benefits. This Update summarizes what each disclosure must contain and when it must be distributed. For complete update, click here.

Curbing obesity, smoking doesn’t save money
 
Preventing obesity and smoking can save lives, but it doesn’t save money, researchers reported yesterday.
By Maria Cheng – Associated Press
Providence Journal 2/5/08

London – Preventing obesity and smoking can save lives, but it doesn’t save money, researchers reported yesterday.

In a paper published online yesterday in the Public Library of Science Medicine journal, Butch researchers found that the health costs of thin and healthy people in adulthood are more expensive that those of either fat people or smokers.

Van Baal and colleagues created a model to simulate lifetime health costs for three groups of 1,000 people: the “healthy living” group (thin and non-smoking), obese people, and smokers. The model relied on “cost of illness” data and disease prevalence in the Netherlands in 2003. The researchers found tht from age 20 – 56, obese people racked up the most expensive health costs. But because both the smokers and the obese people died sooner than the healthy group, it cost less to treat them in the long run.

On average, healthy people lived 84 years. Smokers lived about 77 years and obese people lived about 80 years. Smokers and obese people tended to have more heart disease than healthy people. Cancer incidence, except for lung cancer, was the same in all three groups. Obese people had the most diabetes and healthy people had the most strokes. Ultimately, the thin and healthy group cost the most, about $417,000 from age 20 on.

The results counter the perception that preventing obesity will save health systems worldwide millions of dollars.

“This throws a bucket of cold water onto the idea that obesity is going to cost trillions of dollars,” said Patrick Basham, a professor of health politics at Johns Hopkins University who was unconnected to the study. He said that government projections about obesity costs are frequently based on guesswork, political agendas and changing science.

Obesity experts said that fighting the epidemic is about more than just saving money. “The benefits of obesity prevention may not be seen immediately in terms of cost savings in tomorrow’s budget, but there are long-term gains.” Said Neville Rigby, spokesperson for the International Association for the study of obesity. “These are often immeasurable when it comes to people living longer and healthier lives.”

The study did not take into account other potential costs of obesity and smoking, such as lost economic productivity or social costs.

Pinpointing employers’ health costs
 
On average, employers in Rhode Island spend $10,300 per worker last year, with limited competition among insurers boosting the cost, a survey says.
Journal Staff Report
Providence Journal 2/5/08

The average annual cost for group medical and dental benefits in Rhode Island last year was $10,300, according to a new survey by a benefits consulting firm based in Wakefield.
The survey by Bluff Head Enterprises, its sixth annual, was based on the responses of 58 Rhode Island-area employers representing more than 80,000 worker.

The survey also found that the 2007 annual cost for a single-person health plan was $5,124, more than $300 above the national average, and the average annual cost for family health coverage was $13,596. Since more Rhode Islanders elect family coverage than singe-person plans, the average per-employee cost for health insurance in $2007 reached $10,300.

Sam Slade, founder and president of Bluff Head, said the richness of Rhkode Island health plans compared with those in other states and limited competition among health insurers were key contributors to higher-than-average costs.

“Rhode Island is a bit of an anomaly. Survey respondents acknowledge that the lack of competition has a negative impact on price, yet they also openly admit to an aversion to new plans that might have a smaller network of providers than Blue Cross or United,” Slade said.
Another contradiction, according to Slade, is the desire to achieve lower costs, but an attachment to older, richer plan designs. “Everyone’s calling for less-expensive health insurance, but we in R.I. have also been somewhat more reluctant than folks in other parts of the country to adopt cost shifting design features which reduce premium rates.
Slade said the failure of health insurers such as Aetna, Cigna, Harvard-pilgrim and Tufts to break into the local market has limited competition.

The Bluff Head survey documents an average employee contribution of $1,631 per year toward the cost of employer-sponsored medical coverage. The average private-sector employee contribution was $1,740 for last year while the average public-sector employee contribution was $1,238.

Private sector employees continue to make higher health-care premium contribution than public employees but, according to Slade, this gap is narrowing. “it’s clear that the State of Rhode Island is aggressively negotiating for employee contributions on health insurance from state employees,” said Slade.

When it comes to squeezing more savings out of Rhode Island’s health-care system, he said, reducing reimbursement rates for physicians was not a viable option. “Our insurers have been successful in negotiating relatively low reimbursement rates for participating physicians,” said Slade. “I think most Rhode Islanders would be surprised to learn that R.I. health-care providers are paid, on average, less than in Connecticut or Massachusetts.”

Slade cited the recently created Health Pact Plan that offers higher benefits for Rhode Islanders agreeing to live healthier lives as a positive step in the effort to reduce health-care costs. Established by Christopher Kohler, Rhode Island’s insurance commissioner, Health Pact offers premium reductions of up to 20 percent for participants.

Webcast titled "Managing Health Care Costs in New England"
 
Managing Health Care Costs in New England, including MA, NH, VT, RI, CT, and ME. Staying Below the Health Care Cost Curve; Key Findings That Can Help You Gain Control.

In this Webcast series, we will explore local results of our health benefit cost research, including:   

About this survey:

• Largest, most comprehensive annual survey
• Established in 1986, national probability sample used since 1993
• Almost 3000 employers participated in 2006:
     -- 154 employers in New England
     -- 86 with 500+ employees
     -- 10 in Rhode Island
• All employers with 10 or more employees are surveyed
• Size groups examined separately in this report include:
     -- Small employers: 10 - 499 employees
     -- Large employers: 500+ employees
     -- Jumbo employers: 20,000+ employees

Topics addressed include:

• Average change in total health benefit cost from 1990 to 2007
• Total health benefit cost by employer size for 2006
• Upward and downward pressures on cost in 2006
• Cost jumps for smaller employers
• Cost shifting trends
• Cost sharing in 2006: employee contribution percentages, monthly rates
• Trends in prescription drug benefit cost increases
• Growth of consumer-directed health plans (CDHP)
• Plans offered by area employers; percentage of employees enrolled in plans
• Employees' use of care management programs
• Growth of HSA-based CDHPs versus HRA-based plans
• Average cost per employee compared for CDHPs, HMOs, other plans
• Medical plan choices employers say they are likely to offer five years from now
• Prevalence of retirees medical plans
• Emerging strategies and outlook for 2007 - 2008

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SEPTEMBER 2007 -- This report covers pay trends and practices for 70 countries, based on a survey with 884 participants in Canada, the U.S., and Latin America. Topics addressed include: economic trends impacting base pay in the Americas, planned base pay increases, top rewards challenges facing HR, average 2007 base salary increases, short-term incentive payout, alignment of rewards strategy to business strategy, total rewards communication vehicles, and more.

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"Mercer's 2006 Global HR Transformation Study garnered nearly 1,400 responses across Asia, Australia, Europe, Latin America, New Zealand and North America. For purposes of the study, HR transformation is defined as the process of recreating or reinventing the HR function -- such as re-engineering, restructuring, implementing new systems or a new HR service delivery model, outsourcing or co-sourcing -- with the specific intent of enhancing HR’s contribution to the business."

"Mercer's study confirms, unequivocally, that HR transformation is alive and well around
the world. Half of the 2006 respondents said they are currently in the midst of an HR transformation, while 12 percent had completed one within the past year, and another
10 percent plan to begin a transformation within the next year. However, based on the 2006 study findings as well as Mercer’s work with leading organizations globally, it is clear that a
second wave of transformation is now under way. This new wave -- let’s call it Transfor- mation v2.0 -- differs significantly from the initial wave."

"Transformation v1.0, which started about 10 years ago, focused largely on operational excellence and improved HR service delivery through process and technological enhance-
ments. At the same time, it opened the door to a more strategic role for HR -- one that has
not yet fully materialized. In Transformation v2.0, HR is challenged to deliver on those strategic expectations -- to make the human capital strategies a reality. HR can do so
through a disciplined focus on business."

"Through this paper, Mercer examines both versions of HR transformation and answer
some critical questions:

• Is HR making progress -- and in the right direction?
• Where hasn't HR made progress and why?
• How is HR transformation similar and different around the world?
• How can organizations position themselves for success in the next wave of
  HR transformation?
• What will the successful HR function of the future look like?"

Click here to read this informative and challenging white paper, which has been posted to our site with the permission of Mercer Health & Benefits.

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"Many employers are now looking to high-deductible health plans (HDHPs) paired with health savings accounts (HSAs) as a potential solution to rising health insurance costs. However, marketing a new plan to employees who are used to a traditional preferred provider organi-
zation (PPO) requires careful planning and extensive communications. This author recounts how one manufacturer introduced HSAs and enjoyed significant cost savings."  

This article will appear in the September issue of Benefits & Compensation Digest. It is posted here with permission from the publisher, the International Foundation of Employee Benefit Plans. Learn more about the IFEBP at their website: www.ifebp.org

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If you missed this meeting, or if you wish to review the information which was provided at the meeting, use the links above to download the PowerPoint presentations.
 
If you do not have Microsoft PowerPoint software on your computer, you can get PowerPoint Viewer 2007 free from the Microsoft site. Go to http://www.microsoft.com/downloads/ and then search on "PowerPoint Viewer".

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 Click Here to Download Purchaser Guide (PDF)

To help employers embrace the four cornerstones of value-driven health care as outlined by Secretary of Health and Human Services (HHS) Michael Leavitt in November 2006, the Partnership for Value-Driven Health Care has developed a "Purchaser Guide to Value-Driven Health Care." This resource will help guide purchasers of health care as they implement the four cornerstone actions of better health care - utilize health information technology, measure and publish quality, measure and publish price information, and create positive incentives for high quality, efficient care.
 
Organizations interested in joining the value-driven health care initiative should consider signing the HHS statement of support.

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National Survey of Employer-Sponsored Health Plans 2006

 Mercer News Release on Employer-Sponsored Health Plans 2006 (PDF)
 Survey of Employer-Sponsored Health Plans 2006 -- Charts (PDF)

 
Some highlights of this survey are presented below. For more details, use the links above to download press release and charts.

Rhode Island Employers (10 surveyed employers)

• Total health benefit cost for active employees increased 4.1% in 2006 to an average of $8,905 per employee. After making changes to plan design and/or plan vendors, employers expect a change in the total cost per employee for 2007 of +5.6%.
   
• The average employee contribution amount for employee-only coverage is $82 monthly for a PPO.
   
• 95% of employees covered by employer plans are enrolled in PPOs. Less than 1% are enrolled in HMOs, 4% in POS plans, 0% in traditional indemnity plans and 1% in CDHPs.

Northeast region employers (with 10 or more employees)

• Total health benefit cost for active employees increased 6.3% in 2006 to an average of $8,180 per employee. After making changes to plan design and/or plan vendors, employers expect a change in the total cost per employee for 2007 of +6.8%.
   
• The average employee contribution amount for employee-only coverage is $96 monthly for a PPO and $97 monthly for an HMO.
   
• 50% of employees covered by employer plans are enrolled in PPOs, 29% in HMOs, 16% in POS plans, 3% in traditional indemnity plans, and 2% in CDHPs.

U.S. employers (with 10 or more employees)

• Total health benefit cost for active employees increased 6.1% in 2006 to an average of $7,523 per employee. After making changes to plan design and/or plan vendors, employers expect a change in the total cost per employee for 2007 of +6.1%.
   
• The average employee contribution amount for employee-only coverage is $98 monthly for a PPO and $95 monthly for an HMO.
   
• 61% of employees covered by employer plans are enrolled in PPOs, 24% in HMOs, 9% in POS plans, 3% in traditional indemnity plans, and 3% in CDHPs.

Download the press release (PDF) for more details. For interpretation and observations of survey, contact: Deborah Wozniak in the Mercer Health & Benefits office at (617) 450-6399.

The U.S. employer and region data above and in the press release was collected through a stratified random sample and has been weighted to reflect the results of all employers in the country. The state data above represents only the employers who responded.

 Mercer Perspective: Easing the Avian Flu's Impact on Employee Welfare
      and Productivity (PDF)

This Perspective centers on workforce concerns -- issues related to the health, safety and welfare of employees.

Before, during, and after an avian flu outbreak, human resource managers, and the
protocols they put in place, will play a critical role in maintaining their organizations' ability
to function effectively.

 Mercer Avian Flu Preparedness Survey Report

 Mercer Review of Insured and Self Insured Benefits (PDF)

• Define yourorganization's benefits objectives
• Identify the current benefits package
• Understand the benefits and their limitations
• Gap analysis
• Solutions and implementation

 Marsh Global Risk Alert on Avian Flu (PDF)
(This is a large file and may take a few moments to download.)

Businesses would be well-advised to ensure their emergency-response and business-continuity plans are up-to-date and include specific planning for dealing with a pandemic. This Risk Alert aims to:
 

• Provide background information on avian flu and human influenza pandemics;
• Discuss corporate preparedness and business-continuity management (BCM)
  through the lens of a pandemic;
• Highlight the international implications of a pandemic; and
• Outline some of the potential insurance coverage issues related to pandemics.

 Business Checklist developed by CDC and Dept.of Homeland Security (PDF)
 Letter to Business Leaders from US Secretaries Chertoff, Leavitt, Gutierrez (PDF)

Employer-Sponsored Health Plans: Highlights of Mercer Survey

 Mercer National Survey of Employer-Sponsored Health Plans 2005 (PDF)

This report contains highlights from the survey results, including Rhode Island employers, Northeast region employers, and U.S. employers
 

CEO Compensation: Mercer Human Resource Consulting Survey

 Mercer 2005 CEO Compensation Survey (PDF)