Aetna CEO Comments On Future Of Health Insurance

Speaking at the HIMSS12 Conference in Las Vegas, Aetna CEO, Chairman and President Mark Bertolini, said a reckoning for the traditional health insurance model was at hand. "The system doesn't work... The end of insurance companies, the way we've run the business in the past, is here."

Bertolini offered a strong endorsement of the accountable health organization model, positioning health insurers as uniquely suited to usher in an era of coordinated care. "We need to move the system from underwriting risk to managing populations. We want to have a different relationship with the providers, physicians and the hospitals we do business with."

Technology is crucial to redefining this relationship, he said. Leveraging mobility, social and cloud technologies, he sees health insurers increasingly providing providers with this technical wherewithal to better serve patients and drive costs out of the system.

Pondering the future of the health care exchanges, Bertolini foresees the brands of health systems superseding those of health insurers. Bertolini says this new arrangement makes great sense from the perspective of the customer. The lack of coordination inherent in the current system stems largely from the various stakeholders acting rationally in their own self-interest. "For the patient it's a nightmare. Think of a hockey game where everybody has their own puck."

A new business model for insurers predicated on partnering with providers coupled with skillful use of technology can turn the focus back on the customer, he said. "We can use technology to make it easier for the consumer. Convenience is the new word for quality."

Savings of $9700 Per Employee Over Five Years...How'd They Do It?

The Sixth Annual Cigna Choice Fund Experience Study (released today) shows individuals enrolled in Cigna Choice Fund®, Cigna's consumer-driven health plan, lowered their costs without compromising care by becoming more engaged, informed and active health care consumers.

Cigna CDHP customers lowered their risk of developing or worsening a chronic condition. According to the study, when employers fully transitioned to offering only a CDHP option, individuals improved their health risk profile by 10 percent in the first year compared to customers in a traditional plan option.

Cigna CDHP medical cost trend was 16 percent lower than traditional plans during the first year. Over five years, cumulative cost savings averaged $9,700 per employee enrolled in a Cigna CDHP.

Cigna CDHP customers had consistent or higher use of over 400 evidenced-based medical best practices (than their counterparts in traditional plans). Cigna CDHP customers also sought preventive care, such as annual office visits and mammograms, more frequently than customers enrolled in a traditional plan.

Additionally they were more likely to complete a health risk assessment, participate in Cigna Health Advisor health coaching, compare cost and quality information when selecting a doctor or reviewing potential medical costs.

President's Budget Bad for Small Business says ASPPA

President Obama's current budget proposal limits the tax benefit for retirement savings for families earning over $250,000. This doesn't sound like such a bad thing but consider the effect it will have on the employees of small businesses. If you can no longer deduct your contributions to the retirement plan, you lose the incentive to make the plan available. Also, contributions to a retirement plan will be taxed somewhere down the road, so there is no tax avoidance. And lastly, the contribution calculation has been limited by law to a maximum of $250,000 in income.

So this proposal really leaves the employees of small businesses hanging in the wind as far as their retirement is concerned. More Americans save at work that any other place and employer sponsored plans account for a significant part of that. Penalizing small business owners that make over $250,000 and contribute to a 401(k) plan wont balance the budget. It will just make them think twice about starting or maintaining a plan.

Cutting Health Care Costs - Like Japan

Everyone wants to reduce the cost of their health care which is about 18% of GDP Today. Most are looking for someone to blame (insurers, doctors, etc.). But maybe we need to point the finger at ourselves. Obesity rates are going up as well. Consider that suger consumption in 1900 was about 1 pound for every American per year. It went to about 15 pounds after World War II and 115 pounds in the mid 80s. The latest available data shows the late 2000s to be 205 pounds! No one thinks they consume that much. But with processed foods and high fructose corn syrup, you may be surprised to find the amount of sugar and salt in just your bread.

Here are some facts. Treating a person with Type 2 diabetes is about $22,500 versus a healthy worker at about $1,700. And employers with higher obesity rates also happen to have the lowest productivity rates. Japan recognized that those with two out of five Metabolic Syndromes (metS) are 725% more likely to be a health risk. So the Japanese government required employers to demonstrate a 1.5% reversal in metS by 2012 and a 3% overall reversal by 2015 or pay a penalty to the Japanese government retirement program.

A whopping 74.1% of Americans are obese or overweight compared to only 22.6% of the Japanese, we obviously face a larger health care crisis. I'm not advocating government involvement in regulating health care or pushing it down to the employer level. But let's face it, we as employers pay the cost until MediCare kicks in and then pass it on to the government. Which will end up costing us in the end anyway.

Exempt Classification Analysis - Not Likely In 2012

The fed has said they will want employers to create a written classification analysis document for every exempt employee on staff. The change known as "Right to Know" rule would require employers to perform a written classification analysis and share that info with all affected workers. Companies would also be required to retain the analysis documents in the event of a DOL investigation.

However, after being pushed back several times last year, the DOL changed the classification of the Right to Know rules from the "Proposed Rules Stage" to "Long-Term Actions". Long-Term Actions are usually items under development but for which the agency does not expect to have a regulatory action within 12 months.

Whew!

Reporting Health Coverage Costs on W2 Begins 2012

Beginning 2012 employers with 250 or more W-2s will have to report the aggregate cost of employer-sponsored health coverage on the Form W-2 of their employees. The Internal Revenue Service recently revised their interim guidance issuing Notice 2012-9 clarifying the original Q&As and adding some new ones.
Small Employer Exemption Employers with fewer than 250 Form W-2 are not required to report for 2012. But you will need to start in 2013 so be prepared.
Stand-alone dental and vision plans In determining whether the cost of coverage under a dental and/or vision plan is included in the aggregate cost is the same standard for determining whether such coverage is an excepted benefit under HIPPA. Certain stand-alone dental and vision plans may be exempt from the reporting requirement
Excess reimbursement for highly compensated The report requirement does not apply to the cost of coverage includible in income under Section 105(h) of IRS Code or payment or reimbursements of health insurance premiums for 2% shareholder-employees of an S corporation.
Coverage under employee assistance program or similar programs An employer that does not charge a premium for an EAP, wellness program or on-site medical clinic to COBRA- qualifying beneficiaries is not required to include the cost of such coverage in the aggregate reportable cost.
Optional reporting of exempted benefits Employers may, for convenience, include in the aggregate reportable cost the cost of coverage that is not required (coverage under HRA for example) provided certain conditions are met.
Reporting non-applicable employer-sponsored coverage Employers may use any reasonable method to determine the relative allocation of cost for benefit programs.
Employee election changes after year-end The aggregate reportable cost for a calendar year reported on a Form W-2 may be based on the information available to the employer as of December 31 of the calendar year without regard to any election or notification made or provided in subsequent calendar year that has a retroactive effect on a previous year's coverage.
Payroll periods crossing two taxable years This notice provides employers with various options for reporting the aggregate reportable cost for a payroll period that spans two taxable years.
Hospital indemnity/specified disease insurance Employers are required to include the cost of coverage in the aggregate reportable cost on Form W-2 if the employer makes any contribution to the cost of coverage that is excluded from the employee's income, or if the employee purchases a policy on a pre-tax basis under a cafeteria plan. However, if the employer provides the opportunity for employees to purchase an independent, non-coordinated fixed indemnity policy and the employee pays the full amount of the premium with after-tax dollars, the cost of coverage provided under that policy is not required to be reported on Form W-2

Do Your Employees Understand Their Benefits

Although human resource decision makers believe it is important for employees to fully understand their benefit options, it is estimated that about 40% of them do not. With the trends in health care pushing more and more responsibility on employees to manage their own benefits, there is clearly a disconnect here.
The majority of large and midsized companies believe web based tools increase employee understanding of benefits and their overall engagement, yet the majority of large and midsized companies don't provide them. In fact six out of ten HR decision makers, regardless of company size, believe Mobile access to benefit information is important. Yet fewer than half of the companies provide mobile access now.