The population of racial and ethnic minorities in the United States is larger than ever, and is continuing to grow at a rapid pace. This demographic change is reshaping the American work force and, as a result, is having a profound impact on the health-related benefits companies offer their employees.
This may seem surprising, because employer-sponsored medical plans often have built-in flexibility to meet diverse needs. Employees can choose their coverage plans, doctors and other plan dimensions. In fact, with new consumer-directed products, employees have unprecedented freedom to tailor a plan to their needs.
Studies show that despite this flexibility, racial and ethnic minorities as a group have less-favorable health care outcomes than nonminorities, even when insurance status, income, age and severity of conditions are comparable. [See “Disparities in health care: facts you should know”]. It also appears that employees do not access health care services in uniform ways. Fortunately, government agencies, civic groups and health plans are analyzing the issues that contribute to these disparities, and are striving to close the gaps in our health care system.
Effect on employers
Meanwhile, even if employers fund medical benefits equally for all their employees, some employees are likely to be underserved when they access the health care system. This can boost claim costs, such as when untreated minor illnesses become more serious, and create a work environment challenged by absenteeism, disability and lost talent.
Fortunately, health plans are offering employers a number of methods for achieving more consistent and appropriate health plan utilization by all employees.
- Disease management programs. Health plans may have targeted prevention programs for conditions such as asthma, diabetes or heart-related diseases to reach higher-risk groups through foreign-language videos, Web sites and other resources.
- Targeted education programs. Statistics show that African-American women experience consistently higher rates of premature births. Health plans may provide education about preterm labor, followed up by telephone calls and outreach services.
- Screening reminders and programs. Hispanic and African-American women encounter barriers to getting annual mammogram screenings, which may lead to higher breast cancer mortality rates. Health plans may be able to reach out to those who have not been screened and provide breast self-examination materials or videos.
- Spanish-language resources. Health plans should provide enrollment and plan brochures, claim information and other tools in Spanish. Some insurers may also provide Spanish-speaking nurses for 24-hour information, as well as online tools and disease management materials in Spanish.
- Online self-assessment tools. Some health insurers offer sophisticated Web resources that enable employees to input health information and receive tailored assessments of their health risks. Based on these assessments, they may receive targeted educational materials and outreach services.
The National Business Group on Health also lists concrete steps companies can take to help reduce disparities. (Source: Why Companies are Making Health Disparities their Business: The Business Case and Practical Strategies, December 2003.)
- At renewal meetings with health plans, ask about their initiatives to reduce health disparities; use the responses as criteria for renewal
- Establish a quality measurement around reducing health disparities
- Provide employees with information about appropriate health care services that are evidence-based and useful to all patients
- Ask employees about their experiences communicating with health care providers and use the feedback as criteria for your health plan renewal
- Launch culturally and linguistically competent health and wellness programs at the worksite
- Develop and disseminate culturally and linguistically competent education materials that raise awareness of health issues that disproportionately affect minorities
Which of these programs and ideas will help your organization more ably address the issue of health disparities? It’s a question you should address with your health plan provider and your human resources team.
With some modest efforts, you will be on your way to providing access to high-quality and highly accessible health care resources for your employees and their families.
Long in the shadow of higher-profile health and welfare benefits, dental coverage is stepping into the spotlight both as an agent of better employee health and a mechanism for preserving precious benefits dollars.
It's a little-known fact that inadequate dental care swallows up untold billions of dollars in productivity all across American industry. According to the U.S. Department of Health and Human Services, more than 164 million hours of work are lost each year due to employee dental disease or dental visits.
And for employees who are parents, the numbers are even more alarming. More than 51 million school hours are lost each year due to dental-related illness, which can translate into one or both parents leaving work, or staying home to attend to their children's needs.
When it comes to calculating the costs to productivity and the strain that untreated oral disease can have on your benefit plans over time, the math isn't hard to do. But what is less understood is the impact that certain diseases, which may initially manifest in the mouth, can have on your bottom line.
There is compelling research indicating a strong connection between chronic, long-term health problems, such as diabetes, heart disease and pregnancy complications, with the presence of oral disease and infection (see chart).
Teeth tell tales
While the medical evidence is still mounting, it is believed that 90 percent of systemic diseases -- those affecting many parts of the body -- also manifest themselves in the mouth. In fact, some researchers believe that the bacteria from oral infections can spread throughout the bloodstream and contribute to disease in other parts of the body.
This means that Americans -- and, in particular, employers -- need to adopt a broader view of the importance of dental care and the roles of dental care providers. Dentists can be the catalyst in the prevention, early detection and treatment of potentially deadly diseases that go far beyond the mouth.
The good news is that most periodontal disease is easily diagnosed and treated through routine dental care. But, without regular dental visits and proper dental treatment, periodontal disease can go undetected and can lead to serious, long-term health implications and a lifetime of significant medical costs.
So it's not enough to simply offer dental benefits; employers must encourage workers to use their coverage by ensuring that they understand the benefits of good dental health as well as the more far-reaching quality of life improvements they may enjoy.
For employers who have not taken the step of sponsoring a dental benefit -- or those who have noticed a drop-off in participation in their existing plans -- this would be a good time to take a fresh look at how a dental plan can help to keep employees healthy, productive and, yes, even smiling.
Mark Hanrahan is vice president of sales and service for Aetna's north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.
Consumer-directed health plans (CDHPs) typically include a health fund (such as a health reimbursement arrangement or a health savings account), a deductible and a traditional health plan, supported by a wealth of consumer tools and information. These plans give employees greater control over how they spend their health care dollars and increase their financial stake in decisions. The result is an increased employee focus on cost that tends to improve an employer's overall claim experience.
Market interest and enrollment in CDHPs is growing rapidly. This spring, 73 percent of nearly 1,000 employers surveyed by Mercer said they were either very likely or somewhat likely to offer a CDHP-style plan by 2006.
How the plans work
CDHPs encourage employees to infuse their health care decisions with the same informed consumerism they demonstrate when buying a car or a major appliance. To help them make informed decisions, these plans generally offer sophisticated planning tools, as well as information about health care costs and treatments.
Consumers are able to choose -- in consultation with their doctors -- treatment options, medications and other medical services to best meet their individual needs.
HRAs, HSAs and RRAs
Two of the most popular models are Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). Recently, Retiree Reimbursement Accounts (RRAs) have also begun to attract attention from employers who want to explore alternate or additional methods of funding employee benefits during retirement.
An HRA blends a deductible-based benefits plan with an employer-established fund, which is owned by the employer, not the employee. With an HRA, unused year-end balances roll into the following year's account, as long as the member remains in the plan. This gives the member a chance to save for future expenses. Underlying medical coverage will often include first dollar coverage for preventive care benefits.
HSA: A different animal
Health Savings Accounts are tax-advantaged accounts for both the employer and employee. Unlike an HRA, the funds in an HSA are owned by the individual and held by a trustee (a bank, insurer or other entity).
HSA funds can be invested, and earnings grow tax-free. Distributions for qualified medical expenses are also tax-free. Accumulated HSA funds automatically roll over from year to year and are portable.
Contributions you as an employer make to an HSA are excluded from the income of employees. Your employees' contributions to the HSA can be made on a pre-tax basis as part of a cafeteria plan offering, or, if they choose to use after-tax dollars, they can claim the amount as a tax deduction.
RRAs -- an alternative for retirees
In a Retiree Reimbursement Account, a type of HRA, funding is entirely employer-funded. Contributions are made to the employee's account to reimburse qualified health care expenses in retirement.
Employers offering RRAs have significant control over how the plan is structured, flexibility regarding contributions and are not required to maintain an underlying medical plan.
Only scratching the surface
Clearly, there is a lot more to these plans than we can cover here. You should consult with your insurance broker or consultant and your company's financial advisers to assess the various consumer-directed plans and their associated funds in light of your overall benefits strategy.
You may find that these trend-setting plans are just what you need to maintain high-quality, affordable health benefits for your employees. Mark Hanrahan is vice president of sales and service for Aetna's north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.
CDHPs, as offered by most health plan carriers, are comprised of three essential components a health fund or account, a deductible-based health plan and Web-based education tools with information to help members make more-informed health care decisions. Below is an introduction to CDHP funding options.
Funding good health
When CDHPs first began appearing a few years ago, early adopters offered one account option: the health reimbursement arrangements (HRA). But employers now have four options HRAs, HSAs, RRAs and FSAs. This increase in options is fueling the adoption of CDHPs. For example, a recent study by the industry group Americas Health Insurance Plans found that the number of people who have Health Savings Accounts (HSAs) one of the newest types of CDHP has more than doubled since September 2004 to over a million people.
So, what are each of the CDHP options?
An HRA is a fund that the employer establishes and solely funds, and which employees can use to pay for qualified medical expenses. Account balances can be carried over at the end of the year. If the employee leaves the company, however, the account does not travel with them.
As the sole funder, this can work in an employer’s favor and may make the fund a useful retention tool. Another potential benefit to employers is that they might be able to deduct reimbursements of employee medical expenses made from the HRAs as business expenses.
A health savings account is a tax-advantaged account created to pay for medical care expenses. But, unlike the employer-only funding feature of the HRA, you, your employees and their family members (or any combination) may contribute.
Your employees can contribute to the HSA on a pre-tax basis as part of a cafeteria plan offering or may use after-tax dollars. HSA funds can be invested for tax-free growth and withdrawals for qualified medical expenses are also tax-free. In addition, leftover HSA funds automatically roll over from year to year.
Note that, unlike an HRA, the money in an HSA is portable: any dollars an employer places into employees’ accounts become the employee’s money, traveling with them if they leave the company.
Retiree reimbursement accounts are like the original HRAs, except they reimburse medical costs only after a worker retires. Employers create RRAs for active employees, then employers (and only employers) credit the accounts.
A key feature of the RRA is that the employer retains control over the plan design. This means, for example, that employers can put in a place a schedule for vesting of the credits.
Also, RRA contributions can be extended into an employee’s retirement years, potentially making it a flexible and valuable retiree benefit.
A flexible spending account allows an employer, an employee, or both to make regular deposits to an account through salary reduction. For employees, this money avoids both income tax and Social Security tax. As with the other approaches, money in the FSA can only reimburse qualified medical expenses.
However, unlike HRAs, HSAs and RRAs, the balances in an FSA cannot carry forward. Employees forfeit any unspent funds in the account at the end of the year. This means that employees must accurately project their anticipated health care expenses to avoid a use-it-or-lose-it dilemma.
Understanding the details
Clearly, the opportunities in consumer-directed health plans are enormous but accompanied by some complexity. The chart above is a brief introduction to CDHPs and is not exhaustive, so please consult with your insurance broker, consultant or tax adviser to assess the various consumer-directed plans and their associated accounts and funds in the context of your overall benefits strategy.
Mark Hanrahan is vice president of sales and service for Aetna’s north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.
Employers today face tough challenges when it comes to benefits, striving to maintain and strengthen their offered benefits in an environment of rising benefits costs. Increasingly, however, they are finding a powerful ally in this quest -- access to dental networks and discounts at low, or even no, employer cost.
The inclusion of dental access in employers' health offerings may actually lower overall benefits costs and reduce absenteeism. The U.S. Department of Health and Human Services estimates that more than 164 million hours of work are lost due to employee dental disease or dental visits each year. Additionally, the connection between good dental health and good overall health is well-documented. In fact, according to the Academy of General Dentistry, as many as 90 percent of systemic diseases, which affect several parts of the body, also show up in the mouth.
To help employers offer attractive dental options, carriers are rolling out new, creative products that provide excellent value for employees while demanding little or no employer subsidy. These options fall into the category of "voluntary" benefits, in which the employer's chief role is to assess program quality and provide convenient access.
One of the new options available to employers is the dental discount card. Discount cards are not insurance -- there are no co-payments, claim forms, deductibles or annual limits. Rather, for a few dollars a month, an employee can possess a dental discount card that offers significant discounts - up to 50 percent or more off of a typical dentist's charges.
From the employer's perspective, this is a very simple and inexpensive benefit to administer. The benefit is communicated to employees, enrollment is handled by the carrier and -- the best part -- the program doesn't generate dental claims or paperwork. Naturally, the employer may opt to offset some or all of the cost of the discount card -- a per-employee expense often only in the double digits.
This program can have an especially profound impact on employees who have been living without dental coverage. Even if they pay for the card themselves, the fee may be offset by the savings realized during their first dentist visit.
Offering a dental discount card to employees may be a viable option for employers who do not offer a dental plan or who no longer can afford to do so. Research indicates that dental discount programs have the highest participation rate among voluntary programs, indicating that employees appreciate the value of saving on dental services.
Many voluntary programs offer employers the flexibility to structure the discount card program to access dental services either through a preferred-provider organization or through a traditional indemnity structure. The programs can be adjusted to meet the employer's threshold of affordability, while remaining attractive to workers. Cost-sharing for the benefits might be as high as 50/50, and certain restrictions - such as waiting periods for major services and orthodontia - may be imposed.
Depending upon the carrier, employees may also have access to sophisticated online tools that help price procedures and manage benefits, and even offer tips on better dental care.
Whether you are planning to provide dental benefits for the first time, or trying to manage your existing offering more effectively, dental discount cards can deliver an excellent value for you and your employees. Always consider your options in light of your overall benefits strategy, then seek the advice of your insurance broker or consultant to investigate some of these emerging approaches. As you're assessing carriers, look for one with the following key characteristics.
A robust dental provider network with quality dentists
A range of programs and subsidy designs
Flexible billing options
Online tools to help workers manage their benefits
Whether you choose a no-cost or low-cost plan, you will be providing your employees access to services that will help them better care for their health and their family's health.
Americans spent four times as much on prescriptions drugs in 2002 as they did in 1990, according to the Kaiser Family Foundation. People are using more prescriptions (one-third of adults use between one and three per day), and they often choose newer, more expensive drugs over older, cheaper alternatives.
This is no surprise to employers, many of whom have seen their pharmacy costs rise faster than the overall expense increases in their medical plans. Such increases are consistent with a national trend reported by the Kaiser Foundation -- between 2001 and 2002, prescription spending increased 15 percent, compared with an 8 percent increase for physician and clinical services.
In response to rising drug costs, many employers are adopting aspects of consumerism in their pharmacy plans that are designed to preserve employee choice while providing information and incentives designed to reduce unnecessary costs.
One of the most common methods employers use to reduce pharmacy expenses is to adopt a tiered structure in their plan. With this approach, employees pay a smaller percentage of their prescription cost when they select a generic drug.
If they prefer name brands, employees save money by choosing from a list of approved formulary prescription products. The employee pays the most for drugs that are neither generic nor on the formulary list.
These tiered plans can be accompanied by a shift from fixed co-payments to a co-insurance model, in which the employee pays a variable percentage of the drug's cost depending upon the tier in which that drug resides.
For self-funded employers, such a program reduces claim costs because their share of the cost of generics costs is lower and their health plan can provide a lower price on formulary prescriptions due to advantageous discounts from drug manufacturers.
Many employers overlook a very powerful tool in managing their pharmacy costs: a mail-order program. These programs allow employees to buy larger quantities of certain maintenance drugs via the mail with a lower relative co-payment.
The mail-order provider is able to buy discounted medications in bulk from manufacturers and pass these savings on to employees. Employers see savings through reduced overall pharmacy claim costs.
A very costly subsegment of many employers' pharmacy expenses consists of what are called specialty drugs --- treatments for such conditions as cancer, hemophilia, hepatitis, immune deficiency, infertility, multiple sclerosis and pulmonary diseases. These drugs often are injected and require special handling and administration.
It is not uncommon for such a drug to cost hundreds of dollars and, according to pharmacy market researcher IMS Health, spending on such drugs is expected to increase 20 percent annually for the foreseeable future.
Fortunately, some health plans are offering specialty pharmacy services that provide these drugs less expensively by providing economies of scale due to advantageous vendor contracts. Some specialty pharmacy service providers may even offer around-the-clock counseling operations -- with care coordinators, pharmacists and registered nurses -- to support employees with disease-specific treatment programs. This kind of responsive service can improve the employee's health and, as a result, reduce unnecessary claim expenses for the employer.
Take steps to save
Your insurance broker or consultant can help you investigate some of these and other useful approaches to manage rising prescription drug costs.
The effect of these approaches -- combined with plan designs that provide useful information and incentives to employees for making cost-effective decisions -- can help your work force remain healthy and productive, while your health benefits costs become less of a burden to your bottom line.
Mark Hanrahan is vice president of sales and service for Aetna's north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.
When it comes to improving an sick or injured employee's chances of returning to work sooner, timing is everything. Disability services are effective in helping employees, but, when information is shared between health and disability, it enhances an employee's ability to address his or her health condition.
That's why employers are increasingly pursuing programs that offer integrated health and disability (IHD) services. These programs link medical, short-term disability and long-term disability plans, viewing employee health more holistically, which can mean better identification and resolution of tough health issues.
With this integrated model, employees who have a certain health or disability claim are asked for permission to share data between the insurer's health and disability staffs. This provides protection for health information in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Once permission is granted, case managers from both disciplines work together to achieve the greatest impact on the employee's overall health. By looking at the employee's medical needs and ability to work, the insurer can identify opportunities to help the person return to the workplace sooner and avoid an extended disability claim.
Some insurers with IHD capabilities can help you achieve even greater preventive results by integrating your enrollees' medical and disability data. By analyzing historical claims data, they may apply certain predictive models that identify members at risk for adverse health and disability events. This allows them to implement early intervention programs designed to avoid or lessen disabilities and time away from work.
Employer and worker benefits
When your insurer links medical and disability claims information, claims processes and case management, it benefits you and your employees by:
* Improving plan administration
* Providing a consistent medical case manager for the employee
* Supporting complete, efficient interactions between your employees and health and disability staff
This last point can be especially effective in helping employees cope with the intricacies of difficult medical situations. IHD offers employees and their doctors a single point of contact for interacting with the insurer on complex treatment issues, eliminating multiple phone calls and duplicative paperwork.
IHD case scenario
Let's look at an example of the IHD model in action. Imagine that David, 50, is out on disability due to low back pain. He also has diabetes, a chronic and potentially dangerous condition.
Rather than look narrowly at the back injury, David's IHD case management team would review his situation holistically. With permission, the information is shared between medical and disability case management, and the disability team learns that David was also recently admitted to the hospital after suffering a diabetic coma.
With a handle on both of these health events, the team would then develop a common plan to help David more fully understand his condition and contributing factors. The team would also be aware of the potential for co-existing conditions such as depression and help David and his physician access providers to manage the depression.
This coordination of care could help David reduce his risk of future hospitalizations by taking proactive, preventive steps.
A closer look
There are many examples of how an integrated health and disability approach can lead to improved medical outcomes and reduce employer benefits costs at the same time. You may want to get in touch with your insurance broker or consultant to analyze how your organization might benefit from IHD and smarter, clearer handoffs between the people who help manage your employees' health.
Mark Hanrahan is vice president of sales and service for Aetna's north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.
Shielded by minimal co-payments, employees have traditionally paid little attention to the actual cost of care or changed their behavior to consume health care services more efficiently. The consumer-directed model of health care is a way to encourage employees to become more economical consumers of health care.
Health care economics
The Eighth Annual Watson Wyatt/Washington Business Group on Health Survey found that nearly half of surveyed employers reported that their health care costs exceeded their budget in 2002.
Consumer-directed plans provide a longer-term strategy to engage employees by creating an opportunity for price to enter their decision-making process. These plans differ from traditional approaches to health coverage; while employers still choose how the health care plan is designed, employees assume a greater financial stake than with conventional managed care plans.
Consumer-directed plans generally feature a discretionary fund such as an individual health reimbursement account funded by employer contributions that participants can use to pay for routine medical expenses. These accounts are typically offered in conjunction with comprehensive, high-deductible health insurance.
In 2004, acceptance of and interest in consumer-directed health plans is expected to skyrocket. According to a Forrester Research study, these consumer-directed health plans will attract 2.7 million health plan participants in 2005.
As part of the Medicare reform legislation signed into law in 2003 by President Bush, consumers have new alternatives for paying for health care expenses. The legislation included the creation of tax-deductible health savings accounts (HSAs) that permit unused balances to be carried forward from year to year and to be rolled over if the consumer changes employment.
Another driving force behind the consumerism trend is the demand for more health care information that is simple and accessible. Consumers are finding it easier to become more informed and engaged in their health care benefits, partly because of widespread access to the Internet.
Well-designed consumer-driven plans provide employees access to a variety of tools and resources to help them understand, select and use their benefits more effectively. Online tools enable employees to check their health fund balances, research claims status, compare prices for medical procedures, select a doctor, e-mail customer service representatives and access health and wellness information libraries.
Consumer-directed plans respond to both employer and employee demands for a more flexible health benefits alternative. Over time, as employees become more cost-conscious, they will be more likely to help contain future costs.
However, they should be viewed in a larger context. When selecting a carrier with a consumer-driven product, employers should make sure the carrier's capabilities also include mature disease management, case management and disability programs that address chronic illness and other major cost drivers that account for most claim dollars.
Mark Hanrahan, vice president of sales and marketing for Aetna's north central region, is based in Chicago. Reach him at (312) 928-3104 or HanrahanM@aetna.com.