Ninety-four percent of civilian union workers and 67 percent of nonunion workers had access to retirement benefits through their employer in March 2019. Access means the benefit is available to employees, regardless of whether they chose to participate. Eighty-five percent of union workers and 51 percent of nonunion workers participated in an employer-sponsored retirement benefit plan. The take-up rate—the share of workers with access who participate in the plan—was 90 percent for union workers and 77 percent for nonunion workers.
From the press release:
Most employers are implementing few, if any, changes to their health plans for the 2020 plan year. That’s not surprising – employers are generally reluctant to make big or abrupt adjustments to provider networks or cost-sharing that could cause pushback from employees. But many health care experts believe that if we’re ever to truly tackle out-of-control health care costs in this country, the employer community needs to take the lead.
A newly released report from Georgetown CHIR finds, however, that there are significant challenges facing insurers and employers who seek to constrain the rising provider prices that have driven the annual family premium above $20,000 this year. In six market-level, qualitative case studies, we examined strategies that private insurance companies and employer-purchasers use to limit health care costs and how these strategies are affected by increased provider consolidation. We focused on the following mid-sized health care markets, all of which had recently experienced some kind of provider consolidation activity:
Syracuse, New York
Asheville, North Carolina
Colorado Springs, Colorado
Across the six markets, we found:
Hospitals are empire-building. Hospitals’ motivations for consolidation are similar, with stakeholders reporting a pursuit of greater market share and a desire to increase their negotiating leverage with payers to demand higher reimbursement.
Payers have tools to constrain cost growth, but they lack the incentive and ability to deploy them effectively. While payers in our markets identified several cost containment strategies such as narrow networks and provider-payer partnerships, all come with downsides. Furthermore, some third-party administrators for self-insured employers actually have incentives to keep provider prices high when they’re paid a percentage of the overall cost of the plan.
Employers’ tools to control costs are limited. Employers are frustrated with existing strategies to reduce cost growth such as the exclusion of certain providers or higher deductibles in the face of employee dissatisfaction and limited evidence of savings. However, emerging strategies that could be more effective may be challenging for many employers to implement, and employers lack access to basic data to inform their efforts.
Public policy strategies have had limited effectiveness. Anti-trust and other policies to limit the ill-effects of consolidation have had a limited impact in our study markets, but there are nascent state-level efforts to push back on provider prices that are worth watching.
From the abstract:
Over the past decade, many states have reformed their retirement systems by reducing benefit generosity, tightening retirement provisions, introducing non-defined-benefit (DB) plan options and even replacing DB plans with defined-contribution plans. Many of these reforms have affected post-employment benefits that public workers will receive when they retire. Have these reforms also affected the attractiveness of public sector employment? To answer this question, we use state-level data from 2002 to 2015 and examine the relationship between state pension reforms and public employee turnover following the reforms. We find that employee responsiveness to the reforms was tangible and that it differed by reform type and worker education. These results are important because the design of public retirement benefits will continue to influence the ability of the public sector to recruit and retain high-quality workforce.
A correction has been published.
There may be a solution on the horizon for strapped restaurant-world parents and the people who employ them. Camilla Marcus, the owner of Soho cafe West~bourne, teamed up with a new venture-backed child care center Vivvi to offer her employees fully subsidized child care from 7 a.m. to 2 a.m. It’s a striking new employee benefit as parents across America struggle with the rising costs of child care and as restaurant owners face an ever-tighter labor market. ….
…. Vivvi has one location, at 75 Varick Street, which opened this spring; it can accommodate 90 children. Expansion, however, is in the works. The company is taking over the Trinity Preschool downtown, which is set to open next year with a capacity for 130 kids. Other employer partners include law firms, health care providers, and Horizon Media.
Here’s how it works: Employers sign up for a minimum of 100 credits, each worth one day of care, and can distribute credits to employees. Instead of committing to a certain schedule, employees can use the credits at will, meaning they can use it every day or just as emergency or backup child care or just when a shift changes. They don’t have to be locked into a schedule.
Credits cost the employer around $200 each, but the real cost ends up closer to $50 to $75 when tax incentives — including the Federal Credit for Employer Provided Child Care Services, around since 2001, and a new state law going into effect in 2020 — are factored in. Vivvi promises to help employers file for the credits. ….
Source: Moody’s Investors Service, October 3, 2019
Adjusted net pension liabilities (ANPL) declined in states’ fiscal year 2018 reporting due to healthy investment returns in fiscal 2017, though unfunded pension liabilities remain high for some states.
Medians – Adjusted net pension liabilities spike in advance of moderate declines
Source: Pisei Chea, Marcia Van Wagner, Timothy Blake, Nicholas Samuels, Emily Raimes, Tenzing T Lama, Moody’s, Sector In-Depth, August 27, 2019
Adjusted net pension liabilities (ANPL) spiked in states’ fiscal year 2017 reporting due to poor investment returns in fiscal 2016, according to our state pension medians data. States typically report their pension funding levels with a one-year lag. Thus, favorable investment returns in fiscal 2017-18 will lead to a decline in pension liabilities in fiscal 2018-19 reporting.
Adjustments to Pension and OPEB Data Reported by GASB Issuers, Including US States and Local Governments Methodology
Source: Moody’s, Cross Sector Methodology, October 7, 2019
Credit FAQ: How S&P Global Ratings Will Implement Pension And OPEB Guidance In U.S. Public Finance State And Local Government Credit Analysis
Source: S&P, October 7, 2019
On Oct. 7, 2019, S&P Global Ratings published “Guidance: Assessing U.S. Public Finance Pension And Other Postemployment Benefit Obligations For GO Debt, Local Government GO Ratings, And State Ratings Methodology.” Here, we answer the most frequently asked questions from investors and other market participants.
Elsewhere, we have also provided an overview on our approach to U.S. state and local government pensions within the context of our three government criteria: See “Credit FAQ: Quick Start Guide To S&P Global Ratings’ Approach To U.S. State And Local Government Pensions,” published May 13, 2019.
U.S. State Pension Reforms Partly Mitigate The Effects Of The Next Recession Primary Credit
Source: Carol H Spain, S&P, September 26, 2019
Table of Contents:
• Average State Funding Levels Plateau With Notable Exceptions
• Many States Continue With Pension Reforms, Avoiding Backward Measures
• Most States Still Fall Short Of Minimum Funding Progress
• Despite Reforms Despite Improved Assumptions, Plans Remain Vulnerable To Market Volatility
• Demographics Influence The Funded Ratio And Budgetary Vulnerability
• Pension Costs Remain Affordable For Most States, With Notable Exceptions
• Policy Decisions, Not Markets, Will Likely Pose Greatest Future Risks
• Survey Methodology
• Related Research
Despite investment gains in 2018, U.S. states have made relatively slow progress since the Great Recession in improving funded ratios, with S&P Global Ratings’ most recent survey data indicating that the average weighted pension status across state plans was 72.5% compared with 83% in 2007. However, looking at the funded ratios alone falls short of understanding whether or not states have made progress toward improving the overall pension funding picture. Indeed, poor investment returns in select years and maturing pension plan populations have stunted state funding progress. Also, in the years immediately following the Great Recession, many states had reduced plan contributions as a short-term means of balancing budgets, resulting in funding setbacks from which many have yet to recover.
However, in recent years, many states have made conservative changes to actuarial methods and assumptions that, while hindering actuarial funding ratios, show a more realistic assessment of market risk tolerance for states, thus better enabling them to make funding progress. We have also witnessed that many states have learned lessons from funding discipline mistakes over the past ten years and better understand sources of pension liability and costs, and have therefore demonstrated a commitment to actuarially based funding. In this sense, states may be better prepared heading into the next recession despite weaker funded ratios. Yet, in our view, despite some progress, many plans’ current contributions, discount rate assumptions, and investment allocations still fall short of fully mitigating the market volatility that increasingly appears to lie ahead….
From the press release:
Annual family premiums for employer-sponsored health insurance rose 5% to average $20,576 this year, according to the 2019 benchmark KFF Employer Health Benefits Survey released today. Workers’ wages rose 3.4% and inflation rose 2% over the same period.
On average, workers this year are contributing $6,015 toward the cost of family coverage, with employers paying the rest.
Despite the nation’s strong economy and low unemployment, what employers and workers pay toward premiums continues to rise more quickly than workers’ wages and inflation over time. Since 2009, average family premiums have increased 54% and workers’ contribution have increased 71%, several times more quickly than wages (26%) and inflation (20%).
- Section 1: Cost of Health Insurance
- Section 2: Health Benefits Offer Rates
- Section 3: Employee Coverage, Eligibility, and Participation
- Section 4: Types of Plans Offered
- Section 5: Market Shares of Health Plans
- Section 6: Worker and Employer Contributions for Premiums
- Section 7: Employee Cost Sharing
- Section 8: High-Deductible Health Plans with Savings Option
- Section 9: Prescription Drug Benefits
- Section 10: Plan Funding
- Section 11: Retiree Health Benefits
- Section 12: Health and Wellness Programs
- Section 13: Grandfathered Health Plans
- Section 14: Employer Practices and Health Plan Networks
Source: Diane M. Soubly, Benefits Law Journal, Vol. 32, No. 2, Summer 2019
In its first seven years, the Patient Protection and Affordable Care Act (ACA), now almost a decade old, decreased the number of uninsured persons who used highly expensive emergency care as primary care and curtailed double digit medical inflation. In the first two years of the Trump Administration, the President, the Executive Branch and Congress have devised ACA’s death by a thousand cuts. As former Solicitor General Donald Verrelli observes at page 2 of the Opening Brief submitted by Intervenor-Appellant The U.S. House of Representatives in the appeal from the Texas district court decision holding ACA unconstitutional, “Despite all that the Act has achieved, its political opponents have made repeated efforts to repeal it or to disable it through litigation.” This article updates employee benefits plan designers and litigators about those continuing efforts in the legal battle for the death of ACA…..
Source: Amelia Dantzer, Employment Alert, Volume 36, Issue 18, September 4, 2019
The Michigan Supreme Court has held in a ruling that governmental employees were not entitled to lifetime health benefits because their collective bargaining agreements (CBA) did not create a vested right to lifetime coverage. The court found that none of the relevant bargaining agreements included express language providing for vested, lifetime health benefits, and all the agreements contained “durational” clauses providing that the terms are only in effect for three years. Specifically, the court held that “[t]he CBAs contain a general three-year durational clause, and no provision specifies that the benefits in dispute are subject to any different duration. If the parties meant to vest healthcare benefits for life, they easily could have said so in the CBAs, but they did not.”
From the abstract:
Businesses are more efficient when employees are motivated and productive. This study investigated the correlation between flex-time and motivation in employees, as well as flex-time and productivity in employees. The research methodology used for this study was correlation research designed to examine the relationship between flex-time and motivation and the relationship between flex-time and productivity. This quantitative study consisted of 63 voluntary participants. The findings of this study illustrated a very strong positive correlation between flex-time and employee motivation and a strong positive relationship between flex-time and employee productivity.
Source: Mary K. Feeney, Justin M. Stritch, Review of Public Personnel Administration, Volume 39 Issue 3, September 2019
From the abstract:
Family-friendly policies and culture are important components of creating a healthy work environment and are positively related to work outcomes for public employees and organizations. Furthermore, family-friendly policies and culture are critical mechanisms for supporting the careers and advancement of women in public service and enhancing gender equity in public sector employment. While both policies and culture can facilitate women’s participation in the public sector workforce, they may affect men and women differently. Using data from a 2011 study with a nationwide sample of state government employees, we investigate the effects of employee take-up of leave policies, employer supported access to child care, alternative work scheduling, and a culture of family support on work–life balance (WLB). We examine where these variables differ in their effects on WLB among men and women and make specific recommendations to further WLB among women. The results inform the literature on family-friendly policies and culture in public organizations.