Category Archives: Benefits

Local Government Strategies to Address Rising Health Care Costs

Source: Elizabeth Kellar, Christine Becker, Christina Barberot, Ellen Bayer, Enid Beaumont, Bonnie Faulk, Joshua Franzel, Mark Ossolinski, and Danielle Miller Wagner, Center for State and Local Government Excellence (SLGE) and University of Tennessee, December 2014

From the abstract:
Rising costs over the last decade have prompted many local governments to make changes to their health plans and strategies. Cost sharing, wellness program, and disease management initiatives are widely reported. Other changes cited include increased reliance on high-deductible plans, dependent eligibility audits, and altering retiree benefits.

Key findings:
– The top cost drivers of local government health care increases were increased claim costs (64 percent); prescription drugs (57 percent); an aging workforce (46 percent); insurance company price increases (45 percent) and federal health care policy (45 percent).
– Fifty-seven (57) percent of respondents increased cost sharing of premiums paid by employees and nearly half of respondents reported that their local governments changed the way health insurance is provided.
– Nineteen (19) percent of those reporting health plan changes shifted employees to a high-deductible plan with a health savings account and 14 percent established a health reimbursement arrangement.
– Disease management programs, on-site clinics, dependent eligibility audits, and regular review and rebidding of health care vendor contracts have achieved significant savings.
– Respondents reported that providing easy access to health services at work sites not only supports employee wellness, but also reduces employee absenteeism and health care costs.

Urban Fiscal Stability and Public Pensions: Sustainability Going Forward

Source: University of Pennsylvania, Institute for Urban Research, November 11, 2014

On Nov. 11, Penn IUR hosted a dynamic discussion with leading practitioners and researchers on the complex fiscal issues facing cities, focusing on the legacy issues of the funding of pensions, and looking forward to strategies that support financial sustainability.

Speakers included Robert Inman, Richard King Mellon Professor of Finance, Professor of Business Economics & Public Policy, Professor of Real Estate, The Wharton School, University of Pennsylvania; Mathew McCubbins, Professor of Law and Political Science, Duke Law; Amy Monahan, Julius E. Davis Professor of Law, University of Minnesota Law School; Joshua Rauh, Professor of Finance, Stanford Graduate School of Business and Senior Fellow, Hoover Institution, Stanford University; Richard Ravitch, former Lieutenant Governor of New York; and James Spiotto, Managing Director, Chapman Strategic Advisors LLC; and Marcia Van Wagner, Vice President/Senior Credit Office, States Team, Moody’s Investors Service. Panels will be moderated by Olivia Mitchell, Professor of Business Economics and Public Policy and Executive Director of the Pension Research Council, The Wharton School; and Robin Prunty, Managing Director, Standard & Poor’s Public Finance Ratings. This event was co-sponsored by Next City and made possible with support from Melanie and Lawrence C. Nussdorf. …

Urban Fiscal Stability and Public Pensions: Sustainability Going Forward (Part 1)

Urban Fiscal Stability and Public Pensions: Sustainability Going Forward (Part 2)

Retirement Benefit Decisions by City and County Governments

Source: Robert L. Clark, Melinda Sandler Morrill, Matthew Anderson, and Aditi Pathak, Center for State and Local Government Excellence, Issue Brief, November 2014

From the summary:
This brief is the second of a three-part series that analyzes employee participation in primary and supplemental retirement plans, retiree health care benefits, and Social Security in 20 large cities and counties across the country.

· Workers who work a full career in their city or county can expect a retirement income of between 45 and 80 percent of their pre-retirement income.
· Career employees of local governments who participate in Social Security can expect retirement income replacement rates of 20 to 30 percentage points higher than employees whose governments do not participate in Social Security.
· These and other variations mean that many local workers will need to be disciplined about participating in savings plans, outside of their primary plans, to meet their retirement security goals.

Workplace Health Promotion and Labour Market Performance of Employees

Source: Martin Huber, Michael Lechner, Conny Wunsch, Centre for Economic Policy Research (CEPR), CEPR Discussion Paper No. DP10055, July 1, 2014
(subscription required)

From the abstract:
This paper investigates the average effects of (firm-provided) workplace health promotion measures in form of the analysis of sickness absenteeism and health circles/courses on labour market outcomes of the firms’ employees. Exploiting linked employer-employee panel data that consist of rich survey-based and administrative information on firms, workers and regions, we apply a flexible propensity score matching approach that controls for selection on observables as well as on time-constant unobserved factors. While the effects of analysing sickness absenteeism appear to be rather limited, our results suggest that health circles/courses increase tenure and decrease the number of job changes across various age groups. A key finding is that health circles/courses strengthen the labour fo

The Early Impact of the Affordable Care Act State-by-State

Source: Amanda Ellen Kowalski, National Bureau of Economic Research (NBER), NBER Working Paper No. w20597, October 2014
(subscription required)

From the abstract:
I examine the impact of state policy decisions on the early impact of the ACA using data through the first half of 2014. I focus on the individual health insurance market, which includes plans purchased through exchanges as well as plans purchased directly from insurers. In this market, at least 13.2 million people were covered in the second quarter of 2014, representing an increase of at least 4.2 million beyond pre-ACA state-level trends. I use data on coverage, premiums, and costs and a model developed by Hackmann, Kolstad, and Kowalski (2013) to calculate changes in selection and markups, which allow me to estimate the welfare impact of the ACA on participants in the individual health insurance market in each state. I then focus on comparisons across groups of states. The estimates from my model imply that market participants in the five “direct enforcement” states that ceded all enforcement of the ACA to the federal government are experiencing welfare losses of approximately $245 per participant on an annualized basis, relative to participants in all other states. They also imply that the impact of setting up a state exchange depends meaningfully on how well it functions. Market participants in the six states that had severe exchange glitches are experiencing welfare losses of approximately $750 per participant on an annualized basis, relative to participants in other states with their own exchanges. Although the national impact of the ACA is likely to change over the course of 2014 as coverage, costs, and premiums evolve, I expect that the differential impacts that we observe across states will persist through the rest of 2014.

Political Polarization, Anticipated Health Insurance Uptake and Individual Mandate: A view from the Washington State

Source: Anirban Basu, Norma B. Coe, David E. Grembowski, Larry Kessler, National Bureau of Economic Research (NBER), NBER Working Paper No. 20655, November 2014
(subscription required)

From the abstract:
The politicization of the Affordable Care Act (ACA) was extreme, with the popular moniker of “Obamacare” and 54 House attempts to repeal the law in the four years after passage. Our study set out to understand Washington state public’s preferences about enrolling into ACA driven health insurance programs, the role that political polarization may play on the chances that the uninsured would enroll and the extent to which individual mandate may influence these choices. A representative mail survey among the registered voters of Washington State. We find that 27% have not ruled out purchasing insurance through the Exchange, but their ambiguity is most likely driven by conflicts between health care needs and financial worries on one hand and their political views on the other. Overall, compared to the insured population in 2013, uninsured are significantly more likely to enroll through the Exchange even after all adjustments including medical needs and financial worries. This highlights that the individual mandate may have an independent effect on enrollment for the uninsured. However, the individual mandate effect is found to be negligible for the uninsured who blamed the Democrats and/or President Obama for the 2013 governmental shutdown. Political polarization appears to have a trickle down affect at the individual choices even beyond medical needs and financial worries. Alternative strategies, for example bipartisan outreach, may be necessary to convince certain groups of eligible beneficiaries to consider enrollment through the Exchange.

2015 OEP: Emerging trends in the individual exchanges

Source: McKinsey Center for U.S. Health System Reform, Intelligence Brief, September 2014

From the abstract:
The 2015 open enrollment period (OEP) begins in about seven weeks. To develop a preliminary understanding of how it is likely to differ from last year’s, we analyzed all available data from the state exchanges as of September 15, 2014. We began by collecting the carrier participation data released by 40 states and the District of Columbia; collectively, these localities contain nearly 80 percent of the population eligible for qualified health plans (QHP) in the United States. We then examined data from the 19 localities (18 states and D.C.) that released complete rate filings, which collectively contain 44 percent of the QHP-eligible population. (To simplify the discussion in this Intelligence Brief, we refer to the first group as “41 states” and the second group as “19 states.”) For comparison with 2014 carriers and products, we used the comprehensive exchange offering database we developed during that OEP. Because detailed information about 2015 rate filings is currently available from only 19 states, many of our analyses focused on silver plans, the products purchased most often during the 2014 OEP.

Real-time tracker of 2015 individual exchange filings

Key Study On Obamacare 2015 Premium Rates Is Out And You Won’t Believe What’s Going To Happen
Source: Rick Ungar, October 31, 2014

… So, how do we explain the McKinsey findings, which reveal some awfully good news when it comes to premium rates, as Obamacare begins its second year sign up period beginning November 15?
We explain it by simply pointing out that when your sole approach to a program is based on your preferred political point of view, the truth may sometimes disappoint—even when the truth comes in the form of some pretty good news.

Here are the bullet points of the study:
• Despite the cries of the Obamacare bashers that insurance companies would leave the exchanges in droves once they discovered how much money they are losing, it turns out that competition and choice are increasing as we head into 2015.

According to the McKinsey study, “In the 41 states releasing exchange participation carrier data, the number of health insurers increased by 26 percent between 2014 and 2015. In the 19 states with complete fillings, the number of products grew 66 percent, with most in the silver tier.”
• While 65 percent of existing policies will see an increase in premium costs for 2015, the medium increase will be just 4 percent. ….

Do Public Pensions Help Recruit and Retain High-Quality Workers

Source: Alicia H. Munnell, Jean-Pierre Aubry and Geoffrey T. Sanzenbacher, Center for Retirement Research at Boston College, SLP#41, October 2014

The brief’s key findings are:
– Research shows that pensions help recruit and retain high-quality workers; thus, cutbacks in public pensions could hurt worker quality.
– One indicator of quality is the wage that a worker can earn in the private sector.
– Using this measure, states and localities consistently have a “quality gap” – the workers they lose have a higher private sector wage than those they gain.
– The analysis shows that jurisdictions with relatively generous pensions have smaller quality gaps, meaning they can better maintain a high-quality workforce.
– The bottom line is that states and localities should be cautious about scaling pensions back too far.

2015 Segal Health Plan Cost Trend Survey

Source: Segal Group, 2014

Health benefit plan cost trend rates for 2015 are forecast to drop slightly for some coverage, but to increase substantially for prescription drug coverage, according to data compiled in the 2015 Segal Health Plan Cost Trend Survey, Segal’s eighteenth annual survey of managed care organizations (MCOs), health insurers, pharmacy benefit managers (PBMs) and third-party administrators (TPAs). Trend is the forecast of annual gross per capita claims cost increases. The survey captured data on trend projections for the following types of medical coverage for active participants and retirees under age 65: fee-for-service (FFS)/indemnity plans, high-deductible health plans (HDHPs), open-access preferred provider organizations (PPOs)/point-of-service (POS) plans, PPOs/POS Plans (with PCP gatekeepers) and health maintenance organizations (HMOs). In addition, the survey compiled data on trend projections for various types of medical coverage for Medicare-eligible retirees, prescription drug carve-out, dental and vision. This report presents the survey results, including components of trend, in graphs and tables with observations on key findings. To assess the accuracy of projections, trend projections are compared to actual data. Actual trends for 2013 (the most recent full year for which actual data is available), were the lowest reported in more than 12 years for managed care plans (HMOs and PPOs/ POS plans). The report also compares trend data to increases in the consumer price index for all urban consumers (CPI-U) and wages. It concludes with Segal’s commentary on top health care cost-management strategies….