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Consumer-Driven Healthcare

Why the Latest Healthcare Reform Defeat Shouldn’t Be a Distraction from Your Health Benefits Strategy

Why The Latest Healthcare Reform Defeat Shouldn’t Be a Distraction from Your Health Benefits Strategy

10/09/2017

by Chris Byrd

 

Now that the Graham-Cassidy healthcare bill has failed, Congress will move on. We can expect it to concentrate instead on some pressing items on the calendar—things like agreeing on a continuing resolution to keep the government operating, raising the debt ceiling and reauthorizing programs like the Children’s Health Insurance Program. And of course, as we all know, congressional leadership is poised to take on the very complex issue of tax reform. In other words, after a six-month-long healthcare debate during which politicians expended a considerable amount of political and emotional energy, healthcare is largely off the table for now, barring the (unlikely) inclusion of healthcare in a tax reform package.

 

This means the Affordable Care Act remains the law of the land. While it is far from a perfect framework (and both sides of the aisle agree on that), the employer market has adjusted to it. The repeal and replace efforts of the past six months led some employers to place their benefit strategies on hold pending an understanding of what a new world order might look like. My advice: Don’t put off making decisions about your benefits strategy any longer. The deliberation and debate over a wholesale overhaul of the present system is finished. There will be some targeted efforts, most notably to stabilize the individual market, but the employer market framework is known—more of the same.

 

If there is disappointment among supporters of consumer-directed healthcare approaches, it is over the missed opportunity to pass reforms that would have expanded HSAs, restored the OTC tax benefit, eliminated the cap on FSA contributions and further delayed the implementation of the Cadillac Tax. In the absence of a broad reform bill, these supporters will continue to advocate for these provisions in separate pieces of legislation. But much of that effort may have to wait until after the end of the year, given that the attention of the tax-writing committees is fully focused on tax reform. The industry’s biggest priority continues to be to repeal, reform or delay the Cadillac Tax.

 

The market forces that are causing employers to continue to move toward consumer-directed, higher-deductible healthcare plans haven’t changed, and the trend of consumers having more skin in the game is inexorable because it works. Even without the legislative changes that would have been favorable to consumers with tax-advantaged accounts had the broad healthcare reform bills passed, these accounts will remain a very effective and attractive tool for both employers and consumers. Consumers should be making use of them, as they provide a significant benefit by helping them save money and become wise stewards of their healthcare dollars. Consumer-directed health approaches—and the tools and products that have sprung up around them—continue to be an effective part of the answer to the challenges presented by healthcare’s ever-increasing costs. As Congress gathers its energy for another round of discussion and debate—this time around tax reform—employers and consumers should not be distracted by what’s happening in Washington as it relates to their health benefits strategy.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


Spread the Word about Money-Saving Benefits and Services

Spread the Word about Money-Saving Benefits and Services

Getting geared up for open enrollment? Organizations everywhere are reviewing benefit offerings and preparing their process for this annual fall ritual. Employers are seeking to balance their healthcare spend with providing the support their diverse workforce needs.

A key strategy that remains popular with organizations is offering consumer directed health plans (CDHP). These plans are often paired with a health savings account or a flexible spending account. The percentage of employees enrolling in HDHPs has been increasing steadily over the past five years. Driving the trend, is the savings employees see with the average monthly paycheck deduction for individual-only coverage in a HDHP at about $90, compared to $140 for a PPO plan.
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Healthcare Benefits in 2017: What Employers Have to Say

It’s been a tumultuous few years for the healthcare benefits community, and as the Trump administration takes office, the changes are just beginning. To address this, the Healthcare Trends Institute recently completed a survey of benefits professionals from across the United States to learn more about the trends, preparations and expectations for the coming year.

Trends in Healthcare Benefits: 2017 Healthcare Benefits Benchmark Study

The 2017 Healthcare Benefits Benchmark Study was completed by over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Below, we will share some of the key insights and what they mean for employer groups in 2017.

Among the notable considerations for employers heading into 2017:

Employers Buying into Healthcare Consumerism

Since the passing of the Affordable Care Act in 2010, employers have been encouraging their employees to take more control of their own healthcare decisions by offering a high-deductible health plan (HDHP).

The Move to HDHP

High deductible health plans are plans that have minimum deductibles of $1,300 for individuals and $2,600 for families. One of the main selling points of an HDHP is that it combats rapid increases to monthly premiums for employers and employees, as shown by the relatively flat Medical Cost Trend over the past 4 years. The increasing popularity of these plans grew as a result of rising healthcare costs and the passing of the ACA, and pose benefits for both employers and employees:

  • For employees, high deductible health plans were designed to help them to lower premiums, focus on preventive care, shop around for affordable care, use emergency rooms only for emergencies, and ultimately take more control of their healthcare decisions.
  • For employers, HDHPs helped to combat rising premiums while shielding them from the Cadillac Tax, which was initially set to begin in 2018.

With all of this in mind, 2016 marked a milestone for healthcare consumerism, with the amount of organizations offering HDHPs jumping from 28% four years ago to 39% in last year’s survey to 53% in this year’s survey.

Pairing HDHP with Consumer-Oriented Accounts (HSA, HRA, FSA)

With this rise in HDHPs came an increase in the number of employees being enrolled in a Health Savings Account, Healthcare Reimbursement Arrangement, or Flexible Spending Account, as this year’s survey found that 51.5% of respondents’ employees are enrolled in one or more of these plans/arrangements.

By offering one or more of these arrangements, employers are demonstrating that they are committed to helping employees afford out-of-pocket healthcare expenses if and when they arise, making people-first decisions rather than money-first ones.

Notably, however, the move to HDHP does require effective communication, as there is a great deal of misunderstanding among consumers about why these plans help them and how they can use them effectively. Learn more about common misunderstandings in 5 Benefits Problems Employees Face and how to address concerns in How to Talk About Healthcare Consumerism with Your Employees.

Focusing on the Advantages

Organizations are relying heavily on their benefits programs to recruit, retain, and engage employees. Even if many employers have moved away from the traditional forms of healthcare benefits that were prevalent in the industry decades ago, the benefits offerings of today still can represent a significant investment in happier, healthier, and more engaged employees. Additionally, a well-defined benefits strategy can play a major role in improving company reputation as a leader and one that cares about its employees. In BenefitsPro’s Analysis of our whitepaper:

Respondents were asked to rank on a scale of 1 to 10 how strongly they agree with the statement “the quality of a benefits package impacts the reputation of my company,” with 10 being “strongly agree.” Not surprisingly, given that such packages are looked upon as recruiting tools, 67 percent put the statement at 7 or higher, with nearly a quarter choosing “strongly agree.”

Learn More: Download the Entire 2017 Healthcare Benefits Trends Benchmark Study

The entire 2017 Healthcare Benefits Trends whitepaper takes a much deeper look into the trends to look out for in 2017, including plans and insights from other employer groups. The national survey went to over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Click Here to Download.